Encana Corp (ECA.TO)

It was the gas play, but now they are in oil. It was probably a pretty good move, even if the timing was not the best. They made their acquisition in the US and paid an expensive price for it. He thinks he can do better in other oil companies. They just did a massive share issue. It is dilutive, but they are doing the right thing.

He likes the company, but it is too pricey for what it is. It had the big raise and is paying down debt, doing all the right things. Because he sees oil/gas quite range bound, maybe even drifting down over the next month or so, he doesn’t think you have to be there. Wait for it to go down 20%-30%.

This has been well-run. They have done another financing and have totally reversed the strategy of the company. It was natural gas and is now oil. They’ve zeroed in on 4 major plays which ultimately will produce excellent low cost production. The financing satisfied a fair amount of demand, so he would wait a little.

(Market Call Minute) He is bullish on Nat Gas until the end of the year and then you should consider getting out.

This has had its challenges, but has done well lately. It is one that is very much loved by the US. The US doesn’t really understand our Canadian issue with debt. The company has done a really good job in selling off non-core assets and focusing on a lot of their energy on (?) plays, which are all very interesting. She has never really seen very much in terms of growth, so she is a little more hesitant. Feels this will go up with higher oil prices, but to her it doesn’t have the same pattern of free cash flow growth that she looks for.

Their asset in Texas has people excited. They are like a hedge fund hotel. They have declining production and an overly levered balance sheet. They have acreage in two different places in North America, but he does not think it can offset the rest of the business.

(Market Call Minute) It had a great move although it is a great company. They have good long term assets. Nothing wrong with owning it.

He owns a little. A lot of people view this as a beta play on gas. Although its portfolio is tilted a little more towards gas, it does have a fairly balanced portfolio. Because it had too much leverage, it has gone through a very large restructuring program over the last 1.5 years. They’ve really right sized the balance sheet. There is still a little more of $1-$1.5 billion of non-core assets that they can still sell. If you have a favourable view on natural gas, this is one that you could still buy and hold. Dividend yield of 0.6%.

(Market Call Minute.) The stock has done well recently. He would prefer others, such as Crescent Point (CPG-T).

It had a massive run. It still needs $60 to tread water. The market does not appreciate the significant challenges they still face.

He struggles with wrapping his head around this company. He likes some of the things they are doing in terms of repositioning the portfolio. They had something like 17 core plays for awhile, so have been in the process of consolidating that. Thinks they need $60 oil to make good economics.

Got hit when all the other stocks got hit. There were dividend cuts at many companies. This low interest rate environment which will go on for a long time has had a big impact on economic development. This one, however, has not shown the consistency in growth to fit his criteria. It will stay low for a long time.

As a long-term hold in the energy patch, it is a nice core holding. Recently sold some assets which gives them some breathing room in the event commodity prices remain lower for longer. It has probably already gone through the worst.

He is looking at this as a Short. Thinks it has too much debt. Eventually they will run out of assets they can sell. However, they have a very good asset in the Permian Basin in Texas. He would worry about their exposure to natural gas pricing.

Their balance sheet is probably more leveraged than some of their peers, but they are a low cost producer. They’ve been restructuring. Cut their dividends. We have likely seen the lows in crude. If you own, continue holding for the long-term.