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Upstream energy firm Encana Corporation ECA provided a positive production update. The company announced that it has delivered high-margin growth from its four strategic assets – Permian, Eagle Ford, Duvernay and Montney basins – in the first half of this year.
Production Update
Encana stated that it has brought 72 new wells online in the past two months. Last month, these assets produced about 257,000 barrels of oil equivalent per day (BOE/d), 15% higher than the second-quarter 2015 average production. Management at Encana expects to meet its fourth-quarter production target of 270,000 BOE/d through continued growth from these assets.
The company provided an operational update on these developments for the month of August.
Permian: Production averaged 45,000 BOE/d, up 26% from the second-quarter average. The company started production from 44 new wells during July and August. 20 out of these are horizontal wells. Additionally, Encana’s well performance continues to improve.
Eagle Ford: Production averaged 57,100 BOE/d, up 25% from the second-quarter average production. The company commissioned 17 new wells during July and August. Encana also mentioned that the Patton Trust South Facility, which came online in July, raised the facility’s production capacity to over 25,000 BOE/d.
Duvernay: Production in the region averaged 9,400 BOE/d. The reported figure surged 62% from the second-quarter average production. A total of four wells were brought online in the past two months. Encana further mentioned that the impact of third-party transportation restrictions were partially offset by improved well performance and the start-up of Phase 2 of the 15-31 plant.
Montney: Production from the region averaged 145,000 BOE/d, up 7% from the last quarter average production. The company has commissioned seven new wells in the months of July and August. The impact of third-party transportation restrictions were partially offset by improved well performance.
Balance Sheet Strength
Encana expects to achieve debt reduction of $2 billion by the end of this year. The cash proceeds of about $1.8 billion from the recently announced sale of Haynesville assets and other divestments this year will support the company’s balance sheet.
Hedge Update
As of Aug 31, 2015, Encana hedged 38,000 barrels per day of its anticipated 2016 production at an average price of $62.83 per barrel. The company has also hedged 18,000 bbls/d of 2016 oil production under three-way costless collar arrangement. This will allow a price band of $47.24–$63.03 per barrel. Encana has also hedged 300 million cubic feet per day of expected 2016 natural gas production in a similar arrangement with a price range of $2.72–$3.43 per Mcf.
Zacks Rank and Key Stock Picks
Currently, Encana carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader energy sector are Tesoro Corporation TSO, Seadrill Partners LLC SDLP and Alon USA Partners, LP ALDW. All these stocks sport a Zacks Rank #1 (Strong Buy).
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Encana Corporation
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EXPLORATION STAGE |
CODE : ECA.TO |
ISIN : CA2925051047 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Encana is a oil and natural gas producing company based in Canada. Encana holds various exploration projects in Canada. Its main exploration property is BUFFALO HILLS in Canada. Encana is listed in Canada and in Germany. Its market capitalisation is CA$ 4.8 billions as of today (US$ 3.7 billions, € 3.3 billions). Its stock quote reached its highest recent level on November 23, 2018 at CA$ 9.99, and its lowest recent point on January 24, 2020 at CA$ 4.96. Encana has 973 120 000 shares outstanding. |