Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Canada’s largest natural gas producer EnCana Corporation (ECA - Analyst Report) has agreed to sell two processing plants to Calgary-based Veresen Inc. This divesture will fetch Encana about C$920 million or $905.1 million.

Per the deal, EnCana will sell its 100% interest in two natural gas processing plants that serve the Cutbank Ridge area – the Steeprock unit in northeast British Columbia and the Hythe facility in northwest Alberta – and approximately 229.9 miles of associated gathering pipelines. The facilities can process natural gas up to 516 million cubic feet per day (MMcf/d).

EnCana has also entered into a long-term competitive gathering and processing fee agreement with Veresen. This pact will enable Encana to conduct the ongoing natural gas development in Cutbank Ridge economically as well as efficiently supply natural gas and liquids to market.

The transaction, pending customary approvals and regulations, is slated to be closed in the first quarter of 2012.

This disposition forms a part of EnCana’s divesture program designed for 2011. While total proceeds from all assets sale upon closing is expected to reach $3.5 billion, management expects to meet its projected range of $1 billion to $2 billion in proceeds from the divestures completed in 2011.

In this regard, EnCana entered into an agreement with Enbridge Inc. (ENB - Snapshot Report) for the sale of its majority stake at the Cabin Gas Plant in Horn River Basin for approximately C$215 million. Earlier this year, EnCana sold its Colorado-based natural gas processing properties to Western Gas Partners, L.P. (WES - Snapshot Report) for $300 million.

EnCana has also soldsome of its midstream assets in Colorado to privately held Summit Midstream Partners LLC for $590 million. The company expects proceeds from these sales to strengthen its balance sheet and provide greater financial flexibility in 2012. 

Headquartered in Calgary, Alberta, EnCana is the second largest gas producer in North America, and holds a highly competitive land and resource position in a number of the region's most promising shale and tight gas resource plays. This provides the company with a low risk, long-life and sustainable growth profile.

We are maintaining our long-term Neutral recommendation on the stock. EnCana shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%