Canadian energy company Encana has reported a profitable first quarter of 2014, compared to a net loss recorded in the same period last year.
The company’s 1Q 2014 net earnings were $116 million or $0.16 per share compared to a loss of $431 million for the same period last year; and operating earnings of $515 million or $0.70 per share, a 192 percent year-over-year increase on a per share basis.
“Our strong first-quarter financial and operational results demonstrate that we are making very good progress executing on our strategy and our teams are delivering on virtually all of the targets that we have set to date,” says Doug Suttles, Encana President & CEO. “Through our focused capital investment, we continue to build momentum in our core growth areas and we’re accelerating the transition to a more balanced portfolio through the recent transactions that we’ve announced.”
Encana said its increased capital focus was evident as approximately 80 percent of first-quarter capital spending was deployed to the five core growth plays prioritized by the company in last November’s strategy launch. Strong first-quarter operational performance was highlighted by liquids volumes of 67.9 thousand barrels per day (Mbbls/d), a 56 percent year-over-year increase. Natural gas production for the quarter was 2.8 billion cubic feet per day (Bcf/d), down 2 percent year-over-year.
The company also realized total cost savings of approximately $40 million in the first three months of 2014 due to organizational realignment and operating efficiencies achieved in both core and base production assets. Encana ended the quarter with approximately $2.2 billion in cash and cash equivalents on its balance sheet. The strong cash position includes a significant principal debt reduction in March following a cash tender offer conducted in the quarter, Encana added in a statement.
“The strength of our balance sheet and our more agile organizational structure give us a competitive advantage by allowing us to be proactive and capture high-value opportunities when they emerge,” says Suttles. “This was apparent with our recent agreement to acquire a position in the prolific Eagle Ford resource play, where we were able to quickly and confidently execute a major transaction which we plan to close and fund with cash on hand. This financial flexibility, along with the strength of our base business, has us well positioned to capitalize on opportunities to enhance our portfolio.”
While first-quarter financial results were bolstered by improved NYMEX natural gas prices that were up 37 percent compared to the fourth quarter of 2013, the company also benefited from higher wellhead realizations relative to local benchmark prices. In addition, volumes from the Deep Panuke platform offshore Nova Scotia received strong seasonal pricing in the U.S. northeast market where the first-quarter average realized price was approximately $19 per thousand cubic feet (Mcf).