Standard & Poor's Rating Services said Monday it put EnCana Corp.'s credit ratings on a negative watch list, suggesting it may downgrade the Canadian oil and natural gas producer after it announced plans to split itself into two separate companies.
The move affects EnCana's 'A-' corporate credit and senior unsecured debt ratings. S&P said the long-term corporate credit ratings on the two separate companies could stay the same or move lower.
"Based on our review of the asset portfolio composition of both companies, our evaluation of the growth profile associated with these assets and the expected capitalization and financial policies, the downside risk to the prospective ratings is limited to one notch," S&P credit analyst Michelle Dathorne said in a statement. "As a result, and barring any material changes, we expect that the ratings on the new companies would fall between 'BBB+' and 'A-'."
Such a move would keep the companies' ratings investment grade.
Calgary-based EnCana, Canada's biggest natural gas company, announced plans Sunday to split into two energy companies: one focused on oil, the other on natural gas. The transaction is expected to be completed in early 2009.
EnCana shares jumped $6.50, or 7.6 percent, to $92.43 on the New York Stock Exchange.
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