Shares of energy company El Paso jumped 6.53% on volume that was nearly five times the daily average after the company announced plans to spin-off its exploration and production business into a separate, publicly traded entity by the end of this year. The company said its shareholders would get a pro rata share through the spinoff.
Texas-based El Paso (EP) is looking to increase its production of oil and natural gas and is using the spinoff to accomplish that objective. Current positions in the Eagle Ford and Wolfcamp shales and the Altamont field are expected to provide a profitable and rapidly growing oil production profile, the company said in a statement.
Brent Smolik will be named as chief executive officer and Dane Whitehead will become the chief financial officer of the exploration and production business. Fitch Ratings raised its outlook on El Paso to ''positive'' from ''stable'' following news of the spinoff. The ratings agency did not change its credit rating on the company.
After the spinoff, El Paso Corp. will include its pipeline group, its midstream group and its general and limited partner interests in El Paso Pipeline Partners LP (EPB), according to the Associated Press.