encana

TECK RESOURCES LTD., $43.77, Toronto symbol TCK.B, earned a record $908 million in the three months ended March 31, 2010. That’s up 276.8% from $241 million a year earlier. Earnings per share rose 206.0%, to $1.53 from $0.50, on more shares outstanding. One-time items, including the sale of two gold mines in Turkey and a one-third interest in a B.C. hydroelectric dam, boosted the company’s earnings in the latest quarter. Without one-time items, Teck’s earnings would have fallen 4.2%, to $205 million from $214 million. Teck’s cash flow per share fell 42.5%, to $0.70 from $1.22. However, its revenue rose 13.8%, to $1.9 billion from $1.7 billion, largely because of rising copper prices....

CENOVUS ENERGY INC., $29.16, Toronto symbol CVE, took its present form on December 1, 2009. That’s when EnCana Corp. split itself into two separate companies. One kept the EnCana name and “ECA” trading symbol, and focuses on unconventional natural gas. The other, Cenovus, specializes in oil-sands projects, oil refineries and conventional natural gas. Cenovus rose 2% this week. The gain was mainly in response to a big purchase in the Alberta oil patch: Chinese state-owned oil company Sinopec bought a 9.03% stake in the massive Syncrude oil-sands project for $4.65 billion U.S. The purchase price was roughly 20% higher than the consensus estimate. That helped draw investor attention to all oil-sands stocks, including Cenovus....

ENCANA CORP $32.25 (Toronto symbol ECA; Shares outstanding: 747.9 million; Market cap: $24.1 billion; SI Rating: Average; Dividend yield: 2.5%) has announced plans to double its natural-gas production over five years. The company is particularly interested in producing more gas at its Haynesville shale-gas property in Louisiana. (Shale gas is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas.) To achieve its higher production goals, EnCana will spend $4.5 billion on exploration and capital upgrades in 2010 (all amounts except share price in U.S. dollars). That’s $750 million more than it had previously estimated....

ENCANA CORP., $31.37, Toronto symbol ECA, fell 8% this week, mainly because the company announced a plan to double its natural-gas production over five years. This announcement pushed down EnCana’s share price because the weak economy has hurt gas demand and depressed prices. Investors worry that adding to existing natural-gas inventories could push prices down further. However, EnCana’s new drilling and extracting technologies are lowering its production costs. That should give it an advantage over its competitors. The company is particularly interested in producing more gas at its Haynesville shale-gas property in Louisiana. (Shale gas is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas.)...

ENCANA CORP. $35 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 751.3 million; Market cap: $26.3 billion; Price-to-sales ratio: 2.3; Dividend yield: 2.3%; SI Rating: Average) focuses on developing unconventional natural-gas properties. The company has several landholdings in the Horn River Basin in northeastern B.C. Early drilling indicates that this area contains large amounts of shale gas, which is natural gas that is trapped in rock formations. To extract it, companies must pump water and chemicals into the rock. This fractures the rock and releases the natural gas. EnCana has recently signed a contract with Korea Gas Corp. Under this deal, Korea Gas will contribute $565 million over the next three years to help develop some of EnCana’s Horn River properties. In return, Korea Gas will receive half of any production, which should begin in 2017. To put this deal in context, EnCana earned $1.8 billion U.S., or $2.35 U.S. a share, in 2009. EnCana is a buy....

Exchange-traded funds (ETFs) are one of the more benign financial innovations to come along in the past few years. ETFs are set up to mirror the performance of a stock-market index or sub-index. They hold a more-or-less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. Investors can buy them on margin or sell them short. The best ETFs offer well diversified, tax-efficient portfolios with exceptionally low management fees....

EnCana gets most of its natural gas from unconventional reserves. Accessing these reserves is complicated, but they have long lives and stable output. The company already has proven reserves to last 12 years or more. But its reserves will expand as it develops its 15.6 million acres of landholdings. EnCana’s cash flow depends on gas prices, which have been depressed due to higher gas production and the weak economy. However, the long-term outlook is positive. ENCANA CORP $35.13 (Toronto symbol ECA; Shares outstanding: 750.4 million; Market cap: $26.4 billion; SI Rating: Average; Dividend yield: 2.3%) owns natural-gas properties in Alberta, B.C., Colorado, Wyoming and Texas that account for 4% of North America’s daily production. These holdings include promising shale-gas properties in the Haynesville region in the U.S. southeast and B.C.’s Horn River area. Lower gas prices pushed down EnCana’s 2009 earnings by 32.2%, to $1.8 billion, or $2.35 a share. In 2008, it earned $2.6 billion, or $3.47 a share. (All amounts except share price in U.S. dollars.) Cash flow per share fell 20.9%, to $6.68 from $8.45....

Exchange-traded funds (ETFs) may have a place in your portfolio. That’s because, unlike many other financial innovations, they don’t load you up with heavy management fees, or tie you down with high redemption charges if you decide to get out of them. Instead, they give you a low-cost, flexible, convenient alternative to mutual funds. ETFs trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You’ll have to pay brokerage commissions to buy and sell ETFs, but you will quickly make these back because of the low management fees. Shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital-gains bills generated by the yearly distributions most conventional mutual funds pay out to unitholders....

CENOVUS ENERGY $26.16 (Toronto symbol CVE; Shares outstanding: 751.3 million; Market cap: $19.7 billion; SI Rating: Extra Risk; Dividend yield: 3.1%) holds the more aggressive assets from the EnCana split on December 1, 2009. Cenovus’ oil-sands projects, oil refineries and conventional natural gas remain profitable. But extracting oil from oil sands is a hugely capital-intensive enterprise. Oil sands projects can become unprofitable if oil prices fall. Cenovus earned $1.3 billion, or $1.74 a share, in 2009 (all amounts except share price in U.S. dollars). That’s down 19.5% from $1.6 billion, or $2.17 a share, in 2008. These figures exclude unusual items. Cash flow per share fell 20.0%, to $3.29 from $4.11....

CANADIAN TIRE CORP., $52.29, Toronto symbol CTC.A, fell 3% this week after the company reported lower-than-expected 2009 earnings. During the year, Canadian Tire earned $348.0 million, or $4.26 a share. That’s down 12.2% from $396.4 million, or $4.86 a share, in the prior year. These figures exclude several one-time items, including gains and losses on sales of securities by Canadian Tire’s finance division. The company also paid a penalty for redeeming debentures before their expiry date. That will let it take advantage of the improvement in the credit markets to issue new bonds at lower interest rates. Without these one-time items, analysts were expecting Canadian Tire to earn $4.34 a share. Revenue fell 4.8%, to $8.7 billion from $9.1 billion. Overall sales at the company’s main retail division, which consists of its Canadian Tire stores and the PartSource auto-parts chain, fell 2.8%, while same-store sales were 4.2% lower. Weak sales of electronics offset stronger sales of household-cleaning, kitchen and pet-care goods. As well, a lack of snow in Ontario and Quebec hurt sales of winter merchandise, such as snow shovels....