Encana (ECA) Q1 Earnings Beat On Price And Output Gains

Encana Corporation (NYSE:ECA) reported first-quarter 2018 operating earnings of 16 cents per share, surpassing the Zacks Consensus Estimate of 13 cents. Increased liquids production along with higher price realizations drove the better-than-expected results.

The bottom line also improved from 11 cents per share reported in the year-ago quarter. Of late, Encana has successfully repositioned its asset base and transitioned to the more profitable crude. Production growth from its core assets: Permian, Montney, Eagle Ford and Duvernay led the company deliver impressive year-over-year results. The four core assets accounted for 94.8% of Encana’s total production, with Montney assets alone accounting for more than half of its output.

Quarterly revenues of $1,313 million also topped the Zacks Consensus Estimate of $1,110 million. Revenues were also higher than the prior-year figure of $1,289 million.

Production & Prices

Total first-quarter production came in at 324,400 barrels of oil equivalent per day (BOE/d), compared with 317,900 BOE/d in the prior-year quarter.

Quarterly natural gas production declined approximately 13% year over year to 1,075 million cubic feet per day, while liquids production rose 31% from the prior-year quarter to 145.2 thousand barrels per day.

Encana's realized natural gas price was $2.94 per thousand cubic feet, compared with the year-ago quarter level of $2.50. Meanwhile, realized oil price rose to $55.74 per barrel from $49.66 in the first quarter of 2017.

Costs & Expenses

Total operating expenses increased 22% from first-quarter 2017 to $976 million. The rise is primarily attributed to an increase in depreciation charges and higher purchased products costs.

Capital Spending and Balance Sheet

Encana's capital investments during the quarter were $509 million. As of Mar 31, 2018, cash and cash equivalents were $433 million and long-term debt was $4,198 million. The debt-to-capitalization ratio stood at 38.25%.

Zacks Rank & Key Picks

Based in Calgary, Alberta, Encana is a focused pure-play natural gas exploration and production company, carrying a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are China Petroleum & Chemical Corporation or Sinopec (NYSE:SNP) , Crescent Point Energy Corporation (TO:CPG) and Canadian Natural Resources Limited (TO:CNQ) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sinopec delivered an average positive earnings surprise of 492.75% in the trailing four quarters.

Crescent Point surpassed earnings estimates in three of the trailing four quarters, with an average of 363.54%.

Canadian Natural delivered an average positive earnings surprise of 0.78% in the trailing four quarters.

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