UPDATE 3-EnCana to split in two with oil at record highs

(Adds executive, investor comments; In U.S. dollars unless noted)

By Jeffrey Jones and Scott Haggett

CALGARY, Alberta, May 11 (Reuters) - EnCana Corp (ECA.TO: Quote, Profile, Research), Canada's biggest energy company, said on Sunday it plans to split into two separate oil and natural gas firms in an effort to wring out more value with crude prices at record highs.

EnCana, a $65 billion gas and oil sands producer formed in a merger six years ago, said the move should help investors better gauge the parts of its business and remove a discount it says it suffers in the stock market.

The new producers will be evaluated against "pure play" companies that are rewarded with higher stock market values, Chief Executive Randy Eresman told reporters.

"The expectation of us and the advice that we've gotten from our financial advisers suggests there's a likelihood that, with time, we would see an increase in our overall multiples," Eresman said.

The new oil firm, worth about a third of the enterprise value, will operate Alberta oil sands and U.S. refining assets, which EnCana holds as part of a joint venture with ConocoPhillips (COP.N: Quote, Profile, Research). It will also hang onto Canadian plains natural gas assets.

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

Eresman acknowledged investors in the new gas firm will be exposed to higher commodity-price risk. But he said he expects prices to stay at recent high levels.