ECA Bullish on the New EnCana

admin — Tue, 01 Dec 2009 17:37:23 +0000

With its corporate split moving into the rear view mirror, RBC CM is reaffirming a bullish outlook for EnCana, predicated upon impressive production growth visibility over the next few years. The new EnCana will begin trading on the TSX on Dec 3 and on the NYSE on Dec 9. In RBC CM’ mind, EnCana possesses the best real estate on the block, with 10.6 million acres of net undeveloped land. RBC CM believes that EnCana has established blue water on its rivals, with its secure lock on the Deep Bossier, coupled with the Montney and emerging Haynesville and Horn River shale plays. In spite of a large production base of 3.2 bcfe/d, RBC CM is comfortable with EnCana’s targeted production growth of circa 10% over the next few years. With 500 mmcf/d of natural gas production shut-in that will return to market combined with 200 – 300 mmcf/d of gas production from Deep Panuke by late2010, EnCana should have little trouble in delivering low cost growth. In RBC CM’ view, EnCana’s relative multiple (based on its ‘if, as and when issued’ market price in Canada of approximately US$28.15) is attractive, particularly given its impressive track record of growth and superior management execution over the years. RBC CM is reaffirming an Outperform, Average Risk rating on EnCana with a revised one-year target price of US$39 per share (vs. US$70 per share previously).

EnCana Corporation Earnings for Q2/09 Ahead Of Expectations

admin — Sun, 26 Jul 2009 22:52:31 +0000

While volumes of 4.6 Bcfe/d were essentially in line with our 4.6 Bcfe/d
estimate, Q2 CFPS of $2.87 was ahead of our estimate of $2.40 and
consensus of $2.41 on lower operating costs, lower mineral taxes and better
downstream operations.

About 0.4 Bcf/d of gas has been shut-in with ~0.1 Bcf/d in East Texas and
with the near-term soft outlook for gas, ECA has widened its ‘09 guidance to
4.4-4.8 Bcfe/d (from 4.5-4.7 Bcfe/d) on lower capex of $5.5-$6 B (down
from $6.1 B). Our ‘09 estimates move to 4.5 Bcfe/d (from 4.6 Bcfe/d).

With high storage levels, we see gas prices remaining soft in Q3 and likely
most of Q4/09. However, the tightening supply/demand balance process
should be more prominent later this year with the US rig count declining
~60% from its peak, supporting a more balance gas market in 2010.

We favor ECA for its best-in-class low-cost operations, strong financial
position (‘09E D/CF at 1.2x), strong management team, attractive F&D
costs, and exposure to enormous gas and bitumen resources.

TSX Commentary » EnCana Corporation

ECA Bullish on the New EnCana

EnCana Corporation Earnings for Q2/09 Ahead Of Expectations