Upstream operator Encana Corporation (ECA) has announced the filing of initial prospectus related to the spinoff of its gas and oil resources in Western Canada. The plan reflects the company’s intent to vend non-core properties and to primarily focus on five liquid-rich assets.

The company that will be formed through the offering – PrairieSky Royalty Ltd. – is expected to own roughly 5.2 million acres of land in Alberta, Western Canada. The properties will be free from royalties of the government. PrairieSky Royalty will not be executing upstream operations on the assets but will instead collect fees from the companies exploring the resources. Encana added that the divesture of PrairieSky Royalty is expected to be closed by the first half of June this year.

Separately, Encana declared that it has entered into a deal with Stabilis Energy, provider of liquefied natural gas (LNG). Per the agreement, Encana is expected to sell its U.S.-based LNG business. The company has not disclosed the price yet.

Based in Calgary, Alberta, Encana is the second largest gas producer in North America and holds a highly competitive land and resource position in several of the region's most promising shale and tight gas resource plays. This provides the company with a low risk, long-life and sustainable growth profile.

Encana currently carries a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next 1 to 3 months.

One can also look at well-performing players in the energy sector like Range Resources Corporation (RRC), Helmerich & Payne Inc. (HP) and Unit Corporation (UNT). All the players sport a Zacks Rank #1 (Strong Buy).

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