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CALGARY, AB --(Marketwired -May 12, 2015 ) -Encana (TSX: ECA) (NYSE: ECA)
-- cash flow of approximately$495 million , up 31 percent from the fourth quarter of 2014 -- liquids production of approximately 120,700 barrels per day (bbls/d), up 78 percent year-over-year and 13 percent from the fourth quarter of 2014 -- significant improvements in well performance, drilling and completion cycle times and cost savings in the company's four most strategic assets, theMontney ,Duvernay , Eagle Ford and Permian -- approximately 80 percent of capital invested in the company's four most strategic assets -- continued efficiencies that have the company on track to deliver the full-year capital savings of$300 million and direct operating cost savings of$75 million embedded in its 2015 guidance -- completed a bought deal common share offering in March, and in early April used the net proceeds, along with cash on hand, to redeem approximately$1.3 billion of long-term debt
"Through the continued advancement of our strategy, our first quarter results demonstrate the impact of our high quality portfolio, focused capital investment and prudent balance sheet management," said
Consistent with its strategy to invest capital to grow higher margin production, and supported by its portfolio transformation in 2014,
"We've made good progress repositioning our portfolio which now includes core positions in some of the highest netback basins in
Total company production averaged approximately 430,100 barrels of oil equivalent per day (BOE/d) during the quarter, down from about 536,100 BOE/d in the same quarter in 2014, reflecting the sale of lower margin assets and the company's shift to a higher margin, liquids-weighted production mix.
The company continues to prudently manage its balance sheet and in April used the net proceeds from its common share offering, and cash on hand, to redeem approximately
As announced in its revised guidance, and based on assumptions of
On a reported basis, due primarily to a non-cash, after-tax ceiling test impairment and a non-operating foreign exchange loss,
Innovation delivers better wells, lower costs and creates line of sight to larger drilling inventory "Our team is doing a good job significantly improving well performance, lowering costs all across our operations and gaining line of sight to increased drilling inventory," said Suttles. "We are leveraging the power of our portfolio by taking proven drilling and completion techniques from areas such as the Haynesville, Piceance and
Permian: RPH model accelerating development In its first full quarter of activity,
Eagle Ford: Improving production and lowering costs
Dividend Declared OnMay 11, 2015 , the Board of Directors declared a dividend of$0.07 per share payable onJune 30, 2015 to common shareholders of record as ofJune 15, 2015 . First Quarter Highlights ---------------------------------------------------------------------------- Financial Summary ---------------------------------------------------------------------------- (for the period endedMarch 31 ) ($ millions, except per share amounts) Q1 2015 Q1 2014 ---------------------------------------------------------------------------- Cash flow(1) 495 1,094 Per share diluted 0.65 1.48 ---------------------------------------------------------------------------- Operating earnings(1) 9 515 Per share diluted 0.01 0.70 ---------------------------------------------------------------------------- Earnings Reconciliation Summary ---------------------------------------------------------------------------- Net earnings (loss) attributable to common shareholders (1,707) 116 After-tax (addition) deduction: Unrealized hedging gain (loss) (98) (203) Impairments (1,222) - Restructuring charges - (10) Non-operating foreign exchange gain (loss) (508) (194) Gain (loss) on divestitures 10 - Income tax adjustments 102 8 ---------------------------------------------------------------------------- Operating earnings(1) 9 515 Per share diluted 0.01 0.70 ---------------------------------------------------------------------------- (1) Cash flow and operating earnings are non-GAAP measures as defined in Note 1. ---------------------------------------------------------------------------- Production Summary ---------------------------------------------------------------------------- (for the period endedMarch 31 ) % (after royalties) Q1 2015 Q1 2014 ∆ ---------------------------------------------------------------------------- Natural gas (MMcf/d) 1,857 2,809 (34) ---------------------------------------------------------------------------- Liquids (Mbbls/d) 120.7 67.9 78 ----------------------------------------------------------------------------
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First Quarter Natural Gas and Liquids Prices
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Q1 2015 Q1 2014
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Natural gas
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NYMEX ($/MMBtu) 2.98 4.94
Encana realized gas price(1)($/Mcf) 4.78 5.82
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Oil and NGLs($/bbl)
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WTI 48.64 98.68
Encana realized liquids price(1) 37.83 69.19
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(1) Realized prices include the impact of financial hedging.
A conference call and webcast to discuss the results will be held for the investment community today,
The Annual and Special Meeting of Shareholders will be held today,
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,
Important Information Encana reports in U.S. dollars unless otherwise noted. Production, sales and reserves estimates are reported on an after-royalties basis, unless otherwise noted. Per share amounts for cash flow and earnings are on a diluted basis. The term liquids is used to represent oil, NGLs and condensate. The term liquids rich is used to represent natural gas streams with associated liquids volumes. Unless otherwise specified or the context otherwise requires, reference to
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.
-- Operating earnings is a non-GAAP measure defined as net earnings
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
ADVISORY REGARDING OIL AND GAS INFORMATION -
30-day initial production and 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.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS - In the interests of providing
Forward-looking statements in this news release include, but are not limited to:
-- on track to deliver efficiencies and full-year capital savings of$300 million and direct operating cost savings of$75 million -- focused investment in assets expected to deliver a significant increase of liquids production in the second half of 2015 -- anticipated future interest expense savings while further enhancing its financial flexibility -- the company's expectation to fully fund its 2015 capital program and dividend with anticipated cash flow and proceeds from divestitures -- expected hedging activities -- anticipated cash flow -- expected net production for 2015 -- the continued evolution of the company's resource play hub model to drive greater productivity and cost efficiencies -- potential stacked pay and future performance driven by new technology -- anticipated increased initial production rates and well performance -- anticipated 2015 capital investment -- anticipated dividends -- the expectation of meeting the targets in the company's 2015 corporate guidance
Readers are cautioned not to place undue reliance 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, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause the company's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These assumptions, risks and uncertainties include, among other things:
-- commodity price volatility
-- assumptions based upon the company's current guidance
-- fluctuations in currency and interest rates
-- risks inherent in the company's and its subsidiaries' marketing
operations, including credit risks
-- 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
-- potential disruption or unexpected technical difficulties in developing
new facilities
-- risks associated with technology
-- the company's ability to acquire or find additional reserves
-- availability of hedges at attractive prices and hedging activities
resulting in realized and unrealized losses business interruption and
casualty losses
-- risk of the company not operating all of its properties and assets
-- risk of downgrade in credit rating and its adverse effects
-- counterparty risk
-- liability for indemnification obligations to third parties
-- variability of dividends to be paid
-- its ability to generate sufficient cash flow from operations to meet its
current and future obligations
-- its ability to access external sources of debt and equity capital
-- the timing and the costs of well and pipeline construction
-- risk that the company may not conclude 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 Encana may refer to from
time to time as "partnerships" or "joint ventures" and the funds
received in respect thereof which Encana may refer to from time to time
as "proceeds", "deferred purchase price" and/or "carry capital",
regardless of the legal form) as a result of various conditions not
being met
-- changes in royalty, tax, environmental, greenhouse gas, carbon,
accounting and other laws or regulations or the interpretations of such
laws or regulations
-- political and economic conditions in the countries in which the company
operates
-- terrorist threats
-- risks associated with existing and potential future lawsuits and
regulatory actions made against the company
-- risk arising from price basis differential
-- the company's ability to secure adequate product transportation
-- and other risks and uncertainties described from time to time in the
reports and filings made with securities regulatory authorities by
Encana
Although
Forward-looking information respecting anticipated 2015 cash flow for
Furthermore, the forward-looking statements contained in this news release are made as of the date hereof and, except as required by law,
SOURCE:
FOR FURTHER INFORMATION PLEASE CONTACT:
Further information on
Investor contact:Brian 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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