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Encana Corporation Message Board

  • margin321 margin321 Feb 28, 2004 2:12 PM Flag

    Boy I like this attitude


    <<EnCana's share price fell 2.5 per cent when it surprised stock markets last October by forecasting that its 2004 tax bill could hit $1-billion (Canadian).

    Instead of crediting EnCana for the lower 2003 tax bill of $100-million, investors fixated on the higher number for 2004.

    But Mr. Morgan pledged yesterday to give plenty of tax details in the years ahead.

    "We know that there were some rather unfortunate surprises to investors and analyst models last year on the tax side, but we're going to strive to provide timely guidance going forward," he said.

    "In fact, we will likely give you more tax information than you receive from other companies.">>

    I think Morgan was personally embarrassed when analysts got surprised that the one year merger related delay in tax payments (which had been announced) for 2003 meant that those delayed payments would show up in 2004 (which had not been specifically announced). I think he just assumed that the situation was pretty clear. That is what delay means and it weas actually good for the company - they got to use the capital for free during a time they needed it. But never undersetimate the analysts - just last week they figured a 40 cent dividend on a 40 dollar stock was a 3% dividend. (It is 1% if there are any analysts reading this).

    I think the move to $US reporting and post-royalty reporting (also US standard) are GREAT. They are going to report in a clear consistent manner and they are going to continue to report fully. That is their philosophy and that is why I think this issue embarrassed Morgan. Don't forget how conservative they are - ALL their reserve estimates for example are fully certified by outside firms - they made that decision when they formed the company.

    ECA is now my biggest holding - having surged above WFC on this recent move. And it all started when I figured (two different winters in a row) that old CP at $US 19 was crazy in view of all the embedded assets. It was.

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