Encana looks to Asia for growth

Article Excerpt

ENCANA CORP. $32 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 736.3 million; Market cap: $23.6 billion; Price-to-sales ratio: 2.5; Dividend yield: 2.4%; TSINetwork Rating: Average; www.encana.com) is one of North America’s largest natural-gas producers. The company prefers to focus on large unconventional reserves, including 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. At current production rates, Encana’s proven reserves should last 12 years. Encana has lagged behind Cenovus Encana took its current form when the old EnCana Corp. split itself into two separate companies in December 2009. Since then, the new Encana has gained just 8%. The other company, Cenovus Energy Inc. (Toronto symbol CVE), which focuses on oil-sands projects, has jumped 38%. New sources of shale gas have increased natural-gas supplies and pushed down prices. As a result, Encana’s earnings fell 62.4% in 2010,…