QUOTE AND NEWS
SeekingAlpha  Aug 26  Comment 
By Alpha Strategist: Encana Corporation (NYSE:ECA) is in a transition phase. The leading North American energy producer is focused on strengthening its portfolio of resource plays producing natural gas, oil, and NGLs. The company has a history of...
Commodity Online  Aug 26  Comment 
Farmers and traders have expressed their disappointment over bringing the commodity under Essential Commodities Act (ECA) without declaring the minimum support price(MSP). They also demanded concessions on rail freight.
Reuters  Aug 20  Comment 
(Encana official corrects quote in fifth paragraph changing "unstimulated" to "understimulated.")
Market Intelligence Center  Aug 20  Comment 
The patented options-trade picking algorithms used by MarketIntelligenceCenter.com found a trading opportunity with EnCana Corp (ECA) that should provide a 4.84% return in just 150 days. Sell one Jan. '15 call at the $21.00 level for each 100...
Market Intelligence Center  Aug 19  Comment 
MarketIntelligenceCenter.com's patented algorithms have identified an attractive covered-call trade on EnCana Corp (ECA). Look at the Jan. '15 $21.00 covered call for a net debit in the $19.71 area. This trade has a duration of 151 days. The...
SeekingAlpha  Aug 13  Comment 
ByRichard Zeits: Last week Goodrich Petroleum (NYSE:GDP) delivered another information-rich progress report for the Tuscaloosa Marine Shale play. The report is by far the most substantial operational update for the play since April, given that...
Market Intelligence Center  Aug 13  Comment 
After Tuesday’s trading in EnCana Corp (ECA) MarketIntelligenceCenter.com's option trade-picking algorithms uncovered a trade that offers a 6.22% or 14.46% (for comparison purposes only), while providing 8.77% downside protection. The trade is a...
Market Intelligence Center  Aug 11  Comment 
After Friday’s trading in EnCana Corp (ECA) MarketIntelligenceCenter.com's patented algorithms uncovered a trade that offers a 5.85% return or 13.42% on an annualized basis (for comparison purposes only), while providing 8.53% downside...
Market Intelligence Center  Aug 8  Comment 
EnCana Corp (ECA) was selected by MarketIntelligenceCenter.com’s trade-picking algorithms today after trading between $21.05 and $21.43 on Thursday before closing at $21.30. A diagonal spread using a long position in the Jan. '16 $13.00 call and...
SeekingAlpha  Jul 30  Comment 
By Oil And Gas Interest: Q2 is out for Encana (NYSE:ECA) and with it came a major operational update. The quarterly earnings arrived slightly below expectations. But the more important news was the progress made towards achieving a more balanced...




 

Encana (NYSE:ECA) engages in the the production of natural gas from natural gas formations, including tight gas, shales and coal bed methane (CBM). [1] The companies segments are divided into two geographic regions: a Canadian Division and a USA Division. Relatively low natural gas prices have had a significant impact on earnings while also limiting EnCana's capital expenditures as will as its expansion plans.[2] In addition, the company engages in unconventional gas production, which is facing regulatory scrutiny in North America.[3]


Business Growth

Revenue growth can be partially attributed to acquisitions of various North American land and properties in 2010.[4] However, a weak natural gas pricing environment has partially offset Encana's expansions by reducing revenues, profitability, and overall return on production.[5] In 2010, Encana reported annual net income of $1.5 billion on $8.8 billion in revenues, representing a 19.4% decline on net income and a 20% decline in revenue.[6]

Trends and Forces

Weak natural gas prices and supply glut reduce Encana's return on production

Natural gas future prices have averaged approximately $4.2 per million BMU over the first months of 2011.[7] Since 2008, prices have declined by 52% due to high supply and relatively low demand in North America. Encana's operations are very concentrated on natural gas production, and its profitability and revenues have decline in a directionally consistent manner with natural gas prices.[8]

In response to a weak environment, Encana's management is curtailing capital expenditures in an effort to reduce costs.[9] To further support its growth, Encana has sought to engage in partnerships to develop and finance its properties.[10] However, these partnerships and other forms of external financing have the potential of making Encana dependent on these sources to fund acquisitions. In addition, partnerships and other asset sales have reduced the company's portfolio of natural gas properties significantly.[11]

Energy Demand from Overseas has of potential of driving future natural gas demand in North America

As several Asian and South America economies growth, their demand for energy in the form of coal, natural gas, and oil expand as well.[12] Because natural gas provides an environmentally "cleaner" alternative to coal, the economies of China, India, and Brazil are projected to require substantial amounts of natural gas in the future.[13] Many of these countries have substantial resources. The U.S. Energy Information Administration estimates that China has 1.28 quadrillion cubic feet of technically recoverable shale-gas resources, among the most in the world. While China is drafting plans to develop its shale-gas reserves, many Chinese energy companies like PetroChina Company (PTR) are seeking to partner with North American gas producers to secure future supplies.[14]

For producers like Encana, these partnerships have the potential of providing the financing necessary to grow their businesses and develop their currently owned fields. Other Asian companies like Petroliam Nasional Bhd, Barrick Gold Corp (TSE:ABX), and Korea Gas Corp (SEO:A036460) have also sought energy and mineral deals with North American companies.[15] However, these deals are not a sure thing, even after the partnership has been signed. In 2011, PetroChina Company (PTR) ended a $5.5 billion deal with Encana.[16]

Competition

Encana's competitors are independent oil and gas producers in North America. Because weak gas prices have reduced the revenues and capital expenditures of many of its competitors, several US and Canadian companies are seeking to strike deals with a limited number of Oil & Gas Majors or foreign companies in order to finance their expansions.[17]

In Canada, Encana competes with

In the US, Encana competes with

References

  1. Reuters: Encana Corp Company Profile as of June 2011
  2. Reuters: Encana Corp Company Profile as of June 2011
  3. Reuters: Encana Corp Company Profile as of June 2011
  4. Morningstar.com: Company Overview and Financials, June 2011
  5. Morningstar.com: Company Overview and Financials, June 2011
  6. Morningstar.com: Company Overview and Financials, June 2011
  7. Encana Investor Relations: 2010 Annual Report
  8. Encana Investor Relations: 2010 Annual Report
  9. Encana Investor Relations: 2010 Annual Report
  10. Encana Investor Relations: 2010 Annual Report
  11. Encana Investor Relations: 2010 Annual Report
  12. San Francisco Chronicle:Encana Faces Slower Growth Without Partner on Shale-Gas Output, June 2011
  13. San Francisco Chronicle:Encana Faces Slower Growth Without Partner on Shale-Gas Output, June 2011
  14. San Francisco Chronicle:Encana Faces Slower Growth Without Partner on Shale-Gas Output, June 2011
  15. San Francisco Chronicle:Encana Faces Slower Growth Without Partner on Shale-Gas Output, June 2011
  16. San Francisco Chronicle:Encana Faces Slower Growth Without Partner on Shale-Gas Output, June 2011
  17. Bloomberg: Canada's oil deal falling most since 2003 as crude rallies, June 2011
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