Encana Promises Continued Production Growth
Canadian producer Encana, in 1Q 2018 results released May 1, said it is on track to deliver production growth of more than 30% this year as it continues to focus on liquids-rich production in the US Permian and Canadian Montney shale plays.
Net earnings for the quarter fell to US$151mn from $431mn, although non-GAAP operating earnings rose to $156mn from $104mn and non-GAAP cash flow rose 44% year-on-year, to $400mn from $278mn.
“The first quarter marked a solid start to the year and reinforces our confidence in our plan to deliver more than 30% growth within corporate cash flow,” Encana CEO Doug Suttles said. “Our market diversification strategy delivered strong realized pricing and our ability to drive efficiency improvements ensures that commodity price increases can flow to the bottom line.”
Production in the first quarter averaged 324,400 barrels of oil equivalent/day (boe/day), as crude oil and natural gas liquids production increased to 145,200 b/day from 110,900 b/day and natural gas production slipped to 1.07bn ft3/day from 1.24bn ft3/day. During the quarter Encana’s realized natural gas price – including the impacts of its risk management programs – averaged US$2.94/mn Btu, down only slightly from the Henry Hub average of $3.00/mn Btu.
“The company actively manages regional price risk and has limited its exposure to AECO natural gas,” Encana said in its quarterly results statement, adding that it has secured significant market and price diversification through a combination of pipeline transportation and term financial basis hedging, which produced the strong realized pricing.
For the balance of this year, Encana has hedged 1.03bn ft3/day of expected natural gas production at an average price of US$3.02/mn Btu.