RE:RE:RE:RE:RE:What happened?Open at $5.54 and then tanks over 12% to $4.86
Sucks that they look at it like that but it is after all an Investment house and frankly, they are not such great experts at predicting anything. Or they would all have cashed out in 2007...
They did not, so frankly take what they post with a grain of salt. It causes some Funds to have to sell because of rules about not holding that type of debt.
But Yada Yada, like they are such great experts at predicting anything.
Look at the balance sheet ! They have enough cash to weather the storm and they will still be generating cash flow ( be it at a loss for now ). Really, what Moodys says has no bearing on the business end because they already have the LOC, and cash to cover expenses for a long while.
What everyone does not see, is this Oil price cannot go on forever at this level.
It just cannot, for the simple reason, not everyone has the bankroll to survive and those who don't will mean less production and it brings the glut down.
Plus, with low prices brings growth ( and there is always growth with low prices ) and the fact Encana has some great property ( both Gas and Oil) and costs are going down and production is going up, not to mention they are hedged for future costs for much production.
The selloff , is shorts ( Bas^*%*ds) trying to drive the price (although there are 15% less shorts this month) and the funds that have to sell, forcing the prices down. It happens but don't get scared, that is what they want !
I bought this for future (years down the road), because with the asset class and reserves that Encana has, they will be back into the $20.00 range when prices pick up.
The price of OIL will pick up. It is history, just look at the cycle, don't get scared.
The other issue with Frac wells ( in the States) nobody talks about is they fall off production numbers pretty quickly and they require more wells to keep the numbers up ..Just the way it is.
They continue to produce, but at levels much lower...This will evenutally hit the States as drilling of new wells has almost stopped. They have low Captial dollars being spent and production will slow. OPEC knows this.......But also, don't forget, the Saudi government is burning through about 100 million dollars a year more than they have budget for. Not to mention Russia, Canada, Venezula and many others who depend on Oil for revenue.
Sure Saudi's are sitting on 600 million in foreign reserves but it goes fast when your running budget eats that much deficit spending.
How long can they keep this up before someone says , enough ?
I also believe much of this drop has been co-ordinated to hurt ISIS because everyone knew they were stealing about 500,000 barrels of oil a day to fund their war campaign.
Now that the Allies are taking out their storage tanks and transport, it has almost stopped.
The bottom line is, prices do not stay down for long.....They cannot and Encana is in good shape to weather the next year or two until we at least see $50.00 a barrrel oil , which brings Encana cash flow positive again......Buying at these levels, with a 6% dividend still...Sweet !
But of course, nothing goes straight up or straight down....Encana has a good team in place and they are really bringing production and costs in line....They will be on top again.
Moodys can bite me.....Another investment house with usless information. I call them after the fact press release experts. Nothing new here, move along..