Morningstar Rating

Stock Research and Analysis

by Robert Bellinski, CFA

Bulls Say

Encana's 10.1 trillion cubic feet equivalent in year-end proved reserves has plenty of growth potential in the years ahead. Development of emerging regions in the firm's portfolio will contribute greatly to this growth.
Encana's size has allowed it to attract external capital from foreign investors and minimize the impact of cost inflation from drilling rig and service providers.
Emerging liquids-rich and oil focused plays will help triple liquids production by 2015 and improve returns. Read more 

Bears Say

Persistently low natural gas prices could severely affect Encana's ability to deliver on growth objectives while achieving favorable economics.
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.
E&P companies focused on natural gas have fallen out of favor compared with their oil-producing counterparts, and current trading multiples reflect this sentiment. Read more 

Management

Management has demonstrated that it is a standard steward of shareholder capital. Low natural gas prices have hurt returns, but management has assembled an asset portfolio that is well diversified and contains years of drilling inventory.
Encana’s   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 2012, the company reported proved   Read more 

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