Two energy producers, but just one is a buy

Article Excerpt

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. Cenovus, on the other hand, will likely get a boost from Alberta’s move to cut oil production, which should help to stabilize prices for Canadian Western crude. ENCANA CORP. $8.43 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 952.5 million; Market cap: $8.0 billion; Price-to-sales ratio: 1.5; Dividend yield: 1.0%; TSINetwork Rating: Average; operates 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. Encana will now buy Newfield Exploration Co. (New York symbol NFX). That firm operates shale oil and natural gas wells in the Stack and Scoop fields…

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