netrashetty
Netra Shetty
Lizhan Environmental (NYSE:LZEN) is a Chinese company which makes and sells synthetic leather and fabrics by recycling used leather, and other waste materials. The company's products are used to make furniture, upholstery in cars, and some garments. The company exported 23.7% of its 2010 sales to countries like the US, Nicaragua, Germany, Belgium and France. The remaining 76.3% of sales are sold to customers located in China. The company uses a technology, for which they have filed a patent, that combines leather waste, fabric, resin, and other inputs to produce their synthetic textiles. The company's facilities are located in the Zhejiang Province which is close to many of the leather industry clusters in China.[1]
Lizhan Environmental plans to launch a new product called Evergreen LZ. This textile is meant to be a synthetic textile which is very similar in its look and feel to genuine leather. The company hopes to begin sale of this product by the end of November 2010. The company expects that this new product will appeal to furniture and car manufacturers who are interested in environmentally friendly practices. Because the textiles highly resemble leather without actually being made from leather, the company expects to be able to sell Evergreen LZ at a higher margin than their other products.[2]
The company's initial public offering of stock on the NYSE occurred on November 18, 2010. The company offered 2.5M shares each for $4. This was within at the high end of the initial price range of $3-$4, but below the revised price range of $5-$6. The IPO raised a total of $10M. The lead underwriter of the deal was Maxim Group LLC.[3]
The company increased its net sales from 2008 to 2009 by 65%. The company reported sales of $13.1M in 2008 to $21.6M in 2009. During the same period, the company's net income was $1.5M and $2.7M respectively. In 2010, the company's gross margin was 17%. [4]
EnCana (NYSE:ECA) is an independent Canadian oil and gas company with a diverse portfolio of international holdings; with over 12 trillion cubic feet of natural gas and 1.1 billion barrels of oil in its reserves (most of which are proven), EnCana sees a large part of its production on the North American continent. The company is also involved in a joint venture with ConocoPhillips in the Alberta oilsands, and has significant shares on projects in Qatar, Oman, France, Greenland, offshore Brazil and offshore Eastern Canada. Recently rising oil and gas prices have been highly beneficial to the company, as they raise profitability in an otherwise commodity-like market; on the flip side, high oil prices lead to increased production, and as the supply of oil and gas increases, prices will eventually fall. EnCana is also greatly affected by the Canadian-U.S. dollar exchange rate, as an appreciation of the U.S. dollar would increase the company's long-term debt while depreciation would decrease the value of the oil extracted relative to the price of drilling in Canada. Furthermore, the Government of Alberta recently raised royalties on operations in the Alberta oil sands, making the company's operations in the region less profitable. Still, with such large proved reserves, the company is in position to take advantage of near-term high-price conditions. EnCana's competition includes Anadarko Petroleum, Cabot Oil & Gas, Comstock Resources, and Apache. The company earned $6.7 billion in revenue in 2009.[1]
Contents
1 Company Overview
1.1 Operating Divisions[3]
2 Business Growth
2.1 FY 2009[1]
3 Trends and Forces
3.1 For EnCana, Oil and Gas Prices Determine Profitability
3.2 Fluctuating Exchange Rates Affect EnCana's Financials
3.3 A Renewable Future Means Long-Term Decline for Fossil Fuels...and EnCana
4 Competition
5 References
In December 2009 Encana split into two, forming the new Encana which is a pure play natural gas company and integrated oil company Cenovus Energy.[2]
Company Overview
EnCana entered into the integrated oilsands sector in 2007, in conjunction with integrated oil major ConocoPhillips, with the stated intent to increase joint production from 50,000 bbls/d to 400,000 bbls/d by 2015 on the upstream side and from 60,000 bbls/d to 550,000 bbls/d on the refining side.
Operating Divisions[3]
Canadian Division - includes the natural gas development and production assest located in British Columbia and Alberta, and the Deep Panuke natural gas project offshore Nova Scotia. Four key resource plays are located in the division: (i) Greater Sierra in northeast British Columbia, including the Horn River shale play; (ii) Cutbank Ridge on the Alberta and British Columbia border, including the Montney formation; (iii) Bighorn in west central Alberta; and (iv) Coalbed Methane (“CBM”) in southern Alberta.
USA Division - includes the natural gas development and production assets located in the US. Four key resource plays are located in the division: (i) Jonah in southwest Wyoming; (ii) Piceance in northwest Colorado; (iii) East Texas in Texas; and (iv) Fort Worth in Texas. The USA Division is also focused on the development of the Haynesville shale play located in Louisiana and Texas and the recent entrance into the Marcellus shale play located in Pennsylvania.
Business Growth
FY 2009[1]
Net revenue fell 50% to $6.7 billion.
Total oil production fell 4% to 3,003 MMcfe/d
Trends and Forces
For EnCana, Oil and Gas Prices Determine Profitability
Oil and gas prices have fluctuated heavily over the past few years, though the most recent trend is a rise in prices. Because both are nonrenewable forms of energy (they will eventually run out), slowing discoveries of new sources combined with increasing pricing has led to speculation that production is approaching peak oil quantities. Whether this is true or not, oil and gas are commodities: one company's gas can only be differentiated from another company's gas based on price. While EnCana currently benefits from high prices, the profitability of the current market will drive increased exploration and production, which could eventually cause prices to fall and margins to drop.
Fluctuating Exchange Rates Affect EnCana's Financials
Though many of EnCana's expenditures occur in Canada, and therefore use Canadian dollars, the worldwide price of oil is recorded in U.S. dollars. If the Canadian dollar appreciates relative to the U.S. dollar, the value of the oil that is extracted in Canada would decline because it would be sold in a less valuable currency relative to Canadian dollars. Furthermore, much of EnCana's long-term debt is held in U.S. dollars, meaning that an appreciation of the U.S. dollar would increase EnCana's relative debt, as the company would have to turn more Canadian dollars into U.S. dollars to pay it off. Thus, the depreciation of the U.S. dollar hurts the company in the short term and the appreciation of the U.S. dollar hurts the company in the long term.
A Renewable Future Means Long-Term Decline for Fossil Fuels...and EnCana
Fossil fuels, though highly cost-efficient forms of energy, are heavy polluters when burned. Increasing environmental concern over environmental degradation and global climate change is fueling a consumer-driven push away from dirty forms of energy toward cleaner forms like wind, solar, biofuels, and/or nuclear, especially in developed, politically-progressive regions like Europe, where renewables are catching on. This could lead to a long-term decrease in the demand for oil and gas. In emerging markets like China and India, however, the drive for economic growth supersedes environmental concerns, and oil and gas are still cheaper than solar. Since emerging markets are where most of the future opportunities in the global economy lay, EnCana and other oil and gas companies could continue to grow despite growth in the renewables sector.
Competition
EnCana's main competitors lie in the independent oil and gas sector, since the major oil companies like Exxon Mobil and BP are too large and diverse to fairly be called "competition". Among EnCana's independent competitors are Anadarko Petroleum, Cabot Oil & Gas, Comstock Resources, and Apache. Anadarko Petroleum is by far the largest of EnCana's competitors; though it only produces about half the gas EnCana does, Anadarko produces nearly 65,000 more barrels of oil per day. Comstock Resources is the smallest of EnCana's competitors, and is also betting on deep water exploration to deliver in the future. Apache's strategy is a unique one; the company buys up "mature" properties from oil majors and then extracts more from them, taking advantage of the high price level to keep margins up despite the use of expensive technology. Cabot Oil & Gas is the most similar to EnCana, though much smaller, as the company is heavily invested in natural gas (with only 3% of its reserves containing liquids). Cabot, however, has moved out of the offshore sector and is focusing on developing onshore North America.
Lizhan Environmental plans to launch a new product called Evergreen LZ. This textile is meant to be a synthetic textile which is very similar in its look and feel to genuine leather. The company hopes to begin sale of this product by the end of November 2010. The company expects that this new product will appeal to furniture and car manufacturers who are interested in environmentally friendly practices. Because the textiles highly resemble leather without actually being made from leather, the company expects to be able to sell Evergreen LZ at a higher margin than their other products.[2]
The company's initial public offering of stock on the NYSE occurred on November 18, 2010. The company offered 2.5M shares each for $4. This was within at the high end of the initial price range of $3-$4, but below the revised price range of $5-$6. The IPO raised a total of $10M. The lead underwriter of the deal was Maxim Group LLC.[3]
The company increased its net sales from 2008 to 2009 by 65%. The company reported sales of $13.1M in 2008 to $21.6M in 2009. During the same period, the company's net income was $1.5M and $2.7M respectively. In 2010, the company's gross margin was 17%. [4]
EnCana (NYSE:ECA) is an independent Canadian oil and gas company with a diverse portfolio of international holdings; with over 12 trillion cubic feet of natural gas and 1.1 billion barrels of oil in its reserves (most of which are proven), EnCana sees a large part of its production on the North American continent. The company is also involved in a joint venture with ConocoPhillips in the Alberta oilsands, and has significant shares on projects in Qatar, Oman, France, Greenland, offshore Brazil and offshore Eastern Canada. Recently rising oil and gas prices have been highly beneficial to the company, as they raise profitability in an otherwise commodity-like market; on the flip side, high oil prices lead to increased production, and as the supply of oil and gas increases, prices will eventually fall. EnCana is also greatly affected by the Canadian-U.S. dollar exchange rate, as an appreciation of the U.S. dollar would increase the company's long-term debt while depreciation would decrease the value of the oil extracted relative to the price of drilling in Canada. Furthermore, the Government of Alberta recently raised royalties on operations in the Alberta oil sands, making the company's operations in the region less profitable. Still, with such large proved reserves, the company is in position to take advantage of near-term high-price conditions. EnCana's competition includes Anadarko Petroleum, Cabot Oil & Gas, Comstock Resources, and Apache. The company earned $6.7 billion in revenue in 2009.[1]
Contents
1 Company Overview
1.1 Operating Divisions[3]
2 Business Growth
2.1 FY 2009[1]
3 Trends and Forces
3.1 For EnCana, Oil and Gas Prices Determine Profitability
3.2 Fluctuating Exchange Rates Affect EnCana's Financials
3.3 A Renewable Future Means Long-Term Decline for Fossil Fuels...and EnCana
4 Competition
5 References
In December 2009 Encana split into two, forming the new Encana which is a pure play natural gas company and integrated oil company Cenovus Energy.[2]
Company Overview
EnCana entered into the integrated oilsands sector in 2007, in conjunction with integrated oil major ConocoPhillips, with the stated intent to increase joint production from 50,000 bbls/d to 400,000 bbls/d by 2015 on the upstream side and from 60,000 bbls/d to 550,000 bbls/d on the refining side.
Operating Divisions[3]
Canadian Division - includes the natural gas development and production assest located in British Columbia and Alberta, and the Deep Panuke natural gas project offshore Nova Scotia. Four key resource plays are located in the division: (i) Greater Sierra in northeast British Columbia, including the Horn River shale play; (ii) Cutbank Ridge on the Alberta and British Columbia border, including the Montney formation; (iii) Bighorn in west central Alberta; and (iv) Coalbed Methane (“CBM”) in southern Alberta.
USA Division - includes the natural gas development and production assets located in the US. Four key resource plays are located in the division: (i) Jonah in southwest Wyoming; (ii) Piceance in northwest Colorado; (iii) East Texas in Texas; and (iv) Fort Worth in Texas. The USA Division is also focused on the development of the Haynesville shale play located in Louisiana and Texas and the recent entrance into the Marcellus shale play located in Pennsylvania.
Business Growth
FY 2009[1]
Net revenue fell 50% to $6.7 billion.
Total oil production fell 4% to 3,003 MMcfe/d
Trends and Forces
For EnCana, Oil and Gas Prices Determine Profitability
Oil and gas prices have fluctuated heavily over the past few years, though the most recent trend is a rise in prices. Because both are nonrenewable forms of energy (they will eventually run out), slowing discoveries of new sources combined with increasing pricing has led to speculation that production is approaching peak oil quantities. Whether this is true or not, oil and gas are commodities: one company's gas can only be differentiated from another company's gas based on price. While EnCana currently benefits from high prices, the profitability of the current market will drive increased exploration and production, which could eventually cause prices to fall and margins to drop.
Fluctuating Exchange Rates Affect EnCana's Financials
Though many of EnCana's expenditures occur in Canada, and therefore use Canadian dollars, the worldwide price of oil is recorded in U.S. dollars. If the Canadian dollar appreciates relative to the U.S. dollar, the value of the oil that is extracted in Canada would decline because it would be sold in a less valuable currency relative to Canadian dollars. Furthermore, much of EnCana's long-term debt is held in U.S. dollars, meaning that an appreciation of the U.S. dollar would increase EnCana's relative debt, as the company would have to turn more Canadian dollars into U.S. dollars to pay it off. Thus, the depreciation of the U.S. dollar hurts the company in the short term and the appreciation of the U.S. dollar hurts the company in the long term.
A Renewable Future Means Long-Term Decline for Fossil Fuels...and EnCana
Fossil fuels, though highly cost-efficient forms of energy, are heavy polluters when burned. Increasing environmental concern over environmental degradation and global climate change is fueling a consumer-driven push away from dirty forms of energy toward cleaner forms like wind, solar, biofuels, and/or nuclear, especially in developed, politically-progressive regions like Europe, where renewables are catching on. This could lead to a long-term decrease in the demand for oil and gas. In emerging markets like China and India, however, the drive for economic growth supersedes environmental concerns, and oil and gas are still cheaper than solar. Since emerging markets are where most of the future opportunities in the global economy lay, EnCana and other oil and gas companies could continue to grow despite growth in the renewables sector.
Competition
EnCana's main competitors lie in the independent oil and gas sector, since the major oil companies like Exxon Mobil and BP are too large and diverse to fairly be called "competition". Among EnCana's independent competitors are Anadarko Petroleum, Cabot Oil & Gas, Comstock Resources, and Apache. Anadarko Petroleum is by far the largest of EnCana's competitors; though it only produces about half the gas EnCana does, Anadarko produces nearly 65,000 more barrels of oil per day. Comstock Resources is the smallest of EnCana's competitors, and is also betting on deep water exploration to deliver in the future. Apache's strategy is a unique one; the company buys up "mature" properties from oil majors and then extracts more from them, taking advantage of the high price level to keep margins up despite the use of expensive technology. Cabot Oil & Gas is the most similar to EnCana, though much smaller, as the company is heavily invested in natural gas (with only 3% of its reserves containing liquids). Cabot, however, has moved out of the offshore sector and is focusing on developing onshore North America.
Last edited: