encana
Toronto symbol ECA, and New York symbol ECA, is a leading North American producer of natural gas and oil.
Encana Corp., $14.81, symbol ECA on Toronto and a recommendation of The Successful Investor, first sold shares of PrairieSky Royalty Ltd., $30.20, symbol PSK on Toronto (Shares outstanding: 130.0 million; Market cap: $3.9 billion; www.prairiesky.com), to the public in May 2014. It sold its remaining 54% stake in PrairieSky in September 2014. Encana set up PrairieSky to hold its Clearwater properties in southern Alberta. PrairieSky owns the oil and natural gas rights to 5.2 million acres. It does not drill wells or explore for new reserves. Instead, it collects royalties from other producers....
ENCANA CORP. $18 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 740.1 million; Market cap: $13.3 billion; Price-to-sales ratio: 2.2; Dividend yield: 1.6%; TSINetwork Rating: Average; www.encana.com) plans to spend $2.4 billion to $2.5 billion on its properties in 2014. That’s down from the $2.8 billion it will likely spend in 2013.
Encana will devote 75% of its 2014 spending to five properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico) and the Tuscaloosa Marine Shale (Louisiana).
These fields produce significant amounts of oil and natural gas liquids (NGLs), such as butane and propane. The company expects oil and NGLs to supply 75% of its cash flow by 2017, up from about 35% today.
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Encana will devote 75% of its 2014 spending to five properties: Montney (B.C.), Duvernay (Alberta), DJ Basin (Colorado), San Juan Basin (New Mexico) and the Tuscaloosa Marine Shale (Louisiana).
These fields produce significant amounts of oil and natural gas liquids (NGLs), such as butane and propane. The company expects oil and NGLs to supply 75% of its cash flow by 2017, up from about 35% today.
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IMPERIAL OIL LTD. $48 (Toronto symbol IMO; Conservative Growth and Income Portfolios, Shares outstanding: 847.6 million; Market cap: $40.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.1%; TSINetwork Rating: Average; www.imperialoil.ca) has resumed production at its Kearl oil sands project in northern Alberta. The company was forced to shut down Kearl due to problems with a machine that separates heavy oil from sand. In the third quarter, Kearl supplied 30% of Imperial’s daily output of 307,000 barrels. The recent oil-price drop has cut the stock’s price by 17.2% from its August 2014 peak of $58. However, low crude prices will benefit Imperial’s refining and petrochemical operations, which supplied 43% of its earnings in the latest quarter. The company may also take advantage of low prices to pick up new properties at a bargain....
ENCANA CORP. $21 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 741.1 million; Market cap: $15.6 billion; Price-to-sales ratio: 2.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.encana.com) recently narrowed its focus from around 30 unconventional natural gas properties to just six. These fields also produce significant amounts of oil and natural gas liquids, such as butane and propane.
The company now expects that liquids will account for 75% of next year’s operating cash flow, two years ahead of its original target.
Encana’s revenue rose 31.8%, from $6.7 billion in 2009 to $8.9 billion in 2010 (all amounts except share price and market cap in U.S. dollars). It then fell to $5.2 billion in 2012. However, revenue recovered to $5.9 billion in 2013 and could reach $7.0 billion in 2014.
Earnings dropped from $2.35 a share (or a total of $1.8 billion) in 2009 to $0.54 a share (or $398 million) in 2011. They then rebounded to $1.35 a share (or $997 million) in 2012, but fell to $1.09 a share (or $802 million) in 2013.
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The company now expects that liquids will account for 75% of next year’s operating cash flow, two years ahead of its original target.
Encana’s revenue rose 31.8%, from $6.7 billion in 2009 to $8.9 billion in 2010 (all amounts except share price and market cap in U.S. dollars). It then fell to $5.2 billion in 2012. However, revenue recovered to $5.9 billion in 2013 and could reach $7.0 billion in 2014.
Earnings dropped from $2.35 a share (or a total of $1.8 billion) in 2009 to $0.54 a share (or $398 million) in 2011. They then rebounded to $1.35 a share (or $997 million) in 2012, but fell to $1.09 a share (or $802 million) in 2013.
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CAE INC., $14.58, Toronto symbol CAE, earned $42.0 million in its fiscal 2015 second quarter, which ended September 30, 2014. That’s up 9.9% from $38.2 million a year earlier. Per-share earnings rose at a slower rate of 6.7%, to $0.16 from $0.15, on more shares outstanding. These figures exclude earnings from CAE’s mining operations, which make simulators that train workers to operate underground trucks, loaders and drills. The company recently announced plans to sell this business, as weak commodity prices have prompted mining firms to cut spending on exploration and expansion projects. On this basis, the latest earnings matched the consensus estimate....
Five years ago, the old EnCana Corp. split itself into two new firms: the new Encana, which focuses on natural gas, and Cenovus Energy, which owns oil sands properties and refineries. Lower gas prices have cut Encana’s share price by 30% since the split. Due to the recent drop in oil prices, Cenovus’s stock has gained about 9% in the last five years. Energy prices could fall further, as new production techniques, particularly hydraulic fracturing (or fracking) and horizontal drilling, add to supplies. However, a colder-thannormal winter would boost oil and gas demand for heating....
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Of course, I still form opinions on which way the market and individual stocks are likely to move in coming months and years. Some of these opinions fall in the category of predictions—others are more like guesses.
From time to time I share these opinions with investors. Sometimes they turn out surprisingly accurate—other times, not so much. This has become a popular part of our service, so we highlight it under the heading “Guesses, Opinions & Predictions”.
...
ENCANA CORP. $21.00 (Toronto symbol ECA; Shares outstanding: 741.0 million; Market cap: $15.6 billion; TSINetwork Rating: Average; Dividend yield: 1.4%; www.encana.com) continues to sell less important natural gas properties as it shifts toward long-lasting projects that mainly produce oil and natural gas liquids, such as butane and propane. The company recently agreed to sell most of its natural gas properties in central Alberta’s Clearwater region for $605 million (Canadian). That’s equal to 83% of its second-quarter cash flow of $656 million U.S., or $0.89 U.S. a share. The company expects to complete the sale in the first quarter of 2015. The cash will help Encana pay for Texas-based oil producer Athlon Energy (New York symbol ATHL), which it recently agreed to buy for $7.1 billion U.S., including Athlon’s $1.15 billion U.S. of debt. Encana should complete this purchase by the end of 2014....
H&R REIT $21.86 (Toronto symbol HR.UN; Units outstanding: 272.4 million; Market cap: $6.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.2%; www.hr-reit.com) owns stakes in 41 office buildings, 112 industrial properties and 168 shopping malls across Canada.
In March 2013, H&R finished building the Bow, a $1.33-billion, two-million-square-foot office complex in Calgary. Encana Corp. has leased the entire building for 25 years.
In April 2013, H&R completed a $3.1-billion purchase of 27 properties from Primaris REIT. These assets include the 567,000-square-foot Dufferin Mall in Toronto’s west end.
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In March 2013, H&R finished building the Bow, a $1.33-billion, two-million-square-foot office complex in Calgary. Encana Corp. has leased the entire building for 25 years.
In April 2013, H&R completed a $3.1-billion purchase of 27 properties from Primaris REIT. These assets include the 567,000-square-foot Dufferin Mall in Toronto’s west end.
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ENCANA CORP. $23.88 (Toronto symbol ECA; Shares outstanding: 741.0 million; Market cap: $17.8 billion; TSINetwork Rating: Average; Dividend yield: 1.3%; www.encana.com) has agreed to buy Athlon Energy (New York symbol ATHL) for $7.1 billion U.S.
Athlon produces 30,000 barrels of oil equivalent (80% oil and 20% natural gas) a day from 1,138 wells in Texas’s Midland Basin. To put that in context, Encana produces 491,700 barrels (86% gas, 14% oil) a day.
Encana recently completed the sale of its remaining 54% stake in PrairieSky Royalty (Toronto symbol PSK) for $2.6 billion. The cash from this sale will help it pay for Athlon.
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Athlon produces 30,000 barrels of oil equivalent (80% oil and 20% natural gas) a day from 1,138 wells in Texas’s Midland Basin. To put that in context, Encana produces 491,700 barrels (86% gas, 14% oil) a day.
Encana recently completed the sale of its remaining 54% stake in PrairieSky Royalty (Toronto symbol PSK) for $2.6 billion. The cash from this sale will help it pay for Athlon.
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