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CALGARY - EnCana Corp.'s (TSX:ECA) decision to split off into two independent oil and gas companies appeared to be getting rave reviews from investors and analysts Monday, a day after the Calgary energy giant announced the corporate overhaul.

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The Canadian Press

President and chief executive officer of Encana Corporation Randy Eresman addresses the media in Calgary on Sunday. Canada's biggest natural gas player says it is splitting into two separate energy companies: one a fully integrated oil company and the other devoted to developing the company's vast unconventional gas assets.

"It's a good deal," said Philip Skolnick, an analyst with Genuity Capital Markets.

The first company, with the working name IntegratedOilCo (IOCo), will be centred around EnCana's oilsands operations and its U.S. refineries. It will be run by Brian Ferguson, EnCana's current chief financial officer.

The second will be focused on EnCana's vast unconventional natural gas resource plays in the Western United States, Alberta, British Columbia and Texas. Chief executive Randy Eresman will be in charge of that company.

Skolnick said the deal will provide more clarity on each company's assets.

"You have greater focus, so maybe there's going to be better execution because rather than one large company dealing with many different assets it's now two separate companies dealing with several assets," he said.

"It's the same management team that's been with the asset base for many years so they know it intimately and I think it's probably going to be much better execution."

On the Toronto Stock Exchange Monday, EnCana's shares soared more than eight per cent, or $7.05, to $93.57.

Its previous 52-week high had been $88.06 and its low has been $59.33.

EnCana shareholders will get a share of each company after the transaction, which is set to close in 2009.

"The key motivation of the transaction was to force the market to put a proper value on ECA's rich asset base," UBS Securities analyst Andrew Potter wrote in a note to clients.

"We have increased our 12-month target price from $94 to $110 reflecting a sum of the parts valuation approach for GasCo and IOCo."

Blackmont Capital analyst Menno Hulshof shifted his recommendation for EnCana from "hold" to "buy" and bumped up his share price target from $86 to $99.

"This structure should both simplify the process of cross-comparing and valuing GasCo's and IOCo's assets and increase their overall attractiveness from both an investor and potential acquirer's perspective given their pure-play nature," Hulshof wrote in a note to clients.

"Although some of the upside associated with this scenario is already reflected in the current share price, we believe this announcement will attract new investors."

Genuity's Skolnick said there's a chance either company could be a takeover target.

"They're smaller in size and more focused and so it makes it more appealing to companies that focus mostly on gas resource plays but don't have oilsands and vice versa."

"They are $30-plus-billion dollar market cap companies that still makes it a little more difficult."

EnCana, which has a market capitalization of $65 billion, was formed in 2002 by a merger between PanCanadian Energy Corp. and Alberta Energy Co.