By Nathan Slaughter, Scarcity & Wealth

Natural gas accounts for fully 96% of the production mix at Encana (ECA). That skewed weighting puts Encana at a disadvantage in the current pricing environment.

The Canadian company makes no bones about being a natural gas specialist and is an outspoken industry advocate. And if you're looking for a well-managed pure play that is perhaps the most leveraged to rising natural gas, this is it.

Encana has secured 11.7 million acres to explore and develop. Much of that land lies north of the border in the Bighorn, Cutbank Ridge, and Horn River gas basins in Alberta and British Columbia.

But the firm also has a major presence in some of the top U.S. plays, most notably the Haynesville Shale in Louisiana and East Texas.   

Post continues below:

Encana's latest target is Michigan's Collingwood Shale. The company has recently amassed 250,000 acres in this region for just $150 per acre, mere pennies.

The value of this shrewd move is just now becoming obvious. According to Morningstar, recent Collingwood auctions have been closing as high as $5,500 per acre.

With dominant positions in low-cost supply basins throughout North America, Encana has built up a massive base of 14.3 trillion cubic feet (Tcf) in proved gas reserves -- 23 Tcf if you include reserves characterized as probable.

To put that number in perspective, a billion cubic feet (Bcf) of gas can be converted into 8.3 million gallons of gasoline.

Encana currently has about 1,600 wells in operation, which trails only ExxonMobil as the nation's top gas producer.

The company can easily accelerate production growth if it wants to. But there's no sense in rushing to get gas out of the ground today for less than $4 per Mcf -- not when you can wait and sell it tomorrow for $6 per Mcf or more.

So management is targeting slow, but steady 5% to 7% annual growth for the time being.

In the meantime, profits aren't exactly suffering. Last quarter, the company generated $1.2 billion ($1.57 per share) in cash flow, amply covering the $0.20 per share dividend.

And that's with rock-bottom prices. Imagine the bottom line potential when those 3.5 Bcf per day are being sold at more favorable prices.

Meanwhile, management has locked up more than half of its 2012 production at an average NYMEX price of $5.80 per Mcf. That's a hefty 48% premium to the going rate.

Looking ahead, Encana also has several additional catalysts on the horizon. The firm is plowing $1 billion into liquids-rich plays from Mississippi to Colorado.

Elsewhere, Encana has a 30% ownership stake in the Kitimat LNG facility, which recently received an export permit from Canada's National Energy Board.

This is one of just a small handful of LNG export hubs in North America, and the facility will be equipped to ship 1.4 Bcf of gas per day to Pacific Rim customers.

Finally, Encana is also an emerging leader in natural gas transportation fuels. The company recently opened a new CNG pumping station in Alberta, which gives the firm a solid foothold in this attractive niche.

Action to Take --> If natural gas prices turn higher, Encana will among the biggest winners. The company has a high-quality asset base and a 50-year inventory of low-cost drilling sites to juice future production and earnings.

As an added bonus, the shares offer a nice 3.6% dividend yield, roughly double their peer group average.

Related articles

• Oil services: A trio of favorites
• Enterprise Products: An S&P 5-star stock
• Williams Partners: Natural gas gains?