encana

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ENCANA CORP. $9.15 (Toronto symbol ECA; Shares outstanding: 1.5 billion; Market cap: $14.3 billion; TSINetwork Rating: Average; Dividend yield: 1.1%; www.encana.com) operates four key properties: Montney (B.C.), Duvernay (Alberta), and Eagle Ford and Permian (both in Texas)....

The best way to cut your risk when investing in oil and gas stocks is to focus on companies with long-lasting reserves. We also look for producers with low operating costs. That helps them stay profitable when oil prices decline.


We analyze three companies below: Encana and Cenovus offer strong long-term prospects; and while Pengrowth’s focus on its new oil sands project is a plus, its high debt load is a major risk factor.


ENCANA CORP....

ENCANA CORP. $9.20 (Toronto symbol ECA; Shares outstanding: 963.1 million; Market cap: $8.8 billion; TSINetwork Rating: Average; Dividend yield: 0.9%; www.encana.com) recently agreed to acquire Newfield Exploration for $7.7 billion U.S. Newfield operates shale oil and natural gas wells in the Stack and Scoop fields of Oklahoma, the Bakken region of North Dakota and Utah’s Uinta basin.


Encana aims to complete the merger in February 2019....

In response to weaker oil and natural gas prices, Encana has decided to aggressively expand in the U.S., while Cenovus is cutting its output.


We’re confident that both approaches will pay off. However, Encana’s big, newly announced acquisition increases its risk, which is why the stock dropped sharply on the news....

ENCANA CORP. $11.47 (Toronto symbol ECA; Shares outstanding: 963.1 million; Market cap: $10.9 billion; TSINetwork Rating: Average; Dividend yield: 0.7%; www.encana.com) fell recently after it agreed to buy Newfield Exploration Company (New York symbol NFX).


Newfield operates shale oil and natural gas wells in the Stack and Scoop fields of Oklahoma, the Bakken region of North Dakota and Utah’s Uinta basin.


Encana will issue $5.5 billion U.S....

BIRCHCLIFF ENERGY $4.82 (Toronto symbol BIR; TSINetwork Rating: Speculative) (403-261-6401; www.birchcliffenergy.com; Shares outstanding: 263.0 million; Market cap: $1.3 billion; Dividend yield: 2.0%) explores for, develops and produces oil and gas, mainly in the Peace River Arch area of both Alberta and B.C....

ENCANA CORP. $15 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 956.3 million; Market cap: $14.3 billion; Price-to-sales ratio: 3.2; Dividend yield: 0.5%; TSINetwork Rating: Average; www.encana.com) has agreed to sell its shale oil properties in the San Juan Basin in northern New Mexico....

Both crude oil and natural gas prices have moved up since the start of 2018. Still, we feel U.S. sanctions on Iranian oil will further lift oil prices. At the same time, rising North American production of shale natural gas should hurt overall gas prices. Due to those factors, we prefer oil companies like Cenovus over gas producers like Encana.


ENCANA CORP....