Something "momentous" is expected to happen at when EnCana Corp. hosts its investor day in Calgary on Tuesday, with one analyst predicting a new natural gas play to be introduced.
"As signaled on its year end conference call, we believe it is likely that EnCana will reveal another emerging natural gas play," Greg Pardy with RBC Capital Markets said in a note to clients. "The whereabouts remain unknown, but we would wager western Canada."
The company currently holds US$4.3-billion in cash and equivalents, with the potential for anywhere from US$ 500-million to US$1.5-billion worth of investment opportunities in the pipeline, Mr. Pardy said.
He also expects EnCana to cut its Henry Hub natural gas price, which is at US$6.50 per thousand cubic feet, by as much as US$1/mcf. Henry Hub is the delivery point for natural gas futures on the New York Mercantile Exchange.
Mr. Pardy said this would be necessary to maintain a cost structure advantage while dealing with headwinds caused by "abundant" shale gas growth.
He maintains an Outperform rating with average risk and target price of US$39 for EnCana.