encana

ENCANA CORPORATION $19.79 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $14.6 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 4 . 0 % ; www.encana.com) is selling its 30% stake in a proposed liquefied natural gas (LNG) terminal in Kitimat, B.C., to Chevron Corp. (New York symbol CVX).

LNG plants are not Encana’s area of expertise, so it has decided to let Chevron focus on building and operating the facility.

Chevron’s experience with similar LNG plants in Australia should help speed up the Kitimat project and let it conclude contract negotiations with Asian LNG buyers.

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iShares S&P/TSX Capped Energy Index Fund, $15.61, symbol XEG on Toronto (Shares outstanding: 56.0 million; Market cap: $874.2 million; ca.ishares.com), aims to mirror the performance of the S&P/TSX Capped Energy Index, which is made up of the largest-capitalization energy stocks on the Toronto exchange. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.60%. It yields 1.5%. iShares S&P/TSX Capped Energy Index Fund’s top 10 holdings are Suncor Energy, 17.6%; Canadian Natural Resources, 12.0%; Cenovus Energy, 8.9%; Nexen, 5.3%; Crescent Point Energy, 5.2%; Encana Corp., 4.9%; Talisman Energy, 4.7%; Imperial Oil, 3.9%; Canadian Oil Sands Trust, 3.4%; and Husky Energy Trust, 3.3%. We continue to think most investors are better off investing in individual companies as part of a well-balanced and diversified portfolio rather than in funds that focus on narrow market sectors. As well, indexes that cap their holdings at a certain level can cut your return by reducing the contribution from top performers if they rise to make up more than the capped limit....

TRANSCANADA CORP., $46.80, Toronto symbol TRP, hopes the U.S. State Department will approve its proposed Keystone XL pipeline in the next few months. Nebraska’s governor recently approved the company’s plan to reroute the line around environmentally sensitive areas of the state. When completed, Keystone XL would pump oil from Alberta to the U.S. Gulf Coast. The entire project would cost $5.3 billion U.S. It could begin operating in late 2014 or early 2015. So far, TransCanada has invested $1.8 billion U.S. in Keystone XL. Meanwhile, TransCanada’s earnings fell 14.7% in 2012, to $1.3 billion, or $1.89 a share. These figures exclude unusual items, such as gains and losses on contracts the company uses to lock in prices for natural gas and electricity. On that basis, the latest earnings missed the consensus estimate of $1.98 a share. In 2011, it earned $1.6 billion, or $2.22 a share....

ENCANA CORPORATION $19.79 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $14.6 billion; TSINetwork Rating: A v e r a g e ; D i v i d e n d y i e l d : 4 . 0 % ; www.encana.com) is selling its 30% stake in a proposed liquefied natural gas (LNG) terminal in Kitimat, B.C., to Chevron Corp....

ENCANA CORP. $19.34 (Toronto symbol ECA;Shares outstanding: 735.4 million; Market cap: $14.2billion; TSINetwork Rating: Average; Dividendyield: 4.1%; www.encana.com) is one of NorthAmerica’s largest natural gas producers. Its provenreserves should last over 14 years.

In the three months ended September 30, 2012,Encana’s cash flow per share fell 22.5%, to $1.24from $1.60 a year earlier (all amounts except shareprice and market cap in U.S. dollars).

Natural gas accounts for 95% of Encana’s production.In response to falling gas prices, the companylowered its output during the quarter; this was themain reason for the lower cash flow.
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VERESEN $11.97 (Toronto symbol VSN; Sharesoutstanding: 197.5 million; Market cap: $2.4 billion;TSINetwork Rating: Average; Yield: 8.4%) ownspipelines, power plants and natural gas processingfacilities across North America. One of its majorholdings is 50% of the Alliance gas pipeline, whichruns 3,000 kilometres between Chicago and Fort St.John, B.C. Enbridge owns the other 50%. Thecompany also owns the Alberta Ethane GatheringSystem, and Veresen and Enbridge together hold85.4% of the Aux Sable natural gas liquids (NGL)plant.

In December 2011, Veresen paid Encana Corp.$920 million for the Hythe/Steeprock natural gasgathering and processing complex in the Montneyregion of B.C. and Alberta. Encana also signed along-term deal to buy most of this facility’s gas.

In the quarter ended September 30, 2012, cashflow rose 12.9%, to $61.4 million from $54.4 milliona year earlier. Cash flow per share fell 6.1%, to $0.31from $0.33, on more shares outstanding.

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Encana took its present form on December 1, 2009, after the old EnCana Corp. split itself into two new companies: the new Encana, which focuses on natural gas, and Cenovus Energy (Toronto symbol CVE), which specializes in oil sands.

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In next week’s Successful Investor Hotline, we’ll reveal our #1 stock pick for 2013. Don’t miss this unique opportunity to profit. ENCANA CORP., $20.16, Toronto symbol ECA, is selling its 30% stake in a proposed liquefied natural gas (LNG) terminal in Kitimat, B.C., to Chevron Corp. (New York symbol CVX). The deal includes Encana’s stake in related pipelines and gas properties in B.C. However, Encana will still ship its gas through Kitimat when the terminal is completed. Chevron is also buying a further 30% of this project from EOG Resources Canada Inc. Following these deals, Chevron will sell 10% to Apache Corp. (New York symbol APA). As a result, Chevron and Apache will each own 50%. (Chevron and Apache are recommendations of Wall Street Stock Forecaster, our newsletter that focuses on U.S. stocks.)...

PLEASE NOTE: One week from today, on January 11, 2013, just after the stock market closes at 4:30 p.m. Toronto time, we will reveal our #1 Canadian Stock of 2013 to subscribers of The Successful Investor. Our #1 pick for 2012, CP Rail, has surged 54% in the past year and is still on the rise. You can be among the first to hear about our #1 Pick for 2013. Because you’re a loyal subscriber, we are happy to offer you a bargain-priced, no-risk introduction to The Successful Investor. It gives you the first month—and the 2013 Stock of the Year—FREE. But you must act now. Click here. CHEVRON CORP., $110.50, New York symbol CVX, has agreed to purchase 50% of a proposed liquefied natural gas (LNG) terminal in Kitimat, B.C., in a series of transactions. The deal includes related pipelines and gas properties in the province. The company will purchase the 30% stakes held by ENCANA CORP. $20.40, New York symbol ECA, and EOG Resources Canada Inc. Following these deals, Chevron will sell 10% to APACHE CORP., $83.20, New York symbol APA. As a result, Chevron and Apache will each own 50%....

Growth by acquisition can be risky. Newlypurchased companies may develop unforeseen problems,especially in an unsettled economy. ButPembina has lowered that risk with its latest deal bypurchasing a rival in a business where it’s already aleader. Meanwhile, Veresen aims to add plants withlong-term contracts already in place.

PEMBINA PIPELINE $28.71 (Toronto symbolPPL; Shares outstanding: 292.3 million; Market cap:$8.4 billion; TSINetwork Rating: Average; Dividendyield: 5.6%; www.pembina.com) owns pipelinesystems that transport half of Alberta’s conventionaloil production, 30% of the natural gas liquids(NGLs) produced in western Canada and virtually allof B.C.’s conventional oil output.

In the quarter ended September 30, 2012, Pembina’srevenue rose 171.2%, to $815.3 million from$300.6 million a year earlier....