ENCANA CORPORATION $18.67 - Toronto symbol ECA

ENCANA CORPORATION $18.67 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $13.6 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 4 . 3 % ; www.encana.com) had cash flow per share of $4.80 in 2012, down 16.1%, from $5.72 in 2011. Revenue declined 39.1%, to $5.2 billion from $8.5 billion. That’s partly because the company sold $4.0 billion of assets in 2012, including major stakes in its shale gas properties in B.C. and Alberta.

Encana continues to benefit from its hedging program, which has shielded it from falling natural gas prices. In 2012, the company sold its natural gas at an average price of $4.82 per thousand cubic feet, compared to today’s price of $3.16. For 2013, Encana has hedged 52% of its forecast production at $4.39 per thousand cubic feet.

Even with low natural gas prices, Encana’s balance sheet remains sound. It ended 2012 with cash of $3.2 billion, or $4.32 a share. Its long-term debt of $7.2 billion is a manageable 53% of its market cap.

Encana is a buy.

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