Encana releases 2nd Quarter financial report
Generates cash flow of US$1.2 billion, or $1.65 per share
July 21, 2010
Encana Corporation (TSX, NYSE: ECA) released their 2nd Quarter of 2010 financial results on Wednesday, July 21st. They report Cash flow was $1.2 billion, or $1.65 per share, and operating earnings were $81 million, or 11 cents per share.
Encana’s commodity price hedges contributed $263 million in realized after-tax gains, or 36 cents per share, to cash flow. Total production in the second quarter was approximately 3.3 billion cubic feet of gas equivalent per day (Bcfe/d). Second quarter natural gas production per share increased 12 percent compared to the second quarter of 2009 on a pro forma basis.
Second Quarter 2010 Highlights
• Cash flow of $1.2 billion, or $1.65 per share
• Operating earnings of $81 million, or 11 cents per share
• Net earnings, a loss of $505 million, or 68 cents per share
• Capital investment, excluding acquisitions and divestitures, of $1.1 billion
• Free cash flow of $118 million (Free cash flow is defined in Note 1 on page 7)
• Total production realized average price of $5.74 per thousand cubic feet equivalent (Mcfe), realized natural gas price of $5.50 per Mcf and realized liquids price of $67.05 per barrel (bbl). These prices include realized financial hedges
• At the end of the quarter, debt to capitalization was 32 percent and debt to adjusted EBITDA was 1.6 times
• Paid dividend of 20 cents per share
• Total production was 3.3 Bcfe/d
• Natural gas production was 3.2 billion cubic feet per day (Bcf/d)
• Natural gas liquids (NGLs) and oil production of about 24,000 barrels per day (bbls/d)
• Operating and administrative costs of $1.11 per Mcfe
• Signed a memorandum of understanding with CNPC that outlines a framework to negotiate a potential joint-venture investment in the development of certain lands in Encana’s natural gas plays in British Columbia
• Announced accumulation of significant land position of about 250,000 net acres of land in the Collingwood shale play in Michigan
• Drilled exploration well into Encana’s new Brent Miller field in Texas that showed promising results, flowing at 32 million cubic feet per day (MMcf/d)
• Divested non-core natural gas and oil assets in North America for approximately $208 million.
Canadian Division, formerly the Canadian Foothills Division, which includes natural gas development and production assets located in British Columbia and Alberta, as well as the Deep Panuke natural gas project offshore Nova Scotia. Four key resource plays are located in the Division: (i) Greater Sierra in northeast British Columbia, including Horn River; (ii) Cutbank Ridge on the Alberta and British Columbia border, including Montney; (iii) Bighorn in west central Alberta; and (iv) Coalbed Methane in southern Alberta.
USA Division, which includes the natural gas development and production assets located in the U.S. Five key resource plays are located in the Division: (i) Jonah in southwest Wyoming; (ii) Piceance in northwest Colorado; (iii) East Texas in Texas; (iv) Haynesville in Louisiana and Texas; and (v) Fort Worth in Texas.
Canada - Other includes the combined results from the former Canadian Plains Division and Integrated Oil - Canada.
Fast-growing Haynesville shale play (Louisiana & Texas)
Production is expected to average 325 MMcfe/d this year in the Haynesvill shale and exit the year at about 500 MMcfe/d. Haynesville has been added to Encana’s list of key resource plays – projects that deliver close to 90 percent of the company’s production. This year, they have one gas factory pilot planned that will see eight wells drilled from a single pad. The Louisiana & Texas natural gas plays are on tap to be 4th largest natural gas plays in world.
New Brent Miller field in Texas
Encana drilled a promising well in the new Brent Miller field, a sizable Texas extension of the Haynesville and Mid-Bossier trends. Encana has about 45,000 net acres across the heart of very prospective lands.
Michigan’s Collingwood shale
Over the past two years, Encana has assembled a significant land position in a promising new natural gas shale play in Michigan. Encana has acquired about 250,000 net acres of land in the Collingwood shale play. The company's first exploration well delivered encouraging test results. With further drilling, Encana hopes to demonstrate stronger gas rates as the company optimizes well completion practices and proves up liquids-rich potential in some parts of the play.
Quarterly dividend of 20 cents per share declared
Encana’s Board of Directors has declared a quarterly dividend of 20 cents per share payable common shareholders of record as of September 15, 2010. Based on the July 20, 2010 closing New York Stock Exchange of $32.91, this represents an annualized yield of about 2.4 percent.
About Encana Corporation
Encana is a leading North American natural gas producer that is focused on growing its strong portfolio of prolific shale and other unconventional natural gas developments, called resource plays, in key basins from northeast British Columbia to east Texas and Louisiana. A pure-play natural gas company, Encana applies advanced technology and operational innovation to reduce costs and maximize margins. The company believes North American natural gas is an abundant, affordable and reliable energy supply that can play a significantly expanded role in serving the continent’s growing energy needs while enhancing environmental performance and generating economic growth. By partnering with employees, community organizations and other businesses, Encana contributes to the strength and sustainability of the communities where it operates. Encana common shares trade on the Toronto and New York stock exchanges under the symbol ECA.
On November 30, 2009, Encana completed a major corporate reorganization – a split transaction that resulted in the company’s transition into a pure-play natural gas company and the spin-off of its Integrated Oil and Canadian Plains assets into Cenovus Energy Inc., an independent, publicly-traded energy company.
Click on this link for the full media release: Encana 2010 2nd Quarter Financial Report