Encana Lifts 2012 Investment Level - Analyst Blog
22 6월 2012 - 2:00AM
Zacks
Leading Canadian natural gas firm Encana
Corporation (ECA) announced plans to boost its investment
in oil fields by an additional $600 million for the balance of
2012, in an attempt to generate higher output.
The company has raised its total liquids production expectations
for the year by 7% to 30,000 barrels per day (bbl/d). The liquid
production in 2013 is expected between 60,000 bbl/d and 70,000
bbl/d, with oil and field condensate comprising 40%.
With the aim of higher output, Encana will now drill about
115–120 wells in 10 plays in 2012, against the previous guidance of
40–45 wells. For the next year, the company’s to-be-drilled oil and
liquids well number will likely go up to approximately 350.
Calgary, Alberta-based Encana projects 2012 and 2013 natural gas
production to remain almost in line with the current level of 3
billion cubic feet per day.
For 2013, the company plans to invest nearly $4.0 billion to
$5.0 billion on capital projects and divest assets worth $1.0
billion to $1.5 billion. Cash flow is expected around $2.5 billion
to $3.5 billion.
Encana management remains highly optimistic about the company’s
performance in the coming days, owing to successful liquid plays
activities achieved in the last few months.
Encana is one of the largest natural gas companies in North
America, with a diverse/high quality portfolio of natural gas
assets spread over Canada and the U.S. This provides the company
with a huge inventory of reserves and a resource base capable of
robust production growth.
We also support the collaboration of Encana and Mitsubishi in
developing the Cutbank Ridge, which is one of the most fertile and
low-cost resource rich acreages in North America. With a large
proved undeveloped natural gas reserve, the region is expected to
have the capacity of delivering long-term, affordable energy
supplies to domestic and overseas markets.
However, operational hindrances, challenging market prices,
growing popularity of renewable sources of energy and cost
inflation are anticipated to weigh on Encana. Hence, we see limited
upside potential on the stock and maintain a long-term Neutral
recommendation.
Encana, which operates with other industry players such as
Canadian Natural Resources Ltd. (CNQ) and
Talisman Energy Inc. (TLM), currently, retain a
Zacks #3 Rank, which translates into a short-term Hold rating.
CDN NTRL RSRCS (CNQ): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
TALISMAN ENERGY (TLM): Free Stock Analysis Report
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