Energy company El Paso Corp. said Tuesday it plans to separate into two publicly traded businesses by the end of the year.
The Houston company's stock jumped $1.18, or 6.2 percent, to $20.16 in afternoon trading.
The El Paso board approved plans to spin off its exploration and production business to its shareholders. The company said its shareholders would get a pro rata share of the stock in the spinoff company although specific terms were not disclosed.
The separation is subject to market, regulatory and tax approvals as well as final approval by the El Paso board.
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. Doug Foshee will remain chairman and CEO.
The new publicly traded exploration and production business will be led by the unit's president, Brent Smolik, as CEO. Foshee will be non-executive chairman.
El Paso said the deal would give managers the opportunity to focus "on distinct business strategies" appropriate for each of the resulting companies, more flexibility to grow each of the businesses and improved capital markets access.
Williams Cos. and Marathon Oil Corp. underwent similar separations this year.