Encana Corp (ECA.TO)

He is impressed with what the new management has done since they have been in place. He is surprised they sold the remainder of their prairie royalty. Thinks they are cashing up ready for an acquisition. He is looking at adding it on weakness.

Thinks they are executing well. Natural gas is recovering over the last couple of years. It is important to have this type of name in your portfolio. Energy prices have taken a hit recently, but thinks this is short lived, once we realize that the US and global economies are still on track.

This is on her watchlist. They have a big war chest and the thought is that they will be using that to acquire something. Have announced that they are focusing on liquids rich natural gas.

Have done a great job at streamlining their assets. The PrairieSky IPO was a huge success and they still own a good chunk of it. Have a lot of cash that they are investing. Eventually you want to see good growth on their free cash flow and a good dividend. Not his favourite story within the gas sector.

(A Top Pick July 17/13. Up 0.68%.) This sector got a little bit beat up as oil retreated, but seasonally the sector tends to move very well from around the end of July 2 somewhere in mid to late October. Still likes it.

There is a lack of a glut on the market due to last winter. We have been producing and shipping less gas in Western Canada. There is not enough production capacity to meet the demands of the heating season. We depleted our reserves last winter to well below the 5 year average. We probably cannot get enough gas in storage for the winter. An average winter will be okay, but if it is cold, we will not have enough capacity. You don’t have to rush into this one because the move has happened. Doesn’t see gas being quite as strong as it has been in the past so ECA is range bound for a while.

This is one of Canada’s great natural gas companies. Have made a number of acquisitions, several of them being very smart over the last number of years. However, they are clearly suffering from low natural gas prices, and the industry will continue to struggle with that. Production is being shut in over time by some of the majors including this company, so declining capacity and some increasing usage, as US utilities reduce their coal consumption, probably argues well long-term for natural gas.

Probably his least favourite stock in the oil/gas sector prior to the PrairieSky IPO. Did an asset spin out that created a lot of value. That stock is now running and you are back to the parent company. They cut their dividend and were having a hard time growing. It is just a low growth scenario with a low dividend. Has disappointed for 10-15 years. There is no need to own this.

(A Top Pick July 22/13. Up 35.2%.) Management has surfaced value with their spin out of PrairieSky (PSK-T), sold Big Horn and acquired some property in Eagle Ford. Becoming much more exposed to liquids than to natural gas. Have done some extremely smart things with their asset base, as well as making some very strategic acquisitions. Good cash position of about $2.7 billion. Still has a long ways to go.

Has been buying, thinking that their quarter is going to be good. It is down, where most large caps are up this month. He has never been a big fan of this company, but it is really turning around. Doesn’t think people are appreciating some of the upside in their assets. Shed a lot of their non-core assets. Have been able to double the productivity out of their Montney with a small incremental cost. Upside in their Duvernay is enormous with 10 wells coming on averaging 100 BOE’s per day. If they got rid of their PrairieSky (PSK-T) holdings, it would clean up the corporate structure. Trading at a very cheap level.

It is almost all pulled back. A huge base and then a break out. We had one leg and now we will get the second. Buy it today or tomorrow.

A gassy stock. After PrairieSky Royalty (PSK-T) established its level and trading in a pretty tight range now, you got Encana pulling back now with the other gas stocks. He prefers something smaller and more nimble with better growth. (See Top Picks.)

The big run and the easy money is over. Likes the natural gas. Take some money off the table due to lack of catalysts.

Longer-term chart shows this had been in the doldrums during 2012 and 2013, and then broke out. It is now coming back to test the breakout. It could fall another $1, and he would consider picking up more. Yield of 1.31%.

Spun off Cenovus (CVE-T), which he thought was foolish. The gas market fell apart, and Encana went through a very difficult time. This is very much more of a restructuring story in the last little while. Have new management which is doing a good job. It’s going to be a much slower process now. Would prefer others.