Divina sells ECA 6.27: This is something Encana has been able to capture as well, which is improving its returns so that it can continue to drill profitable wells even at current prices.

While those assets had been contributing 9% of the company's production, they only produced 2.5% of its cash flow. For example, the company recently announced the sale of its Haynesville shale assets. This has driven a pretty remarkable shift in its margins, which have enabled the company produce more cash flow with less production. It has then replaced that production with higher margin oil either via acquisitions or through the drill bit. It has been very strategic in what it has sold with the focus being on shedding its lower margin natural gas production.


Felicita:
However, thanks to a series of transactions the company has vastly improved its debt profile, which as the following slide shows is rated investment grade.

Hildegarde:
However, the company has worked hard to address some weaknesses that the downturn exposed.

Thuy:
Last week Encana Corporation (TSX:ECA)(NYSE:ECA) announced that it was selling its Haynesville natural gas assets to a private buyer for US$850 million.

Aura:
The company has taken a two-pronged approach by selling its lower margin assets and investing to grow higher margin production.

Teresita:
By improving its margins, Encana will not only generate solid cash flow when prices are weak, but really position the company cash in when prices eventually improve.

Antonette:
Encana has really focused its attention on growing its higher margin production so that it can improve its company-wide per barrel margin.

Elissa:
So, by selling the very low margin Haynesville asset, Encana will boost its overall margins per barrel of oil equivalent.

Mica:
Instead, the move is all about improving its margins.

Clarissa:
This increased financial flexibility is really critical during a downturn like the one the industry is going through.

Katherine:
That will not only bolster its balance sheet, but reduce interest expenses.

Encana Corp. (NYSE:ECA)
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