encana

ENCANA $20.75 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $15.3 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) has come under fire over media reports that the company colluded with U.S.-based Chesapeake Energy Corp. (New York symbol CHK) with regard to various land deals in Michigan in 2009 and 2010.

The companies are alleged to have agreed to avoid bidding against each other in order to keep prices of this land low. Now, recent discoveries of shale gas in Michigan have spurred strong demand for these properties for exploration purposes. (Chesapeake Energy is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.)

Encana is now investigating these allegations, which are also likely to spur a number of class-action lawsuits. However, anti-competitive lawsuits are often difficult to prove.

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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ ENCANA CORP. $20 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $14.7 billion; Price-to-sales ratio: 1.6; Dividend yield: 4.1%; TSINetwork Rating: Average; www.encana.com) is one of North America’s largest natural gas producers. Its reserves should last over 11 years.

The company 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 projects, oil refineries and conventional natural gas.

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Natural gas prices recently dropped below $2 U.S. per million British thermal units (BTUs), a 10-year low. Prices have since moved up somewhat, to $2.87. Shale gas discoveries continue to increase supply. At the same time, demand is slowing due to the weak global economy. Shale gas is trapped in rock formations. To extract it, producers pump water and chemicals into the rock. This fractures the rock and releases the natural gas. Gas production is also growing as a by-product of drilling for more profitable crude oil and natural gas liquids, such as propane and butane....

ENCANA CORP. (Toronto symbol ECA; www.encana.com) is one of North America’s largest natural gas producers. Its reserves should last over 11 years. The company 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 projects, oil refineries and conventional natural gas....

ENCANA CORP. $20 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $14.7 billion; Price-to-sales ratio: 1.6; Dividend yield: 4.1%; TSINetwork Rating: Average; www.encana.com) is one of North America’s largest natural gas producers. Its reserves should last over 11 years. The company 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 projects, oil refineries and conventional natural gas. Low gas prices weighed on results ...

ENCANA $20.75 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $15.3 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.encana.com) has come under fire over media reports that the company colluded with U.S.-based Chesapeake Energy Corp. (New York symbol CHK) with regard to various land deals in Michigan in 2009 and 2010. The companies are alleged to have agreed to avoid bidding against each other in order to keep prices of this land low. Now, recent discoveries of shale gas in Michigan have spurred strong demand for these properties for exploration purposes. (Chesapeake Energy is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive investing.) Encana is now investigating these allegations, which are also likely to spur a number of class-action lawsuits. However, anti-competitive lawsuits are often difficult to prove....

CANADIAN PACIFIC RAILWAY LTD., $74.72, Toronto symbol CP, has appointed Hunter Harrison as a director and its new chief executive officer. Mr. Harrison is the former CEO of Canadian National Railway Co. (Toronto symbol CNR). CP feels Mr. Harrison will duplicate his success at CN, which included improving efficiency and speeding up deliveries. New trains and the recent drop in oil prices should also boost CP’s profitability....

ENCANA CORP., $20.37, Toronto symbol ECA, continues to produce more oil and natural gas liquids (NGLs), such as ethane, propane and butane. NGLs tend to be priced at the same level as crude oil. The company is shifting toward oil and NGLs because low natural gas prices are cutting profits at its regular gas business, which supplied 95% of its overall production in the first quarter of 2012. Encana does not plan to cut its natural gas production. This week, Encana announced that it will spend an extra $600 million (all amounts except share price in U.S. dollars) on its oil and NGL properties this year. The company had originally planned to spend $2.9 billion on all of its capital projects in 2012....

ENBRIDGE INC. $39.40 (Toronto symbol ENB; Shares outstanding: 784.9 million; Market cap: $30.9 billion; TSINetwork Rating: Above Average; Dividend yield: 2.9%; www.enbridge.com) has announced several upgrades to its oil pipelines. One of these improvements is a plan to reverse the flow of its pipeline between Montreal and Sarnia, Ontario. Right now, the line pumps oil from Montreal to Sarnia. Reversing the flow will let Enbridge supply more oil from western Canada to refineries in Ontario and Quebec. That will improve demand from refiners, because it will let them cut their reliance on higher-priced imported oil. Enbridge also plans to expand other pipelines to take better advantage of rising production of shale oil in the Bakken area, which covers parts of Montana, North Dakota and Saskatchewan....

H&R REAL ESTATE INVESTMENT TRUST $24.19 (Toronto symbol HR.UN; Units outstanding: 180.8 million; Market cap: $4.4 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.8%; www.hr-reit.com) owns stakes in 40 office buildings, 117 industrial properties and 133 retail properties across Canada. H&R has a 99.1% occupancy rate.

In the three months ended December 31, 2011, the REIT’s revenue rose 10.9%, to $178.2 million from $160.7 million a year earlier. Cash flow rose 10.1%, to $67.8 million from $61.6 million. Cash flow per unit fell 2.4%, to $0.40 from $0.41, on more units outstanding.

The REIT recently made two major purchases in the U.S. In October 2011, it bought Two Gotham Center in New York City for $415.5 million U.S. The newly built, 22-storey tower is leased to the City of New York for 20 years.

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