In its second quarter financial report, Encana says it delivered strong financial performance due to increased activity, streamlined efficiencies and rising oil prices. Company photo.
Encana on track to grow annual production by over 30 per cent
Encana reported a strong financial performance in the second quarter of this year, mostly due to increased activity, efficiencies and rising oil prices.
The Calgary-based company says it is on track to increase its annual production by over 30 per cent and expects to generate free cash flow this year, one year earlier than planned. According to Encana, cash from operating activities reached $475 million, up almost 120 per cent over the second quarter last year.
“We delivered strong financial performance through the second quarter and continue to demonstrate our ability to execute efficiently at scale in a busier market,” said Doug Suttles, Encana President & CEO.
Non-GAAP cash flow of $586 million, up 67 per cent year-over-year and 47 per cent over the first quarter in 2018.
The company reported its liquids production rose by 24 per cent over this time last year and 7 per cent in the first quarter to 155,300 barrels per day (b/d). Encana reports a 48 per cent increase in condensates. Oil and condensate contributed to 76 per cent of Q2 liquids production while natural gas production amounted to 1,095 million cubic feet per day (MMcf/d).
In the Permian Basin, production jumped by 43 per cent over Q2 2017 and current production is now at 90,000 barrels of oil equivalent per day (boe/d). According to the company, the Permian realized oil price, including basis hedges, was $70.15 per barrel, or 103 percent of WTI.
“Through a combination of pipeline transportation and term financial basis hedging, Encana has virtually no exposure to Midland oil pricing through 2018 and limited exposure through 2019,” the company wrote in a press release.
In the company’s Eagle Ford operations, Encana hit a combined production level of 58,500 boe/d, returning to growth and delivering the highest margin production in the portfolio. The company reports it brought 11 new wells into production and is showing encouraging results from the Graben and Austin Chalk.
In the Duvernay, two test wells are delivering average 30-day initial production rates of around 1,050 bbls/d of condensate
Meanwhile, in Canada’s Montney play, Encana reported its liquids production soared by 128 per cent year-over-year and now sits at 45,000 b/d.
“Our multi-basin portfolio continues to provide a competitive advantage, helping us effectively manage risk, provide optionality to direct capital to our highest margin opportunities and transfer learnings across the business,” said Suttles.
The company says that by optimizing resource recovery through its cube development model, it will boost the value of its multi-basin portfolio by allocating capital to its highest return operations. Encana says it is on track to increase its oil and condensate growth through the second half of this year.
As well, the company is moving forward with its $400 million share repurchase program. “Year-to-date, through its normal course issuer bid, the company has purchased and cancelled approximately 16.8 million common shares for total consideration of about $200 million,” Encana reported in a press release, adding it expects to repurchase the full $400 million by year-end.
The Board of Directors declared a dividend of $0.015 per common share payable on September 28, 2018 to common shareholders of record as of September 14, 2018.
The company reported a net loss of $151 million mostly due to a non-cash, before-tax, unrealized net loss on risk management.