More from RBCEncana CorporationHitting the Ground RunningOur view: Encana has struck a positive chord of late with investors given itsattractive relative valuation, solid balance sheet, mid single-digit upstreamgrowth in 2019 (excluding Newfield), and free cash flow generation ofabout $500 million (before dividends). Focus will now shift towards thedelivery of lower well costs in the STACK—expected in 2H19. We arereaffirming an Outperform recommendation and target price of $11 pershare.Key points:Encana Corporation has hit the ground running in the wake of closingits acquisition of Newfield as the Anadarko Basin moves just behind thePermian amongst its Core Three.Commitment to Buyback. The company reaffirmed commitment to its$1.25 billion share buyback in 2019, which is slated to commence inearly March. Encana plans to fund its buyback with cash & equivalentson its balance sheet, which stood at $1.1 billion as of December 31.We anticipate that Encana will streamline its portfolio over the next 12months, with proceeds earmarked for debt reduction.2019 Budget. Encana’s 2019 budget (on a reported basis) pointedtowards mid-point capital spending of $2.6 billion ($2.5-$2.7 billion),and is expected to be weighted towards the first-half. Over 75% of thiscapital will be directed towards its Core Three assets. The company’s2019 mid-point oil & liquids production guidance of 300,000 bbl/d ispunctuated by relatively stable production in the Montney (vs. fourth-quarter), with advancing growth in the Permian and Anadarko Basin.Encana’s transportation, processing & operating cost guidance of $13/boewas broadly in-line with our expectation.Balance Sheet. Encana’s balance sheet remains in good shape, with a2019E average net debt-to-trailing cash flow ratio of 1.6x (vs. 1.7x for ourNorth American Senior E&P peer group) ($56 WTI and $3.00 Henry Hub).STACK Update. Encana’s game plan in the STACK revolves around reducingwell costs—not an improvement in the play’s type-curve (which equatesto an average EUR of 1.3 mmboe). The company remains confident that itcan achieve synergies of $1 million/well, targeting a $6.9 million averageD&C cost. Encana plans to drop its rig count in the STACK from the 10rigs Newfield was running to 4, and is already advancing its completionsdesign.Relative Valuation—Discount. Encana is trading at a 2019E debt-adjustedcash flow multiple of 4.8x versus our North American Senior E&P peergroup average of 5.5x (US$56 WTI), and 3.5x (vs. peers at 4.2x) in 2020E(US$64 WTI).Dissemin