ENCANA CORP. $23 - Toronto symbol ECA

ENCANA CORP. $23 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 741.0 million; Market cap: $17.0 billion; Price-to-sales ratio: 2.6; Dividend yield: 1.3%; TSINetwork Rating: Average; www.encana.com) reported that its cash flow fell 1.4% in the quarter ended June 30, 2014, to $656 million, or $0.89 a share (all amounts except share price and market cap in U.S. dollars). A year earlier, its cash flow was $665 million, or $0.90 a share. Earnings per share declined 32.4%, to $0.23 from $0.34.

These declines are mainly because the company continues to sell less-important assets as part of its plan to focus on six core properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico), Tuscaloosa Marine Shale (Louisiana) and Eagle Ford (Texas).

These areas contain large amounts of oil and natural gas liquids, such as butane and propane. These commodities supplied 14% of Encana’s output in the latest quarter, up from 9% a year ago. That cuts its exposure to weak gas prices.

Encana is a buy.

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