QUOTE AND NEWS
Benzinga  Mar 3  Comment 
Below are the top major integrated oil & gas stocks on the NYSE in terms of gross margin. The trailing-twelve-month gross margin at Encana Corporation (NYSE: ECA) is 84.50%. Encana's revenue for the same period is $7.19 billion. The...
Forbes  Mar 2  Comment 
Investors in EnCana Corp (NYSE: ECA) saw new options begin trading this week, for the October 16th expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 228 days until...
Forbes  Mar 2  Comment 
Can an oil company really make acquisitions at the tippy top of the market and still somehow make money after the oil price falls by half?
TheStreet.com  Feb 25  Comment 
NEW YORK (TheStreet) -- Shares of Encana were gaining 3.8% to $13.52 Wednesday after the oil company reported its fourth quarter results and lowered its 2015 capital expenditure forecast as oil prices rise. Encana reported earnings of 5 cents...
Wall Street Journal  Feb 25  Comment 
Encana Corp. reported a fourth-quarter profit on Wednesday that fell well short of analyst expectations and cut its capital-spending and cash flow guidance for the year due to the continued slump in energy prices.
Reuters  Feb 25  Comment 
Encana Corp, Canada's largest natural gas producer, slashed its 2015 capital budget by a quarter on Wednesday in response to a slump in global crude oil...
TheStreet.com  Feb 4  Comment 
NEW YORK (TheStreet) -- Shares of oil and natural gas company Encana  fell 4.58% to $13.54 in morning trading Wednesday as oil prices plunged yet again to give up much of Tuesday's gains. WTI crude was down 4.11% to $50.87 at 10:22 a.m.,...
TheStreet.com  Feb 3  Comment 
NEW YORK (TheStreet) -- Shares of Encana Corp. are up 5.46% to $13.72 today as oil rose further on Tuesday on solid U.S. manufacturing data and a weaker dollar, Reuters reports. West Texas Intermediate for March delivery was up 2.64% to...




 

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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