Encana buys a U.S. producer

Article Excerpt

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. worth of common shares to Newfield investors. If you include Newfield’s debt, the takeover is worth $7.7 billion U.S. That’s equal to 95% of Encana’s current $11.1 billion market cap. Still, the deal will increase Encana’s production by roughly 53%. It will also let it cut $250 million U.S. from its annual costs, and help it buy back $1.5 billion U.S. of its shares. The company will also increase its quarterly dividend by 25.0%. The new annual rate of $0.075 U.S. yields 0.7%. Encana is still a hold. hold…

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