Encana (ECA) update - July 15
Posted: Mon Jul 15, 2019 5:07 pm
From Keith Kohl's "The Energy Investor" newsletter 7/15/2019
Recent News
Last week, Encana reported that it is selling its Arkoma Basin acreage in Oklahoma. The
deal was made with an undisclosed buyer, and is valued at $165 million.
In total, the assets include 140,000 net acres in the Arkoma Basin that hold a production
capacity of around 77 million cubic feet per day. < After the sale closes, ECA will still be producing ~1,600 million cubic feet of natural gas per day.
Our Take
This move makes sense considering that Encana wants to focus primarily on developing
its acreage in the Permian Basin, Montney Shale, and Anadarko play (STACK).
Given that the Arkoma acreage was heavily geared toward natural gas, divesting those
assets was a good plan.
Keep in mind that by focusing on its liquids-rich assets, Encana has beaten earnings
expectations for six consecutive quarters, and I expect this company to grow production
while staying within cash flows.
Over the next five years, Encana’s management projects that cash flows will surge by
300%.
Encana (NYSE: ECA) is rated a buy under $20
Recent News
Last week, Encana reported that it is selling its Arkoma Basin acreage in Oklahoma. The
deal was made with an undisclosed buyer, and is valued at $165 million.
In total, the assets include 140,000 net acres in the Arkoma Basin that hold a production
capacity of around 77 million cubic feet per day. < After the sale closes, ECA will still be producing ~1,600 million cubic feet of natural gas per day.
Our Take
This move makes sense considering that Encana wants to focus primarily on developing
its acreage in the Permian Basin, Montney Shale, and Anadarko play (STACK).
Given that the Arkoma acreage was heavily geared toward natural gas, divesting those
assets was a good plan.
Keep in mind that by focusing on its liquids-rich assets, Encana has beaten earnings
expectations for six consecutive quarters, and I expect this company to grow production
while staying within cash flows.
Over the next five years, Encana’s management projects that cash flows will surge by
300%.
Encana (NYSE: ECA) is rated a buy under $20