Encana Corp (ECA.TO)

Just cut their dividend substantially. He thought that they didn’t need to cut this. They are reorganizing, which is a good thing. He is interested in the spinoff they are going to do with some of the royalty stuff. This is still a 2 year story for them. It is going to take time. What they need are better markets to sell assets and there are a lot of assets for sale.

Oil & Gas sector can shut in production where as miners cannot. ECA has a lot of US properties where you have to drill on it. You can’t sit on it. He thinks ECA will snap back but others are preferred.

(Market Call Minute) Sit and watch it. The stock price could come down quite a bit with all the changes.

Will be spinning out a piece of the business. Looks like new management is a little more aggressive. The dividend cut was a little more than the Street was expecting. This creates a little bit of a turnover in that people looking for growth are coming in and people that were there partly for the yield are leaving. You have to like gas. If we have a severe winter, storage is low enough that you could see a lift in gas prices and this company will move up in that scenario.

Took their plays down to 5 focused areas from over 20. Further significant reduction in their workforce. They are talking of IPOing Clearwater and some of the royalty businesses there. Thinks the royalty will be a huge catalyst for them. As gas prices move higher, finally we have a strategy that we can glom onto that makes sense. He is looking for a 25% upside or higher in the next year. Yield of 1.5%.

What they are doing is the right thing. Their CEO has been given the mandate to restructure the company. Cutting the dividend should have happened a long, long time ago. Thinks the stock will go higher. This is now all about execution.

Recently announced major initiatives and will be focusing on fewer projects, spin off a couple of their assets and cut the dividend by $0.28 a year. All of which is something that institutional investors have been asking for. He is expecting a year of headaches with all of these changes, and is looking to see if he should be moving out to other names. No longer the dividend play it was.

Cut to workforce and dividend this morning. Market received the announcement well. A good sign. It is on the road to recovery. He is actively watching it.

He has been a critic for years. It depends on what the new CEO comes out with. The only concerned he has in the short term is whether they cut the dividend. Would buy at $18 and a seller at $20.

Dividend is fine. Payout ratio is 50% so it has lots of flexibility. He is constructive on gas into the winter. You are fine owning this over the next quarter. The problem is that this is a big company and it takes lots to move it. He has been trading the stock and investing in smaller companies that have much more growth and much more catalysts. (See Top Picks.)

This is a company that has been hurt by the decline in natural gas prices, but they’ve been switching more and more to liquids. Feels new management is doing the right things. Has tremendous land positions for development going forward for a long period of time. 4.3% dividend yield.

Just announced a planned reduction in dividends. They are to report earnings tomorrow, which are not expected to be good. He is very bearish on the gas scene entirely. There is just too much gas in North America and he can’t see the price going anywhere.

The concern is that they might cut the dividend but he suspects that is priced into the stock. Buy below these lows. Thinks it is pretty good value here but could Fall 7-10% if they cut the dividend.

$14.62 model price, negative 20%. But it is now earning its dividend. There is better value elsewhere. It is basing here.

Likes it. They are restructuring. A nice play, safe dividend. 5 years from now could be 30-40% higher.