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.
14 Nov 2018
ECA/NFX combo makes a lot of sense - BUY
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ECA/NFX combo makes a lot of sense - BUY
Encana (ECA:TSE) | 0 0 (-1.2%) | Mkt Cap: 13,467m
- Published:
14 Nov 2018 -
Author:
Michael P. Dunn -
Pages:
13
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.