Encana Earnings Fall With Lower Oil and Gas Production

Canadian Energy natural gas producer Encana Corp $ECA reported lower  third quarter earnings before the market Wednesday as production on oil and gas fell. Total oil and gas production fell to 284,000 barrels of oil equivalent per day (boe/d) from 338,000 boe/d a year ago.

Canadian Energy natural gas producer Encana Corp $ECA reported lower  third quarter earnings before the market Wednesday as production on oil and gas fell. Total oil and gas production fell to 284,000 barrels of oil equivalent per day (boe/d) from 338,000 boe/d a year ago.

The Calgary, Alberta based company have cut costs further as drilling and completion costs continue to fall. 

Earnings: Operating earnings per share of 2 cents, below Consensus Estimate of 5 cents. Revenue oft $861 million beating Consensus Estimate of $827 million.

Reaction: Encana NYSE $ECA Pre Open US$ 12.75 –0.16 (-1.21%)

Production 

Quarterly natural gas production declined approximately 29% year over year to 939 million cubic feet per day, while liquids production rose 9% year over year to 127.5 thousand barrels per day.

Permian production in October averaged 80,000 BOE/d, up 25 percent from the third quarter and ahead of its fourth quarter 2017 target of 75,000 BOE/d.

  • Montney production in October totaled 147,000 BOE/d, up 32 percent from the third quarter, with liquids production of more than 25,000 bbls/d, up 42 percent from the third quarter.

Encana montney

Prices

Encana’s realized natural gas price were $2.23 per thousand cubic feet, up 10.4% from the year-ago quarter level of $2.02. Meanwhile, realized liquids price rose marginally to $41.86 per barrel from $41.82 in the third quarter of 2016.

Costs & Expenses

Strong execution performance and continued efficiencies have lowered Encana’s costs and strengthened its resilience. The company is on track to deliver a 10 percent capital productivity improvement by year-end. Year to date, Encana has reduced transportation and processing costs by $98 million and operating expense (excluding long-term incentive costs) by $56 million, compared to 2016.

Cash and Balance Sheet

Encana’s strong balance sheet and liquidity position it to manage commodity price volatility and deliver quality corporate returns throughout the commodity cycle. By year-end, the company expects net debt to adjusted EBITDA ratio will be about two times and to have total liquidity of over $5 billion.

In 2018, Encana expects its total capital and cash flow to be in balance. Through its five-year plan, which is built on flat $50 WTI and $3 NYMEX natural gas prices, Encana expects its return on capital employed will climb to between 10 and 15 percent, to deliver approximately 25 percent compound annual growth in non-GAAP cash flow and generate around $1.5 billion of cumulative non-GAAP free cash flow.

Outlook

“Driven by innovation and strong execution, each of our core assets is firmly on track to meet or beat its 2017 targets,” said Doug Suttles, Encana President & CEO. “Consistent with our plan, the Permian and Montney are delivering significant oil and condensate growth in the fourth quarter, driving continued corporate margin expansion and setting the stage for a strong finish to the year.”

“Our financial and operational performance demonstrates our strategy is working and that we can deliver quality corporate returns through the commodity cycle,” added Suttles. “We are generating significant momentum for 2018 and are strongly positioned to deliver leading returns, cash flow growth and free cash flow through our five-year plan.”

About Encana Corporation

Encana is a leading North American energy producer that is focused on developing its strong portfolio of resource plays, held directly and indirectly through its subsidiaries, producing oil, natural gas liquids (NGLs) and natural gas. By partnering with employees, community organizations and other businesses, Encana contributes to the strength and sustainability of the communities where it operates. Encana common shares trade on the Toronto and New York stock exchanges under the symbol ECA.

Source: Encana http://www.encana.com/news-stories/news-releases/details.html?release=1047682

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