Quote:
Originally Posted by fotze
Encana has one of the best land positions of any energy companies in Canada, large tracts of royalty free lands from the old CPR days.
Encana is also pulling the riegns on the service companies, slowing down the growth to correct the prices. A company that big that answers to itself has that power. We are seeing bids for services come in at half the price of last year by desperate companies wanting work because Encana has slowed it down. Encana has the ability to ramp it up at any time, they are just choosing not to (so I hear). I don;t think they are very worried.
There is also alot of CBM issues that has slowed the development. Large tracts of lands have split-title ownership and the courts have not decided whether the Coal owner or Gas owner owns the natural gas from the coal as years ago coal gas was not considered a commodity. Large land bases are not being devloped because this major issue is up in the air. Also, landowners are getting more and more savvy, using regulatory processes to slow up development.
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Its not just EnCana doing that, every major player is either cutting programs or deferring drilling projects. Thats why the service companies are scrambling, and this is just the beginning of the 2007 readjustment.
Its a good thing since there's too many inferior companies operating at superior costs. The good ones wll be fine this year, the lousy employees will be laid off and it hopefully will have a positive, calming effect on the local economy and housing markets.