Weekend Edition: Encanas New Shale Play

On April 20, Encana Corp. released its Q1 results for 2011 and announced it will be spending $1 billion dollars in exploring and developing natural gas liquids and oil rich zones as natural gas prices remain stubbornly low.

“We plan to significantly increase our liquids weighting over the next few years.” ECA’s CEO said.

Obviously, liquids rich natural gas brings in as much money as oil in some cases so companies have no choice but to go down this path until natural gas prices turn around. The company’s first quarter net earnings plunged to $78 million or 11 cents a share from $1.49 billion or $1.96 a share a year earlier. Low natural gas prices are wrecking havoc on NG weighted companies. While the seniors like Encana can survive this environment, I am very anxious to see the potential beating junior gas weighted companies will get in the middle of this summer especially if we avoid a repeat of last summer’s heat waves.

Encana also announced it has assembled about 190,000 net acres in the Simonette and Kaybob areas of the Duvernay shale in Alberta, which is prospective for liquids rich natural gas. This shale play could be as big as other North American shale gas basins in BC or Texas.

As much as I am bearish on natural gas for 2011, I believe there will be some great entry points this summer if investors overreact to low natural gas prices by massively selling the good and the bad.

Economic roundup:

Rigs on the comeback trail with high oil

Investors in for a Shock as Rising Rates Sink Bonds

World Fleeing the Dollar Flood

US ‘In Denial’ on Debt

$6 Gas by this Summer?

Weekly blog roundup:

My Changing Personality @Invest It Wisely

Make your investment portfolio grow faster!! @Intelligent Speculator

Dividend Income: April 2011 @The Passive Income Earner

My Odd Couple @ MyOwnAdvisor

15 Ways to Commit Career Suicide @101 Centavos