Savings will help Encana cope

Article Excerpt

ENCANA CORP. $4.86 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 849.8 million; Market cap: $4.1 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.7%; TSINetwork Rating: Average; www.encana.com) plans to spend $1.5 billion to $1.7 billion upgrading its properties in 2016, down 25% from 2015 (all amounts except share price and market cap in U.S. dollars). Even with the drop, it expects production at its four main oil projects—Montney (B.C.), Duvernay (Alberta) and Eagle Ford and Permian (both in Texas)—will rise 12% this year. It has also cut its annual dividend rate by 78.6%, to $0.06 a share from $0.28. In addition, Encana has eliminated the 2% price discount it offered to shareholders who chose to reinvest their dividends in new shares. In all, these moves will save $185 million a year. Encana is still a buy for long-term gains. gains. …