EnCana's No Casualty

The EnCana (NYSE: ECA  ) factory is en fuego.

In its latest earnings release, the leading Canadian independent reported strong production growth in both natural gas and liquids, up 10% and 5%, respectively. This helped fuel a free cash flow fiesta, which in turn enabled a doubling of the dividend and a big share buyback to boot. Earnings per share were pounded by noncash hedging adjustments, so that apparent catastrophe can be safely ignored.

Last quarter, I focused on the oil and gas company's integrated oil sands splendor, so this time around, let's look at its resource plays. Unlike Apache (NYSE: APA  ) or Occidental Petroleum (NYSE: OXY  ) , EnCana sticks to unconventional North American oil and gas plays to power its development program. In fact, companies like Devon Energy (NYSE: DVN  ) , which keeps selling off its international interests, appear to be increasingly moving in the same direction. It's simply hard to beat the low-risk profile.

One area that EnCana finds endearing is East Texas. The company has cottoned to the Cotton Valley play, also targeted by Devon and XTO Energy (NYSE: XTO  ) . More becoming still is the Deep Bossier, where EnCana bought out its partner in the Amoruso field back in November. This area is home to some of the most prolific onshore wells seen in recent years.

Another area, and one which could really move the needle for EnCana, is British Columbia's Cutbank Ridge. This is the home of the Montney formation which, unlike the nearby Horn River shale, may just be the holy grail. Early indications are that parts of the Montney may offer economic returns that beat even the best of the Barnett, especially as experience brings down the cost of well completions.

Everyone from ConocoPhillips (NYSE: COP  ) to Canadian Natural Resources (NYSE: CNQ  ) has taken a crack at this play, but EnCana's acreage is ace. So stay alert, Fools -- this asset may amaze.

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