SOURCE: Five Star Equities

Five Star Equities

June 05, 2012 08:20 ET

SandRidge and EnCana Shifting Strategies/Focus to the More Lucrative Oil Business

Five Star Equities Provides Stock Research on SandRidge Energy and EnCana

NEW YORK, NY--(Marketwire - Jun 5, 2012) - Improvements in technology and drilling techniques have allowed exploration and production companies to tap into the nation's vast natural gas reserves at a rapid pace. "Too much of a good thing is a bad thing," said Fadel Gheit, industry analyst at Oppenheimer. "Too much oversupply of natural gas has depressed natural gas prices." As a result many major natural gas companies recently have shifted their strategies and focus to oil. Five Star Equities examines the outlook for companies in the Oil & Gas Industry and provides equity research on SandRidge Energy Inc. (NYSE: SD) and EnCana Corporation (NYSE: ECA) (TSX: ECA.TO).

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SandRidge Energy's revenues in 2008 were 90 percent from natural gas. For 2012 the company predicts that 85 percent of their revenues will now come from oil. SandRidge has piled on debt in the process of transforming into an oil producer but feel they are in a better place as a result. "On a relative basis, our debt level is in a much better place today than it was a year ago, not that we have paid off that debt, but because our earnings power is increasing so dramatically," said Kevin White, senior vice president of business development at SandRidge.

Chesapeake has taken on billions of dollars of debt as well to begin their transformation into an oil producer. Company executives have said that they expect Chesapeake to transition to oil and natural gas liquids by 2014. "The payoff for this corporate transition we have under way should be increasingly clear for all to see in our liquids production growth over the next year and into the years ahead," Aubrey McClendon, Chesapeake's CEO, stated on the company's second-quarter conference call.

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SandRidge Energy, Inc. is an oil and natural gas company headquartered in Oklahoma City, Oklahoma with its principal focus on exploration and production. SandRidge and its subsidiaries also own and operate gas gathering and processing facilities and CO2 treating and transportation facilities and conduct marketing activities. The company reported record oil production in first quarter 2012 of 3.4 million barrels.

Encana is aggressively expanding its exploration and development of oil and natural gas liquids (NGLs) throughout the company's extensive North American asset base, increasing first quarter production 26 percent over the first quarter of 2011 to about 29,000 barrels per day (bbls/d). "Over the past year, Encana's teams have been very successful in advancing multiple oil and liquids-rich natural gas plays towards commerciality. Our tremendous depth and breadth of experience, and focus on highly efficient development programs, have greatly accelerated the speed at which our teams have been able to transition operating expertise from natural gas to oil and natural gas liquids resource plays," said Randy Eresman, President and CEO of Encana Corporation.

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