Encana Earnings Shine With Higher Natural Gas Prices, $ECA up 3.5%

Canadian Energy natural gas producer Encana Corp shares jumped 3.5% after releasing earnings before the market Friday.  They have cut costs further and have boosted oil and gas production volumes with higher realized prices. 

Canadian Energy natural gas producer Encana Corp shares jumped 3.5% after releasing earnings before the market Friday. The Calgary, Alberta based company have cut costs further and have boosted oil and gas production volumes with higher realized prices. ECA has continued to improve their cash-flow measure higher than previously anticipated. Drilling and completion costs continue to fall. 

Earnings: Operating earnings of 18 cents per share, Well ahead of consensus estimate of 4 cents and up from the year-ago period earnings of 10 cents per share.  Revenue of $1,083 million above the consensus estimate $773 million.  Revenues were 197.5% higher than prior-year figure $364 million.

Reaction: Encana NYSE ECA Open 10.00 +0.34 (+3.52%)

Production 

Quarterly natural gas production fell approximately 19% year over year to 1,146 million cubic feet per day, while liquids production fell 5% year over year to 124.9 thousand barrels per day. $ECA is the second largest gas producer in North America with land and resources in a number of the premium shale and tight gas resource plays. 

Prices

Encana’s realized natural gas price were $2.56 per thousand cubic feet, up 37.6% from the year-ago quarter level of $1.86. Meanwhile, liquids price rose to $41.97 per barrel from $38.47 in the second quarter of 2016, reflecting an increase of 9%.

Costs & Expenses

Total operating expenses were cut by 40.3% from second-quarter 2016 to $762 million. The decline is primarily attributed to the reduction in impairment charges. Encana reported operating costs of $113 million for the reported quarter, 16% lower than the year-ago quarter level.

Transportation and processing expenses fell 15% to $206 million. Administration and depreciation charges were down by 60% and 16%, respectively.

Cash and Balance Sheet

Encana’s capital investments during the quarter were $415 million. As of Jun 31, 2017, cash and cash equivalent was $395 million and long-term debt was $4,198 million with a debt-to-capitalization ratio of 38.2%.

Source: Encana

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