~15% core liquids growth Y/Y, Montney pauses

Q4 results and 2019e estimates are down vs. our prior forecasts (higher corp. costs, reduced Montney growth, lower price realizations). TP reduced US$0.50 to US$10.00/share (5.3x ‘20e EV/DACF). BUY. We expect ECA’s operations to differentiate it from many of its peers going forward as other industry players struggle with “child” wells.

ECA/NFX combo makes a lot of sense - BUY

We are positive on the proposed NFX acquisition, as we see the transaction adding inventory and oil growth, without diluting valuation metrics, and provides ECA with a massive contiguous land base with which to deploy “cube” style development. Timing of the transaction may prove opportune, as NFX shares have underperformed, but inefficient HBP drilling is winding down. Reducing TP to US$15.00 (5.0x pro-forma ‘20e EV/DACF at strip). BUY.

ECA touts returns, Montney growth, FCF, and cost efficiencies at investor day

ECA’s new five-year outlook calls for similar growth for less capex, and suggests a slight shift in capital from Permian to Eagle Ford in the nearer term. With ECA now touting ROCE, FCF and returns, we have reduced our 2019e spending and production forecasts to be more in line with the midpoint of its outlook. Reiteration of its near-term Montney growth outlook was key for us. US$16.00 target and BUY rating maintained.

Energy morning research package

ENCANA CORP (ECA CN) | ITHACA ENERGY INC (IAE CN) | PHX ENERGY SERVICES CORP (PHX CN)

Commodity Price Update – Impact on Integrateds, Large Cap E&P, Oilsands

3Q16e WTI prices look set to average ~US$44.50/bbl vs. our $50.00/bbl prior estimate. We have also reduced our 4Q16e WTI forecasts by US$5.00 to US$50.00/ bbl, but left our 2016e+ oil & gas price deck largely unchanged. For the second time in three months we are increasing our forecasts for Canadian refined product premiums relative to New York Harbor.

Issuing Shares to Fund 2017 Permian Program & Reduce Debt

Issuing 107 mm shares at US$9.35/share to fund 2017 Permian drilling and reduce indebtedness. Management likely wants to lock in development plans for the Permian regardless of oil price for 2017e, given the apparent unlikelihood of any more asset sales to bridge the funding gap. The shares are up 228% since their February lows – timing likely seemed opportune to Encana. No change to our Market Perform ranking and US$8.00/share target price.

2Q16 Update

Our CFPS estimates for 2017e and 2018e have both increased by ~20%, as ECA has increased its 2016e D&C activity plans by almost 50% while only increasing capex guidance by ~$200 mm, as capital efficiencies have improved dramatically vs. original guidance assumptions.ECA expects increased activity will add at least 30 mboe/d (~75% liquids) to 2017e volumes, relative to its prior expectations.It appears that the DJ Basin net sale proceeds have been revised down by ~$0.2 billion without explanatio

2Q16 RESULTS, BUDGET INCREASED FOR 2016E

Market Impact: Positive, as go-forward production estimates need to increase.

DJ BASIN SALE CLOSING NOW EXPECTED BY END OF JULY

Market Impact: Slightly positive, as although the timing of the closing is again delayed, the press release suggests the closing is imminent. ECA's shares outperformed peers on the NYSE Friday.

Impact on Integrateds, Large Cap E&P, Oilsands

Commodity Price Update – Impact on Integrateds, Large Cap E&P, Oilsands

Encana Announces Sale of Gordondale Assets for C$625 mm

ECA is selling Gordondale, including future commitments, to Birchcliff for C$625 mm. While the deal is dilutive to CFPS and RENAV, Gordondale was at the bottom of ECA’s priority list in terms of future Montney drilling, and the deal strengthens the balance sheet. No change to our Underperform ranking and US$6.50/share target price.

Encana’s Montney Investor Day

ECA now estimates ~10,000 undrilled locations on its Montney properties (~6,600 are condensate rich), roughly double the prior estimate.

Q1 Update and Cost Analysis

1Q16 CFPS of $0.12/share was hurt by sequential Permian & Eagle Ford declines and severance costs. 2016e guidance was unchanged, albeit well costs are trending lower than prior targets, so there may be room to drill a few more wells this year without increasing spending. Transportation & processing commitments associated with non-core assets, which are currently ~$0.5 billion/year, drop significantly in 2019e-2022e. ECA and ARX have very similar liquids weightings, realized prices, and operating

1Q16 RESULTS

Market Impact: Should be neutral. Similar to other names we cover, 1Q16 saw weak price realizations, but well costs were down more than expected.

Sylvania Platinum - Healthy production recovery

Sylvania delivered a 12% increase in Q125 production compared to Q424 and, with an average platinum group metals (PGM) basket price only slightly down, delivered a 10% increase in revenue. The company is guiding for FY25 production of 73,000–76,000oz. Costs were well controlled with South African rand (ZAR) direct operating costs 3% higher and US dollar costs up 6.5%. Attractive unit cost efficiencies of 5% to 8% were delivered. With results largely in line with our expectations, our forecasts r

SP Angel Morning View: Copper breaches $10,000/t as traders ramp up bullish positions in hopes of China resurgence

Condor Gold* (CNR LN) – Beneficiary of a robust gold price

Hybridan Small Cap Feast - 31 October 2024

** Potential means Intention to Float (ITF) has been announced, or it is a rumour ***Arranged by type of listing and date of announcement ****Alphabetically arranged Share prices and market capitalisations taken from the current price on the day of publication Dish of the day Admissions: None Delistings: Quantum Exponential Group (AQSE: QBIT) has delisted from AQSE What’s baking in the oven? ITF announced:*** Potential** Initial Public Offerings: 17th October 2024: Selkirk Group, a newly incorpo

TENNYSON Morning news – Diversified Energy – Locking in CF via LNG contract & incr. hedges