More pipeline capacity would cut their risk

Article Excerpt

Ottawa’s move to buy the existing Trans Mountain pipeline in order to build its controversial expansion is good news for these three resources companies. Additional capacity to ship crude oil and refined fuels from Alberta to Vancouver should make it easier for producers to service their customers. For new buying, we prefer Cenovus and Teck over Encana. As U.S. shale gas output continues to rise, Encana’s exposure to natural gas prices adds risk. ENCANA CORP. $16 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 963.2 million; Market cap: $15.4 billion; Price-to-sales ratio: 3.6; Dividend yield: 0.5%; TSINetwork Rating: Average; www.encana.com) has four key properties: Montney (B.C.), Duvernay (Alberta), and Eagle Ford and Permian (both in Texas). In addition to natural gas, these fields produce large amounts of oil and natural gas liquids such as propane and butane. The company has now agreed to sell its new Pipestone facility in western Alberta to Keyera Corp. (Toronto symbol KEY). Pipestone will process natural gas and…