Thursday, September 18th18.8°C
19716
22285

Encana CEO says turnaround ahead of schedule, cash flow targets raised

CALGARY - Encana Corp.'s (TSX:ECA) strategic overhaul is one or two years ahead of schedule, CEO Doug Suttles said Thursday as the energy giant hiked its cash flow and liquids production targets for the year.

But that rosy outlook came as Encana posted lower profits for the second quarter.

Since Suttles took the reins just over a year ago, Encana has pared down its portfolio, made an entry into the hot Eagle Ford shale in Texas and spun out Alberta properties in one of the largest initial public offerings in Canadian history.

"Clearly, we're getting there faster than we thought," said Suttles, adding a bevy of asset sales and the $3.1-billion Eagle Ford deal have sped things along.

"We generally think we're between one and two years ahead on our strategy delivery at this point," he told a conference call.

Encana, which keeps its books in U.S. dollars, said cash flow is now expected to range from $3.4 billion to $3.6 billion this year compared to $2.9 billion to $3 billion.

On a conference call with analysts, Suttles was peppered with questions about what Encana would do with its excess cash.

After quipping that CFO Sherri Brillon is "trying to find a bigger closet to put all the money in," Suttles said a number of options are on the table, including debt reduction, returning cash to shareholders and investing back into the business.

Suttles said it's too early to talk about changing the dividend, which had been slashed to seven cents from 20 cents when the new strategy was unveiled last November.

Production of valuable liquids is also expected to come in above previous targets at between 86,000 to 91,000 barrels per day from between 68,000 and 73,000 barrels per day. At the end of last year, Encana's five main core areas produced about 29,000 barrels of liquids per day.

Capital spending is expected to rise by about $300 million as activity ramps up in the Eagle Ford, a sixth core area Encana added through the acquisition earlier this year.

During the quarter, Encana reached a deal to sell its Bighorn assets in west-central Alberta for about $1.8 billion, closed the $1.6 billion sale of its Jonah natural gas properties in Wyoming, mostly closed the $530 million sale of East Texas lands and made a number of other divestitures.

"All in all, that transformation is really happening fast," said AltaCorp Capital analyst Dirk Lever.

"If you would have asked me a year ago if they could be as far along as they are now, I would never have thought it."

Some of the success has been due to aspects that are within Encana's control, like reducing costs and boosting production from wells, said Lever. But the company has also been lucky as far as asset sales and purchases are concerned.

Earlier Thursday, Encana said second-quarter net earnings attributable to shareholders were $271 million, or 37 cents per share, compared with a profit of $730 million, or 99 cents per share a year ago.

Operating earnings, which strip out the effects of unusual items, were $171 million, or 23 cents per share, versus $247 million, or 34 cents per share. The operating earnings missed the average analyst estimate by a penny.

Revenue, net of royalties, totalled $1.58 billion compared with $1.98 billion a year ago.

Encana shares were up about 1.7 per cent at $24.10 in midday trading on the Toronto Stock Exchange.

Follow @LaurenKrugel on Twitter

The Canadian Press


Read more Business News

23021


Recent Trending




Today's Market
S&P TSX15465.54+6.66
S&P CDNX965.79-6.72
DJIA17265.99109.14
Nasdaq4593.426+31.237
S&P 5002011.36+9.79
CDN Dollar0.9144+0.0067
Gold1225.90-10.00
Oil92.98-1.44
Lumber349.00+1.00
Natural Gas3.976-0.101

 
Okanagan Companies
Pacific Safety0.16-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.32+0.07
Cantex0.060.00
Anavex Life Sciences0.2261-0.01
Metalex Ventures0.060.00
Russel Metals37.01+0.64
Copper Mountain Mining2.68-0.05
Colorado Resources0.175+0.005
ReliaBrand Inc0.024-0.003
Sunrise Resources Ltd0.02-0.005
Mission Ready Services0.30+0.01

 



22967

FEATURED Property
201224210610 Granby Rd
$485,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Executors and their duties

There will be a time when you will need to decide who you should appoint as executor of your Will. As well, there may be a time when you will be asked by someone to act as the executor of his or her W...


Power-save your way to a down payment

Part 1 of 2 Photo: Thinkstock.com1. Move in with your parents or in-laws Explain that you're thinking strategically in moving back home. The quickest way to get into the housing market is to ma...


Price Guarantees

Article written by Linda Bustos Though I’d never recommend “lowest prices” as a unique selling proposition, I notice many retailers use a Price Match Guarantee or even a 110% Guara...

_








Member of BC Press Council


22962