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Encana Corporation Message Board

  • gamblingwithstocks gamblingwithstocks Jun 4, 2006 11:36 AM Flag

    rebuttal to comments

    It?s a group reply to conserve my fingers?

    <<I'm not sure what you mean by ECA trading at a premium. What metrics are you using that indicate this? >>

    I wrote "trading premium", not "trading at a premium" -- the stock's gains versus its peers as shown on the charts I posted links to.

    <<I don't see how you can conclude that ECA's valuation includes its oilsands exposure.>>

    I wrote that these assets are "not being ignored" and that I do NOT know how much is being valued (reflected in the share price).


    Again for the oil assets, I specifically used the terms ?cash-translated? and ?undeveloped?. Meaning, EnCana does not have resources to convert these assets back to cash. They will have to give up some assets (cash or oil, etc.) or equity (dilution), to do this. This is why they are seeking a partner; the partner gives them something and the partner gets something.

    Therefore, due to a wide range of variables (including future price of oil itself), it is unknown how much FUTURE revenues from the oil produced from EnCana?s assets translate directly into profits (and cash flow) on a PER SHARE basis. And since this is in regards to ECA?s price TODAY, *tvm* and risks must be considered.

    The situation becomes clearer after a deal is announced and analyzed in Q3.


    If readers think ECA is undervalued, then buy more. If you think it is overvalued, sell it. I DON?T CARE ONE WAY OR THE OTHER -- IT?S YOUR MONEY. I've owned it for two years in my retirement accounts and am not selling so that tells you my position.

    My point is that it is NAIVE TO THINK that all this public information regarding (a huge company) ENCANA?S OIL SANDS - readily available and broadcasted to thousands of shareholders, institutional investors, industry analysts conducting research, the competition and other industry companies for many months and years - IS NOT IN ANY WAY REFLECTED IN THE STOCK PRICE.

    If some readers here really think they alone have "discovered" these "hidden" assets, then I can only urge you to consider alternative opinions from professional resources. Keep in mind for all of you, as SHAREholders, you have to calculate "per share" data to be useful in translating information back to the SHARE price. It is as simple as calculating what cash you get back for the cash you paid. This is what I mean when I say you have to separate the company (EnCana) from the stock (ECA), and notice I maintain distinction between these in my posts.


    Additional disclosure: I neglected to mention that I still have a partial hedge on my ECA shares of 10 June 50?s at ~$1.80. I thought the stock would show some weakness with Iran now having to negotiate against the world, plus the current natural gas supplies. This was very undisciplined as I am only to do this based on technical indicators (which were upside at the time). The underlying shares have exceeded those puts' value since purchase so lessoned learned.

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