December 14, 2018

Encana Corp (ECA)

 

 

Encana Corporation (ECA) is an absolute natural gas giant (the second largest natural gas company in North America), with a market capitalization of over $14 billion.  The predecessors to the current version of Encana can trace their lineage back over 125 years.  They have been an integral part of developing Canada’s West since the very exploration of the region.  Encana (ECA) in its current form was created in 2002 when PanCanadian Energy Corporation and the Alberta Energy Company Ltd, merged.  External evaluators have estimated they energy titan’s natural gas reserves to be in the neighbourhood of 50 years of drilling inventory.  This gives the company the largest and longest resource life base of reserves in their history, and one of the largest of any natural gas company in the world.  Going forward, Encana (ECA) has stated that their focus will be to, “Unlock the tremendous value unrecognized within our asset base.”  Simply put, the raw materials are in place for Encana to succeed over the long-term, not it can focus on operating at peak efficiency and re-investing capital in the most advantageous way possible.  The company hopes to significantly increase their natural gas and oil projection substantially within the next few years.  In addition to the production side of their operations, Encana (ECA) is a major player in the overall lobby for natural gas energy expansion in the fields of power generation, transportation, and industry.

 

Encana’s history truly began all the way back in 1881 when the Canadian Government commissioned the Canadian Pacific Railway (CPR) to build a railroad across the continent.  As part of their payment, the railway agreed to take over 25 million acres in land, and that parcel included the surface and mineral rights in many places as well.  In 1883 a crew that was working for the railway stumbled upon a natural gas deposit when drilling for water near Medicine Hat Alberta.  This would be a harbinger of things to come in Western Canada.  In 1958 CPR formed the Canadian Pacific Oil and Gas Company (CPOG) in order to pursue exploration and energy production in the area.  This company would eventually become Encana (ECA).  In more recent history, Encana decided to split operations into two separate entities.  The original company would carry on as a purely natural gas conglomerate, while the new spin-off – Cenovus Energy Inc. would take all of the integrated oil assets and begin life as its own separate company.

In 2011 Ecana (ECA) sold its Fort Lupton, Colorado, natural gas processing facility to Western Gas Partners for over $300 million.  Their main capital investment was to purchase a 30% interest in the future Kitimat natural gas export terminal which includes a substantial amount of pipeline-related infrastructure.  They also engaged in a fairly public dispute with the U.S. Environmental Protection Agency over their controversial drilling methods.  The company contends that the EPA is suing faulty methodology.  “It is our belief the EPA made critical mistakes and misjudgments in almost every step in the process – from the way it designed the study, to the way it drilled and completed its wells, to the way it collected and interpreted the data, and to its decision to release a preliminary draft report without independent third-party review,” stated David Steward, Head of Environment, Health and Safety for Encana’s Wyoming branch.

 

Shares of Encana (ECA) recently closed at $19.58.  This is near the company’s 52-week low of $18.40 and substantially off of the 2011 highs of $34.25.  The company has managed to maintain a dividend of $0.82 which is gives it a yield of 4.3%.  This is the ideal energy play going forward if you believe that natural gas will rebound be a large part of the energy landscape in the near future.  Encana has truly massive reserves, and its large size allows for widespread innovation and efficiency breakthroughs.  If you believe that energy infrastructure will move away from natural gas, obviously looking at one of Canada’s other major energy companies would be in your best interests.

 

Encana (ECA) Technical Analysis:

ECA trend analyis

 ECA is trading on a down trend, CLICK HERE to get your free trend analysis report on ECA.

 

Encana (ECA) Stock Graph:

TSE ECA

Encana (ECA) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
ECAEncana Corp31.652.4439.360.354149517.83074-37.27226