Oil Sands and Related Stocks Message Board

From: jad	7/26/2006 9:27:09 AM
	1 Recommendation of 25565

Lehman Br puts EnCana at-Underweight / $ 48.73 2Q06 Review, Guidance Realistic? Sector: 2-Neutral ???ECA reported "clean" diluted EPS of $0.98 vs our est of $0.95. Q2 volumes 2.7% below our est. Cost and prod'n guidance unch. ex. higher forecast C$/USD. We are skeptical of FY06 mid-point prod'n guidance which requires 2H06 volumes ~7% above Q2 volumes. Capex guidance is also a challenge given that ECA has spent 63% of its FY06 budget. ???Midpoint capex budget is up $100 mm. We are incrs FY06 capex est $400 mm to $6.4 bn due to sketicism of lower est spending in 2H06 matched with incrs'd prod'n. ???Using est 1240 mmcfpd for US FY06 natural gas prod'n - 12% growth in 2H06 from 2Q06. Midpoint guidance of 1270 mmcfpd requires very high 18% growth in 2H06. ???ECA repurchased 22.4 mm shares in 2Q on top of 21.3 mm shares purchased in 1Q. Another ~40 mm shares may be repurchased and debt to cap increased to complete the 10% buyback. ???About 97% of ECA's FY06 natural gas is protected at a price of $7.19/Mcf. ???Lowering target price $2 due to lowered FY07 prod'n est, incr's cost est, and (our) incr'd cap budget estimate.