EnCana Project Reaps, Refines 'Tar Sands' Oil
March 26, 2008: 08:05 PM EST (Investor's Business Daily delivered by Newstex) --
On Wednesday we examined how well Canada stands as investors unlock their bank accounts and jump back into stocks. Much of the fortunes up north may depend on commodity prices.
Taking a look at Canada's recent winners, we see lots of natural resources companies, such as oil and gas, gold and silver, base metals, and wheat.
Prices for these raw goods recently plunged after major run-ups, so passing on a gold mine or an oil driller may have been smart.
Still, that's Canada's specialite du maison.
So let's start with oil and gas.
EnCana ECA, a big cap based in Calgary, is one of the biggest holders of onshore oil and gas properties in North America. The company was on Tuesday's IBD Big Cap 20.
Natural gas accounts for 80% of EnCana's (NYSE:ECA) output. But it hasn't ignored crude.
One of the company's projects is a joint effort with ConocoPhillips (NYSE:COP) COP. The result is an integrated stream.
It starts with heavy oil extracted from Canadian oil sands (or tar sands) in northeast Alberta. That's EnCana's ballpark.
It wants to raise output to 400,000 barrels a day by 2015. It's now at 50,000 bpd.
"Downstream," that heavy oil is refined at ConocoPhillips' refineries in Roxana, Ill., and Borger, Texas.
EnCana has put up some choppy earnings results. In the past four quarters, it reported gains of 49%, 55%, 4% and 116%.
Estimates for the current period are for a 13% gain. Sales have come in with gains of 43%, 39% and 58% in the past three quarters.
Margins and return on equity improved in 2007 from the prior year. But a concern is that analysts' estimates for 2008 are for a 13% earnings decline.
http://money.cnn.com/news/newsfeeds/articles/newstex/IBD-0001-24048124.htm
