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-- liquids production of approximately 127,300 barrels per day (bbls/d), up
87 percent year-over-year
-- over 80 percent of capital invested in the company's four most strategic
assets, the Permian, Eagle Ford, Duvernay and Montney
-- 59 new wells brought on production in the Eagle Ford and Permian late in
the second quarter, with another 76 planned in the third quarter
-- reduced Eagle Ford drilling and completion costs by $1 million per well,
or 18 percent, compared to the first quarter
-- pace-setting Duvernay wells with production rates of up to 2,000 bbls/d
of condensate and 11.5 million cubic feet per day (MMcf/d) of rich gas
after 27 days on production
-- significant expansion of liquids inventory in the Montney , with higher
condensate yields in Dawson South and two recent Pipestone area wells
each producing over 1,000 bbls/d
"Following our successful portfolio transformation in 2014, we continue to lower costs, improve well performance and increase well inventory in our four most strategic assets," said
Second quarter liquids production increased more than five percent over the previous quarter, largely attributable to continued organic growth in the company's Eagle Ford and Permian positions. Second quarter natural gas production of approximately 1.6 billion cubic feet per day (Bcf/d) reflects a 16 percent decrease compared to the previous quarter, mainly due to divestitures, the company's seasonal production strategy for its Deep Panuke platform and takeaway restrictions in the
Total company production averaged 389,000 (BOE/d) with
"Through our culture of innovation, we continue to identify and seize opportunities to enhance our performance and make our four most strategic assets bigger, better and more efficient," said Suttles. "Our core assets are located in the heart of four of the highest netback basins in
Consistent with its strategy to grow high-margin production, the company expects to focus its remaining 2015 capital budget on its four most strategic assets. Based on assumptions of
Operational highlights: Lowering costs, improving well performance and increasing well inventory
Permian: Building a long-term growth engine
-- strong well performance with recent wells delivering early production
rates of over 1,000 bbls/d of oil
-- innovative casing designs for vertical and horizontal drilling programs
are saving on average $350,000 per well
-- average horizontal well cycle times reduced to 22 days from 26 days in
the first quarter, with the best well at 15 days
-- oil gathering agreement is expected to improve operating margins by up
to $2 per barrel (bbl)
-- drilled 23 net horizontal and 29 net vertical wells in the second
quarter
-- second quarter production of 35,800 BOE/d, comprising 29,500 bbls/d of
liquids and 38 MMcf/d of natural gas
-- significant growth expected in second half of the year as the company
plans 16 horizontal wells to be brought on production in July and a
further 70 wells through the remainder of 2015
-- on track for average fourth quarter production of 50,000 BOE/d
Eagle Ford: Growing inventory after successful first year
-- potential to grow well inventory to over 600 drilling locations - up
from the initial 400 since entering the play one year ago
-- strong well results from the Graben area with a recent well on
production at 1,300 bbls/d of oil and 675 thousand cubic feet per day
(Mcf/d) of natural gas
-- upgrades completed at Patton Trust South facility, increasing its
capacity from 5,000 bbls/d to over 18,000 bbls/d
-- drilling and completion costs lowered by $1 million per well, or 18
percent, compared to the first quarter of the year
-- achieved spud-to-rig release cycle time of less than 10 days during the
second quarter
-- base decline reduced 50 percent year-to-date
-- drilled 14 net wells in the second quarter
-- second quarter production of 45,800 BOE/d, comprising 39,800 bbls/d of
liquids and 36 MMcf/d of natural gas
-- significant growth expected in second half of the year as the company
plans 17 wells to be brought on production in July and a further 21
wells through the remainder of 2015
-- on track for average fourth quarter production of 57,000 BOE/d
-- pace-setting wells with production rates up to 2,000 bbls/d of
condensate and 11.5 MMcf/d of rich gas after 27 days on production
-- industry-leading drilling and completions costs of approximately $10.4
million per well achieved on latest multi-well pad
-- continued efficiency gains from dual-frac spread operations, averaging
nine fracs per day
-- savings of over $1 million per well in water handling costs due to the
start-up of water infrastructure
-- drilled one net well in the second quarter
-- second quarter production of 5,800 BOE/d, comprising 3,000 bbls/d of
liquids and 17 MMcf/d of natural gas
-- expect to bring two wells on production in July and a further 11 wells
through the remainder of 2015
-- on track for average fourth quarter production of 17,000 BOE/d
-- well results in theSouth Dawson area ofCutbank Ridge confirmed the company's predicted higher condensate yields, increasing from five barrels per million cubic feet (bbls/MMcf) of natural gas to over 40 bbls/MMcf -- initial testing of the oil window in thePipestone area showed strong potential with two recent wells each producing 1,000 bbls/d -- enhanced completion design delivering an average 33 percent production improvement -- liquids production increased by 1,000 bbls/d through optimization work at the 16-34Pipestone plant -- realized$18 million in total cost savings at an average of$400,000 per well since the commissioning of the water resource hub nearDawson Creek, British Columbia inSeptember 2014 . The facility blends produced water with saline water and provides nearly 90 percent of the water needed for the company's operations in the area -- drilled six net wells in the second quarter -- second quarter production of 135,900 BOE/d, comprising 21,600 bbls/d of liquids and 685 MMcf/d of natural gas -- on track for average fourth quarter production of 146,000 BOE/d
Additional information on
Dividend declared OnJuly 23, 2015 ,Encana's Board of Directors declared a dividend of$0.07 per share payable onSeptember 30, 2015 , to common shareholders of record as ofSeptember 15, 2015 . Second Quarter Highlights ---------------------------------------------------------------------------- Financial Summary ---------------------------------------------------------------------------- (for the period ended June 30) Q2 Q2 ($ millions, except per share amounts) 2015 2014 ---------------------------------------------------------------------------- Cash flow1 181 656 Per share diluted 0.22 0.89 ---------------------------------------------------------------------------- Operating earnings (loss) 1 (167) 171 Per share diluted (0.20) 0.23 ---------------------------------------------------------------------------- Earnings Reconciliation Summary ---------------------------------------------------------------------------- Net earnings (loss) attributable to common (1,610) 271 shareholders After-tax (addition) deduction: Unrealized hedging gain (loss) (187) 8 Impairments (1,328) - Restructuring charges (10) (5) Non-operating foreign exchange gain (loss) 114 156 Gain (loss) on divestitures 1 135 Income tax adjustments (33) (194) ---------------------------------------------------------------------------- Operating earnings (loss) 1 (167) 171 Per share diluted (0.20) 0.23 ---------------------------------------------------------------------------- 1 Cash flow and operating earnings (loss) are non-GAAP measures as defined in Note 1 on page 4.
---------------------------------------------------------------------------- Production Summary ---------------------------------------------------------------------------- (for the period ended June 30) Q2 Q2 (After royalties) 2015 2014 % Δ ---------------------------------------------------------------------------- Natural gas (MMcf/d) 1,568 2,541 (38) ---------------------------------------------------------------------------- Liquids (Mbbls/d) 127.3 68.2 87 ----------------------------------------------------------------------------
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Natural Gas and Liquids Prices
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Q2 2015 Q2 2014
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Natural Gas
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NYMEX ($/MMBtu) 2.64 4.67
Encana realized gas price1 ($/Mcf) 3.52 4.08
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Oil and Natural Gas Liquids ($/bbl)
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WTI 57.94 102.99
Encana realized liquids price1 43.78 69.53
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1 Realized prices include the impact of financial hedging.
A conference call and webcast to discuss the second quarter 2015 results will be held for the investment community today at
NOTE 1: Non-GAAP measures
This news release contains references to non-GAAP measures as follows:
-- Cash flow is a non-GAAP measure defined as cash from operating
activities excluding net change in other assets and liabilities, net
change in non-cash working capital and cash tax on sale of assets. Free
cash flow is a non-GAAP measure defined as cash flow in excess of
capital investment, excluding net acquisitions and divestitures, and is
used to determine the funds available for other investing and/or
financing activities.
-- Operating earnings (loss) is a non-GAAP measure defined as net earnings
(loss) attributable to common shareholders excluding non-recurring or
non-cash items that management believes reduces the comparability of the
company's financial performance between periods. These after-tax items
may include, but are not limited to, unrealized hedging gains/losses,
impairments, restructuring charges, non-operating foreign exchange
gains/losses, gains/losses on divestitures, income taxes related to
divestitures and adjustments to normalize the effect of income taxes
calculated using the estimated annual effective income tax rate.
These measures have been described and presented in this news release in order to provide shareholders and potential investors with additional information regarding
Important Information
ADVISORY REGARDING OIL AND GAS INFORMATION
30-day initial production and other short-term rates are not necessarily indicative of long-term performance or of ultimate recovery. In this news release, certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (Mcf) to one barrel (bbl). BOE may be misleading, particularly if used in isolation. A conversion ratio of six Mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the well head. Given that the value ratio based on the current price of natural gas as compared to oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
The disclosure regarding drilling locations is based on internal estimates. The drilling locations which
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS
This news release contains certain forward-looking statements or information (collectively, "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements include, but are not limited to:
-- expectation to accelerate liquids production growth in the second half
of 2015
-- number of wells for 2015 and expected production
-- the potential to grow well inventory
-- capital spending plans to grow higher margin production
-- expectation of meeting the targets in the Company's 2015 corporate
guidance
-- anticipated cash flow
-- the Company's expectation to fully fund its 2015 capital program and
dividend with anticipated cash flow and proceeds from divestitures
-- improved operating margins
-- anticipated dividends
-- design and optimization work to improve well performance and production
rates and reduce costs
Readers are cautioned upon unduly relying on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, these statements involve numerous assumptions, known and unknown risks and uncertainties and other factors, which can contribute to the possibility that such statements will not occur or which may cause the actual performance and financial results of the Company to differ materially from those expressed or implied by such statements. These assumptions include, but are not limited to:
-- achieving average production for 2015 of between 1.60 Bcf/d and 1.70
Bcf/d of natural gas and 130,000 bbls/d to 150,000 bbls/d of liquids
-- commodity prices for natural gas and liquids based on NYMEX of $3.00 per
MMBtu and WTI of $50 per bbl through the remainder of 2015
-- U.S./Canadian dollar exchange rate of 0.80
-- effectiveness of the Company's resource play hub model to drive
productivity and efficiencies
-- results from innovations
-- availability of attractive hedge contracts
-- expectations and projections made in light of, and generally consistent
with, Encana's historical experience and its perception of historical
trends, including with respect to the pace of technological development,
the benefits achieved and general industry expectations
Risks and uncertainties that may affect the operations and development of our business include, but are not limited to: the ability to generate sufficient cash flow to meet the Company's obligations; commodity price volatility; ability to secure adequate product transportation and potential pipeline curtailments; variability of dividends to be paid; the timing and costs of well, facilities and pipeline construction; business interruption and casualty losses or unexpected technical difficulties; counterparty and credit risk; risk and effect of a downgrade in credit rating, including access to capital markets; fluctuations in currency and interest rates; assumptions based upon the Company's 2015 corporate guidance; failure to achieve anticipated results from cost and efficiency initiatives; risks inherent in marketing operations; risks associated with technology; the Company's ability to acquire or find additional reserves; imprecision of reserves estimates and estimates of recoverable quantities of natural gas and liquids from resource plays and other sources not currently classified as proved, probable or possible reserves or economic contingent resources, including future net revenue estimates; risks associated with past and future divestitures of certain assets or other transactions or receive amounts contemplated under the transaction agreements (such transactions may include third-party capital investments, farm-outs or partnerships, which
Although
Encana Corporation Encana is a leading North American energy producer that is focused on developing its strong portfolio of resource plays, held directly and indirectly through its subsidiaries, producing natural gas, oil and natural gas liquids (NGLs). By partnering with employees, community organizations and other businesses,
SOURCE:
Further information on
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor contact:Brendan McCracken Vice-President, Investor Relations (403) 645-2978Brian Dutton Director, Investor Relations (403) 645-2285Patti Posadowski Sr. Advisor, Investor Relations (403) 645-2252 Media contact:Jay Averill Director, Media Relations (403) 645-4747Doug McIntyre Sr. Advisor, Media Relations (403) 645-6553 Source:Encana Corporation
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