encana

VERESEN $11.74 (Toronto symbol VSN; Shares outstanding: 199.9 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Yield: 8.5%) owns pipelines, power plants and gas-processing facilities across North America. A major holding is 50% of the Alliance gas line, which runs 3,000 kilometres between Chicago and Fort St. John, B.C. Enbridge owns the other 50%. Veresen also owns the Alberta Ethane Gathering System, and Veresen and Enbridge together hold 85.4% of the Aux Sable NGL plant.

In February 2012, Veresen paid Encana Corp. $920 million for the Hythe/Steeprock natural gas gathering and processing complex. Encana signed a long-term deal to buy most of this facility’s gas.

To diversify beyond pipelines and gas-processing plants, Veresen continues to expand its power generation business. This includes hydroelectric facilities, wind farms, natural gas fired plants and waste-heat facilities.
...

ENCANA CORP. $18.09 (Toronto symbol ECA; Shares outstanding: 737.9 million; Market cap: $13.3 billion; TSINetwork Rating: Average; Dividend yield: 4.6%; www.encana.com) is one of North America’s largest natural gas producers.

In the three months ended June 30, 2013, Encana’s cash flow per share fell 16.7%, to $0.90 from $1.08 a year earlier (all amounts except share price and market cap in U.S. dollars). The decline came from lower realized gas prices.

The company continues to expand its hedging program, which helps shield it from volatile gas prices. For the rest of 2013, it has hedged roughly 75% of its expected output at $4.37 per thousand cubic feet, 19% higher than today’s price of $3.67. For 2014, Encana has hedged 55% of its forecast production at $4.19.
...

CANADIAN TIRE CORP., $92.02, Toronto symbol CTC.A, has announced more details of its plan to spin off most of its real estate holdings as a new, publicly traded real estate investment trust (REIT). This new REIT, called CT Real Estate Investment Trust, will hold 72% of Canadian Tire’s real estate assets, including 255 stores and one distribution centre. Canadian Tire will be CT REIT’s major tenant, accounting for 95.7% of its rental income. The average lease term is 16 years for the retail stores. Canadian Tire will also sign a new deal to lease the distribution centre for 17 years....

Cenovus Energy took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: Cenovus, which specializes in oil sands, and the new Encana (see box at right), which focuses on natural gas. Lower gas prices have pushed Encana’s shares down by about 68% since the split, but Cenovus’s stock is up about 12%.

The stock trades at higher multiples to earnings and cash flow than larger oil sands operations like Suncor and Imperial Oil....

ENCANA CORP. $18 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 737.7 million; Market cap: $13.3 billion; Price-to-sales ratio: 2.3; Dividend yield: 4.6%; TSINetwork Rating: Average; www.encana.com) aims to cut its exposure to low natural gas prices by producing more oil and natural gas liquids (NGLs), like butane and propane.

In the three months ended June 30, 2013, Encana’s oil and NGL output rose 68.8%, to 47,600 barrels a day from 28,200 a year earlier....

Encana has moved down over the last couple of years along with natural gas prices, but its effective hedging program has kept its cash flow high. That has left the company in a strong position to take advantage of the positive outlook for gas.

ENCANA CORP....

Growth by acquisition can be risky, as newly purchased companies may develop unforeseen problems, especially in an unsettled economy. But Pembina lowered that risk with last year’s purchase of a rival in a business where it’s already a leader. Meanwhile, Veresen aims to add power plants with long-term contracts already in place.

PEMBINA PIPELINE $32.36 (Toronto symbol PPL; Shares outstanding: 310.3 million; Market cap: $10.1 billion; TSINetwork Rating: Average; Div....

H&R REIT $20.96 (Toronto symbol HR.UN; Units outstanding: 268.3 million; Market cap: $5.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.4%; www.hr-reit.com) owns stakes in 41 office buildings, 112 industrial properties and 165 shopping malls across Canada....

TECK RESOURCES LTD., $25.11, Toronto symbol TCK.B, reported lower results this week due to weaker metallurgical coal and copper prices. Even so, the latest revenue and earnings beat the consensus forecasts. In the three months ended June 30, 2013, Teck’s earnings fell 50.5%, to $197 million, or $0.34 a share. These figures exclude unusual items, such as foreign exchange losses and asset writedowns. On this basis, the latest earnings beat the consensus estimate of $0.31 a share. A year earlier, Teck earned $398 million, or $0.68 a share. Revenue fell 16.0%, to $2.2 billion from $2.6 billion. Even with the decline, the latest figure also beat the consensus estimate of $2.1 billion....

H&R REIT $22.11 (Toronto symbol HR.UN; Units outstanding: 258.3 million; Market cap: $16.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.8%; www.hr-reit.com) owns stakes in 40 office buildings, 112 industrial properties and 163 shopping malls across Canada. The trust has a 99.0% occupancy rate.

In the three months ended March 31, 2013, the REIT’s revenue rose 21.2%, to $222.6 million from $183.0 million a year earlier. Cash flow rose 24.3%, to $90.0 million from $72.4 million. Cash flow per unit gained 12.5%, to $0.45 from $0.40, on more units outstanding.

In March 2013, H&R finished building The Bow, a $1.33-billion, two-million-square-foot office building in Calgary. Encana Corp. has already leased the entire building for 25 years.
...