Calgary, Alberta-based Encana Corporation ECA reported better-than-expected third-quarter 2015 results on improved crude volumes. Shares of the company gained over 2% following the beat.
The exploration and production company reported operating loss per share of 3 cents, narrower than the Zacks Consensus Estimate of a loss of 4 cents.
The bottom line, however, compared unfavorably with the year-ago quarter earnings of 38 cents per share. Lower natural gas volumes and weak oil and gas prices hampered results.
Encana Corporation (ECA) - Earnings Surprise | FindTheCompany
Quarterly revenues (net of royalties) came in at $1,312 million, which comfortably surpassed the Zacks Consensus Estimate of $1,185 million. However, the top line plunged 42.6% from the prior-year figure of $2,285 million.
Production & Prices
In the third quarter, natural gas production declined more than 30% year over year to 1,547 million cubic feet per day (Mmcf/d). Encana's realized natural gas prices were $3.71 per thousand cubic feet, lower than the year-ago quarter level of $4.03.
The company's oil and liquids production surged 35% year over year to 140,400 barrels per day on strong contribution from the Montney, Duvernay, Eagle Ford and Permian shale plays. Encana sold oil at $49.38 per barrel, significantly down from $90.22 per barrel during third-quarter 2014.
Operating Expenses
Encana reported operating costs of $190 million for the reported quarter, flat with the year-ago quarter level.
Cash Flows
Encana generated cash flows from operations of $371 million or 44 cents per share as against $807 million or $1.09 per share in the third quarter of 2014.
Capital Spending and Balance Sheet
Encana's capital investments during the quarter were $473 million. As of Sep 30, 2015, cash and cash equivalent was $352 million and long-term debt was $6,128 million. This represents a debt-to-capitalization ratio of 52.3%.
Guidance and Outlook
Encana reiterated 2015 capital investment guidance of $2–$2.2 billion. The company also reaffirmed its full-year cash flow in the range of $1.4–$1.6 billion.
For 2015, the company expects total natural gas production in the 1,600–1,700 Mmcf/d range. Liquid production is anticipated to range between 130 Mbbls/d and 150 Mbbls/d. Total production is expected to range between 395 MBOE/d and 430 MBOE/d.
Encana expects to lower debt by about $2.8 billion by the end of this year. Also, the company has no long-term maturities before 2019.
Zacks Rank and Key Stock Picks
Currently, Encana carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the energy sector are Murphy USA Inc. MUSA, Energy Transfer Equity, L.P. ETE and Northern Tier Energy LP NTI. All these stocks sport a Zacks Rank #1 (Strong Buy).
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