EnCana posts biggest annual profit in Canadian history

[RedHot25]

http://www.cbc.ca/money/story/2007/0...a.html?ref=rss

Oilsands and natural gas company EnCana Corp. on Thursday pumped its dividend as the company recorded the biggest annual profit in Canadian corporate history. For 2006, EnCana made $5.65 billion US, or roughly $6.41 billion Cdn, based on last year's average Canada-U.S. exchange rate, a new Canadian record. EnCana's 2006 profit topped the previous record of $5.46 billion posted by BCE Inc. back in 1999.
A big chunk of EnCana's record profit — about $2.38 billion US — came from one-time gains made from commodity prices hedges, sales of discontinued operations and tax rate changes.


Wowsers!

[Jayems]

"commodity price hedges", "discontinued tax rate changes".... "gains"... "2006"....

it's all corporate mumbo jumbo to me.. but it sounds impressive.

[mykalberta]

Also remember that Encana over the last few years has really pushed to divest itself from high risk plays and concentrate more on NA. So this isnt Conoco or Exxon in Iraq/Venezuala etc.

Encana has payed premium prices for NA oil/gas plays (specifically Alberta, and Colorado/Wyoming) so they enjoy the safety of the NA structure while benefiting from world prices.

Just think if Natural Gas prices hadnt tanked, I likely would have surpassed 8 bil US.

Brilliant job, but not totally unexpected by one of the very few Canadian Shark companies.

MYK

[Jagger]

About a year or so ago my wife, who's a professional photographer, was approached to photograph Encana's Christmas Party in Red Deer. She was really worried about how much to charge them, not wanting to overcharge. I really don't think that she should have worried!

[Cowperson]

Before you get all excited . . . .

http://finance.aol.com/quotes/encana...1&timeframe=50

Cowperson

[Canada 02]

^that chart doesn't take into consideration a 2 for 1 stock split. The shares didn't fall from $80 to $40 in one day

[Shazam]

Originally Posted by Jayems

"commodity price hedges", "discontinued tax rate changes".... "gains"... "2006"....

it's all corporate mumbo jumbo to me.. but it sounds impressive.

Basically, what it's saying is that the earnings are high because of one-time events, so don't expect such earnings in the future.

[Cowperson]

Originally Posted by Canada 02

^that chart doesn't take into consideration a 2 for 1 stock split. The shares didn't fall from $80 to $40 in one day

It illustrates the stock is basically in the same spot it was 1.5 years ago.

Cowperson

[Shazam]

Originally Posted by Cowperson

It illustrates the stock is basically in the same spot it was 1.5 years ago.

Cowperson

Not surprising, given that excluding extraordinary earnings their revenue's been flat for a while now, and their expenses have been going up, up, up.

They have nice marble floors in their lobby, though.

[jolinar of malkshor]

Originally Posted by Shazam

Not surprising, given that excluding extraordinary earnings their revenue's been flat for a while now, and their expenses have been going up, up, up.

They have nice marble floors in their lobby, though.

I think one reason their revenue's are flat is because their natural gas division (or what ever you want to call it) has been really slow the last year. I heard that many of their natural gas consultants have little or no work.

[Thunderball]

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.

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.

[Shazam]

Lower than expected NG prices will do that.

[TheRedCrush]

Originally Posted by Jagger

About a year or so ago my wife, who's a professional photographer, was approached to photograph Encana's Christmas Party in Red Deer. She was really worried about how much to charge them, not wanting to overcharge. I really don't think that she should have worried!

No but the reason they did so well is that they know the industry, their procurment staff are really annoyed at vendors who overcharge them simply because they vendor thinks "their Encana they have lots of money"

[Clarkey]

I'm not really sure what to think of EnCana's strategy.

While most other Canadian independents have diversified into offshore and other international ventures EnCana dumped all that and put all their eggs in one or two baskets (western can. CBM and oil sands). How do they sustain growth long term? You can only drill so many additional CBM wells per year.

I guess if they need to adjust strategy and diversify in a few years they will have the capital to do so.

[Clarkey]

Yeah they're all about the wcsb but like you mentioned they're land holdings are very envious and the reason they've been able to stick with just the wcsb.