EnCana Corp. (ECA)

EnCana Corp.'s (ECA - Analyst Report) better-than-expected first-quarter 2009 results were driven by robust production growth and strong cost controls. Natural gas production was up 4% to 3.9 Bcf/d, strongly positioning the company to achieve full-year guidance.

EnCana also benefited from lower operating costs. We continue to like the company for its industry-leading inventory of long-lived unconventional oil and gas assets. Additionally, EnCana remains focused on capital discipline and free cash flows.

With about two-thirds of its volumes this year hedged at very attractive price points, the company is expected to generate around $1.6 billion in free cash flows. Keeping in view the company's year-end 2008 proved reserves and upside potential from unbooked resources, our per share net asset value estimate comes to $64.60. Our new $64 price objective, raised from $54 before, is at approximately 100% of our NAV [net asset value] estimate.