EnCana Corp , Canada’s biggest energy company, said on Sunday it plans to split itself into separate oil and natural gas companies in efforts to lift its value with crude prices at record highs.

EnCana, a $65 billion company formed in a merger six years ago, said the new oil-focused firm will operate its Alberta oil sands and U.S. refining assets, which it runs as part of a joint venture with ConocoPhillips . The entity will produce about a third of EnCana’s current overall output.

The natural gas firm will operate all of the company’s Canadian foothills and U.S. properties, which are located mainly in the Rocky Mountain states and Texas. It will be North America’s second-largest natural gas producer, EnCana said.

In a plan of arrangement, stockholders will get one share in each company for each EnCana share.

EnCana shares have climbed by a third in the past 12 months as oil prices have doubled to more than $125 a barrel and natural gas prices have rebounded from two years of weakness.

“We are initiating this process from a position of unprecedented strength,” Chief Executive Randy Eresman said.

The company concentrates its efforts on large reserves of unconventional natural gas, where the fuel is trapped in hard-to-access deposits that require high-tech rock fracturing techniques and busy drilling.

Its oil sands reserves are pumped to the surface in wells with the aid of steam injected into the ground, a method known as “in situ” production. In its joint venture with ConocoPhillips, it also owns 50 percent of two U.S. refineries.

EnCana also raised its estimate of pre-split cash flow for 2008 to $9.6 billion-$10 billion, reflecting higher commodity prices.

The split is scheduled to be completed in early 2009, EnCana said.

Its shares closed off 96 Canadian cents at C$86.52 on the Toronto Stock Exchange on Friday.

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