News
CALGARY, AB --(Marketwired -February 24, 2016 ) - (TSX: ECA) (NYSE : ECA)
-- fourth quarter production from the core four assets totaled 274,400
barrels of oil equivalent per day (BOE/d), up 35 percent from the fourth
quarter of 2014 and exceeding target of 270,000 BOE/d
-- fourth quarter total liquids production of 145,000 barrels per day
(bbls/d), up 36 percent from the fourth quarter of 2014
-- fourth quarter cash flow of $383 million , up three percent from the
third quarter of 2015 despite lower commodity prices
-- achieved reserves replacement ratio of 233 percent for the core four
assets (Canadian protocol)
-- over $400 million in capital and operating efficiencies captured in
2015, exceeding target of $375 million
-- an almost 30 percent, or $2 billion , reduction in debt, with no long-
term debt maturities until 2019
-- significant liquidity through the renewal of $4.5 billion of unsecured
credit facilities that are fully committed and mature in 2020
"Each year since the launch of our strategy, we have strengthened our balance sheet, increased our financial flexibility and lowered our cost structures. We enter 2016 with tremendous liquidity, a robust hedging program and a strong balance sheet which we will continue to prudently manage and protect," said
2015 fourth quarter and year-end results For the fourth quarter of 2015,
Financial resilience in a low price environment Throughout 2015,
At
The company successfully captured over
Updated 2016 capital and production guidance
Approximately 95 percent of 2016 capital will be invested in the core four assets, the Permian,
The company expects its cost structure in 2016 to be around
--$75 million to$125 million in transportation and processing costs --$50 million in operating costs --$25 million in production, mineral and other taxes --$50 million in overhead costs
The company has hedged close to 75 percent of March to
The company has hedged approximately 75 percent of March to
Dividend declared On
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Financial Summary
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(for the period ended December 31) Q4 Q4
($ millions, except per share amounts) 2015 2014 2015 2014
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Cash flow (1) 383 377 1,430 2,934
Per share diluted 0.45 0.51 1.74 3.96
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Operating earnings (1) 111 35 (61) 1,002
Per share diluted 0.13 0.05 (0.07) 1.35
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Earnings Reconciliation Summary
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Net earnings (loss) attributable to
common shareholders (612) 198 (5,165) 3,392
After tax (addition) deduction:
Unrealized hedging gain (loss) (66) 341 (244) 306
Impairments (514) - (4,130) -
Non-operating foreign exchange gain
(loss) (96) (151) (702) (407)
Income tax adjustments (42) (12) 8 (8)
Restructuring charges (5) (4) (45) (24)
Gain (loss) on divestitures - 9
(11) 2,523
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Operating earnings (1) 111 35 (61) 1,002
Per share diluted 0.13 0.05 (0.07) 1.35
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(1) Cash flow and operating earnings are non-GAAP measures as defined in Note 1.
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Production Summary
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(for the period ended December 31 )
(Net, after royalties) Q4 Q4 % %
2015 2014 Change 2015 2014 Change
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Natural gas (MMcf/d) 1,571 1,861 -16 1,635 2,350 -30
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Oil and NGLs (Mbbls/d) 145.0 106.4 36 133.4 86.8 54
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Total production (MBOE/d) 406.8 416.7 -2 405.9 478.5 -15
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Natural Gas and Liquids Prices
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Q4 2015 Q4 2014 2015 2014
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Natural gas
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NYMEX ($/MMBtu) 2.27 4.00 2.66 4.41
Encana realized natural gas
price(1)($/Mcf) 3.43 4.16 3.89 4.59
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Oil and NGLs($/bbl)
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WTI 42.18 73.15 48.80 93.00
Encana realized liquids price(1) 39.11 66.40 39.93 69.70
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(1) Realized prices include the impact of financial hedging.
Year-End 2015 Proved Reserves
---------------------------------------------------------------------------- 2015 Proved Reserves Estimates - Canadian Protocols (Net, After Royalties) (1) ---------------------------------------------------------------------------- Using forecast prices and costs; simplified Natural GasOil & NGLs Total table. (Bcf) (MMbbls) (MMBOE) ---------------------------------------------------------------------------- December 31, 2014 5,522 356.5 1,276.9 Extensions and Discoveries 542 107.9 198.2 Revisions(2) (228) (29.1) (67.1) Dispositions (1,164) (6.5) (200.5) Production (596) (48.7) (148.0) ---------------------------------------------------------------------------- December 31, 2015 4,076 380.1 1,059.5 ---------------------------------------------------------------------------- (1) Numbers may not add due to rounding. (2) Includes economic factors.
---------------------------------------------------------------------------- 2015 Proved Reserves Estimates -U.S. Protocols (Net, After Royalties) (1) ---------------------------------------------------------------------------- Using constant prices and costs; Natural Gas Oil & NGLs Total simplified table. (Bcf) (MMbbls) (MMBOE) ---------------------------------------------------------------------------- December 31, 2014 5,494 361.7 1,277.4 Revisions and improved recovery (1,144) (130.5) (321.1) Extensions and discoveries 472 113.0 191.7 Sale of reserves in place (1,163) (6.8) (200.6) Production (596) (48.7) (148.0) ---------------------------------------------------------------------------- December 31, 2015 3,064 288.8 799.4 ----------------------------------------------------------------------------
(1) Numbers may not add due to rounding.
Differences between estimates under Canadian and
Estimated Reserves
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Net (after royalties) using forecasted
prices and costs. Estimated Reserves (MMBOE)
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3P
1P 2P Proved +
Proved Proved + Probable +
Probable Possible
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Canadian Operations 536 1,027 1,257
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USA Operations 524 937 1,045
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Total as of December 31, 2015 1,060 1,964 2,301
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Estimated Risked Economic Contingent Resources
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Net (after royalties) using Estimated Risked Economic Contingent Resources
forecasted prices and (MMBOE)
costs.
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Contingent 2C 3C
Resource 1C Best High
Sub-class Low estimate estimate estimate
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Development
Canadian Operations Pending 988 1,283 1,582
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Development
On Hold 59 75 90
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Development
USA Operations Pending 1,515 1,756 1,999
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Development
On Hold 331 1,372 2,484
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Total as of December 31, Development
2015 Pending 2,503 3,039 3,581
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Development
On Hold 390 1,447 2,574
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For information on reserves and economic contingent resources, see Advisory Regarding Reserves & Other Resources Information.
Conference call information
The unaudited interim Condensed Consolidated Financial Statements for the period ended
Important Information Encana reports in
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.
-- Adjusted capitalization includes debt, total shareholders' equity and an
equity adjustment of $7.7 billion for cumulative historical ceiling test
impairments recorded as at December 31, 2011 in conjunction with the
company's January 1, 2012 adoption of U.S. GAAP.
NOTE 2: Information on reserves reporting - Detailed Canadian protocol disclosure will be contained in Appendix A and under "Narrative Description of the Business" of
ADVISORY REGARDING RESERVES & OTHER RESOURCES INFORMATION - All estimates in this news release are effective as of
Reserves are the estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, from a given date forward, based on: analysis of drilling, geological, geophysical and engineering data, the use of established technology, and specified economic conditions, which are generally accepted as being reasonable. Proved reserves are those reserves which can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable plus possible reserves.
Contingent resources are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. A low estimate (1C) is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate, which under probabilistic methodology reflects at least a 90% confidence level. A best estimate (2C) is considered to be a realistic estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate, which under probabilistic methodology reflects at least a 50% confidence level. A high estimate (3C) is considered to be an optimistic estimate. It is unlikely that the actual remaining quantities recovered will exceed the high estimate, which under probabilistic methodology reflects at least a 10% confidence level. There is uncertainty that it will be commercially viable to produce any portion of the resources.
All of the resources classified as contingent are considered to be discovered, and as such have been assigned a 100% chance of discovery, but have however been risked for the chance of development. The chance of development is defined as the likelihood of a project being commercially viable and development proceeding in a timely fashion. Determining the chance of development requires taking into consideration each contingency and quantifying the risks into an overall development risk factor at a project level.
All of the contingent resources disclosed in the above table are classified as either Development Pending or Development On Hold. Development Pending is where resolution of the final conditions for development is being actively pursued (high chance of development). Resources classified in this sub-category must be economic and have been assigned a chance of development ranging between 80% and 99%. Development On Hold is where there is a reasonable chance of development, but there are major non-technical contingencies to be resolved that are usually beyond the control of the operator. Resources classified in this sub-category must be economic and have been assigned a chance of development ranging between 50% and 79%.
Contingent resources are categorized as economic if those contingent resources have a positive net present value under currently forecasted prices and costs. In examining economic viability, the same fiscal conditions have been applied as in the estimation of
The reserves replacement ratio is calculated for a specified period utilizing the applicable proved net reserves extensions and discoveries plus technical revisions, net of price revisions, divided by net production for the period. In this news release, the reserves replacement ratio is based on Canadian (NI 51-101) protocol.
The conversion of natural gas volumes to barrels of oil equivalent (BOE) is on the basis of six thousand cubic feet to one barrel. BOE is based on a generic energy equivalency conversion method primarily applicable at the burner tip and does not represent economic value equivalency at the wellhead. Readers are cautioned that BOE may be misleading, particularly if used in isolation.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS - This news release contains certain forward-looking statements or information (collectively, "FLS") within the meaning of applicable securities legislation. FLS include:
Readers are cautioned against unduly relying on FLS which, by their nature, involve numerous assumptions, risks and uncertainties that may cause such statements not to occur, or for results to differ materially from those expressed or implied. These assumptions include: assumptions contained in
Risks and uncertainties that may affect these business outcomes include: risks inherent to closing announced divestitures on a timely basis or at all and adjustments that may reduce the expected proceeds and value to
Although
SOURCE:
FOR FURTHER INFORMATION PLEASE CONTACT:
Further information onEncana Corporation is available on the company's website, www.encana.com, or by contacting: 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:Simon Scott Vice-President, Communications (403) 645-2526Jay Averill Director, Media Relations (403) 645-4747Doug McIntyre Sr. Advisor, Media Relations (403) 645-6553 Source:Encana Corporation