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After its gas business faltered, Encana got into shale oil, only to see the price swoon.Darren Abate/The Globe and Mail

When times are good in the oil patch, fever spreads.

Energy executives and corporate boards get pitched on splitting their companies along lines of geography, commodity or business unit, with the promise of "unlocking value" in the utopia of the pure play.

Now that the energy sector has been hobbled by the collapse in oil and gas prices, some of the players that were swayed have watched their value get locked up tight. Companies that have stuck to old-school diversification are now rewarded for their stubbornness and even a lack of pizazz.

Financial advisers preach diversification to their clients as they invest for retirement, children's education and other long-term needs. Why do some companies believe that such philosophy doesn't apply to them on a grander scale?

In the coming days, the integrated energy companies – those that produce oil, refine it and sell you your gasoline and diesel fuel – will report results from the first full quarter of the current downturn in which West Texas Intermediate averaged less than $50 (U.S.) a barrel.

Numbers from Imperial Oil Ltd., Suncor Energy Inc. and Husky Energy Inc. will show the sturdiness of their corporate structure during an energy bust. Exploration and production operations, known as the upstream, will display the ravages of the price crash. Refining and marketing – the downstream – will shine for the most part.

The reason? North American gasoline prices largely take their cue from international benchmark Brent crude prices, which have commanded a decent premium to U.S. oil, leaving the refiners with a healthy margin between the cost of cheaper domestic oil feedstock and the price of wholesale fuel.

Asim Ghosh, Husky's chief executive, has often touted the integrated structure, which allows monetary benefits to swing from upstream to downstream and back again, providing a natural hedge. Larger independents, such as Canadian Natural Resources Ltd. have concentrated on oil or natural gas assets, depending on the health of their respective markets.

This week, FirstEnergy Capital Corp. analyst Michael Dunn published a report on Imperial Oil that examines its wherewithal to become an acquirer of pure-play oil sands producers, given its mighty financial position and access to inexpensive capital.

Whether it pulls the trigger on a deal remains to be seen – the company is not known for knee-jerk reactions to booms and busts – but the numbers show it has the ability to snap up such companies as Canadian Oil Sands Ltd., MEG Energy Corp. or Cenovus Energy Inc. thanks to its conservative and diversified set-up (and, in no small measure, the comfort of having Exxon Mobil Corp., the largest oil major, as controlling shareholder).

The market has rewarded it, pushing the shares up 9 per cent since the start of the year.

Among the largest energy split-ups over the past decade, reviews have been mixed. Marathon Petroleum Corp., the U.S. refiner spun off from Marathon Oil Corp. in 2011, has more than doubled in price since then and has gained sharply since the start of 2015. Marathon Oil, meanwhile, has largely followed crude's rise and fall.

Encana Corp. and Cenovus split up in 2009 in a move that can now be safely judged as ill-advised. Both have underperformed the TSX/S&P energy group this year, and went to the market to raise more than $1.3-billion (Canadian) each in dilutive equity to shore up their balance sheets.

Encana spent years hoping gas prices would recover so that the massive reserves it focused on in numerous locales could generate fat returns. When prices remained in a trough, the company sought out joint ventures to help fund development, then struggled to climb back into liquid hydrocarbons, which offered higher prices.

In 2013 it changed CEOs, then went about seeking redemption in the shale oil fields of Texas, through billions of dollars in acquisitions, just before prices crashed. Today, Encana and Cenovus are dealing with the oil price crash, and to be fair, they are also coping with depressed gas prices.

A holdover that has offered Cenovus much-needed diversification from its oil-sands business is its U.S. joint venture with Phillips 66 (spun off in 2012 from ConocoPhillips), in which Cenovus reaps rewards from refineries in Illinois and Texas.

However, if the original Encana had resisted the urge to split, it would have been able to tend to required changes to its production mix in the past several years from a larger, stronger base.

As it stands, it's looking like it was long-term pain for short-term gain.

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