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Canadian natural gas producer, Encana Corp. (ECA - Analyst Report) is planning to vend its $1.0 billion worth Deep Panuke offshore natural gas project. Encana does not consider the project suitable for its core portfolio and aims to focus on the five profitable natural gas production areas of North America.

Deep Panuke, a natural gas field, is based offshore Nova Scotia, Canada. The Deep Panuke natural gas development of Encana primarily generates and processes natural gas from the field. Encana added that the project produced roughly 300 million cubic feet of natural gas per day from four operating wells in the field last month.

Owing to an extreme drop in temperature in parts of northeast U.S., demand for natural gas has substantially risen as it is commonly used for heating purposes. Consequently, the Deep Panuke development has been generating sufficient cash flows for shareholders. However, due to some reason, Encana believes that its $1.0 billion natural gas project does not fit well with its portfolio.

The Deep Panuke project of Encana was slated to start operation in 2010 but production commenced in late 2013.

Encana, based in Calgary, Alberta, is a focused pure-play natural gas exploration and production (E&P) company. It is the second largest gas producer in North America and holds a highly competitive land and resource position in several of the nation’s promising shale and tight gas resource plays. This provides the company with a low risk, long-life and sustainable growth profile.

However, Encana’s extensive natural gas exposure raises its sensitivity to gas price fluctuations, compared to its more diversified independent peers with higher oil production.

Encana currently holds a Zacks Rank #3 (Hold), implying that it is expected to perform in-line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at better-ranked players in the oil and gas E&P sector like Linn Co LLC (LNCO - Snapshot Report), Swift Energy Co (SFY - Snapshot Report) and Clayton Williams Energy Inc (CWEI - Snapshot Report). All the stocks sport a Zacks Rank #1 (Strong Buy).

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