Newly formed EnCana has growth ambitions: merged Canadian gas and oil giant is a North American player with a strong asset base

Money Digest, June, 2002

EnCana Corporation (TSE: ECA; Recent price: $47.75) is one of North America's largest independent gas and oil producers. It was formed when PanCanadian Energy bought natural gas heavyweight Alberta Energy in 2002 and renamed the expanded enterprise.

Although EnCana focuses on Alberta, the company has major interests in different parts of the world: the Gulf of Mexico, the Rocky Mountains, Ecuador, the North Sea, and offshore Nova Scotia. The company has also undertaken exploration programs in Australia, Brazil, Libya, and Venezuela. EnCana has proven reserves of about 2.6 billion barrels of oil equivalent. The former PanCanadian Energy was spun off from Canadian Pacific in 2001.

EnCana has four operating divisions:

* Onshore North America. Upstream onshore activity in Western Canada, the U.S. and Mexico.

* Offshore and International Operations. Development and production core competencies in Ecuador and offshore near the Canadian East Coast, the North Sea and the Gulf of Mexico.

* Offshore and New Ventures Exploration. Exploration outside of the Western Canadian Basin and onshore U.S., Mexico and Ecuador.

* Midstream and Marketing. Gas storage and hub services, pipelines and processing (includes power generation and gas liquids straddle plants), marketing/energy services.

Analysts believe that the company's asset base will enable it to increase its production growth consistently over the next five years, between 12% and 15% each year.

Besides its ability to increase its production, the company is also expected to benefit from synergies as a result of the merger. Its current price compares favourably to its rivals. Those who follow the stock believe that the price of EnCana will appreciate considerably in the coming 12 months.

Encana Corporation *

Total Revenue (000)       $10,098,000
Earnings before
  Interest and Tax (000)   $2,054,000
Profit/Loss (000)          $1,304,000
Earnings per Share              $5.09
Total Assets (000)        $10,859,000
Dividends per Share             $0.40
Return on Com. Equity          33.27%

* 12 months ending Dec 31, 2001 (Canadian dollars)