Like many companies with a focus on natural gas, Encana(ECA) has struggled with the glut of production causing sustained low prices. To some extent, the company has successfully shifted production to oil and natural gas liquids which have had far better economics over the past few years. There is still more that the company needs to do, however, and to that end, the company announced a new vision and strategy, which it called “Bold Action Underway”. The company is slashing its dividend from $.20 per quarter to $.07, cutting 20% of its workforce, and taking a variety of other steps.

Among these is a plan by the company to separate its vast Clearwater position into its own company for which it will conduct an IPO in mid-2014.

Encana also plans to transfer its significant mineral fee title land position and associated royalty interests across southern Alberta – approximately five million net acres where the Company holds the oil and gas rights and can collect royalties on production – into a separate company through an IPO by mid-2014. Encana intends to retain a significant stake in the new company which will manage leasing activities in the area currently known as Encana’s Clearwater play. This gives the Company the opportunity to unlock value from what it believes is an undervalued royalty business in its portfolio while offering the potential for longer term cash flow generation to Encana.

Though the company will initially retain “a significant stake in the new company,” Bloomberg reports that CEO Doug Suttles qualified that on a conference call.

Encana will retain a “significant percent” of the Clearwater business “early on,” Suttles said today on a conference call with analysts. Encana will consider selling more assets depending on market conditions, he said.

The “early on” implies that as soon as practical, Encana will shed its remaining Clearwater stake, either through a sale or a distribution to shareholders.

Disclosure: The author holds no position in any stock mentioned

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