Morningstar Rating

Stock Research and Analysis

by David Meats

Bulls Say

Management's focus on liquids production will boost volumes and revenue and should favorably affect returns.
NAV models underestimate fair value because they are based on trailing well performance data. Future performance will improve as the company climbs the learning curve.
LNG liquefaction will generate incremental natural gas demand following 2016, driving up realized prices. Encana's natural gas assets are ideally situated to benefit from this trend. Read more 

Bears Say

Despite the planned shift to liquids, Encana's heavy gas mix will weigh on profitability, given persistently weak natural gas prices.
Encana has a large portion of its acreage in regions such as the the Piceance, Montney, and Horn River that suffer from lack of proximity to areas of high natural gas demand, limited transportation, and drilling impediments due to difficult terrain.
Exposure to second-tier assets prevents the company from growing at the same pace as competitors focused purely on top-shelf plays like the Permian and Bakken. Read more 

Management

Doug Suttles' tenure as CEO began in June 2013. Since then he has introduced a new strategy with the goal of refocusing activity on a handful of key liquids plays and spending within cash flows. That is an excellent start, and the company remains on   Read more 

Profile

Encana, based in Calgary, Alberta, engages in the exploration and production of natural gas in the United States and Canada. At the end of 2013, the company reported proved   Read more 

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2 Energy Stocks With Plenty of Gas Left in the Tank 
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