Markets

Encana's Q3 Loss Narrower than Expected, 2015 View Stays

Calgary, Alberta-based Encana CorporationECA 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).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ENCANA CORP (ECA): Free Stock Analysis Report

ENERGY TRAN EQT (ETE): Free Stock Analysis Report

MURPHY USA INC (MUSA): Free Stock Analysis Report

NORTHERN TIER (NTI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MUSA

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More