Natural gas giant Encana posts $1.24-billion quarterly loss
On Wednesday Natural gas titan Encana Corporation (TSX: ECA) (NYSE: ECA) posted a $1.24-billion net loss in its third quarter, mainly driven by lower natural gas prices, but it said it was still on track to meet its financial guidance for the full year.
The company reported cash flow of $913 million or $1.24 per share and $263 million in operating earnings or $0.36 per share for the third quarter 2012. Year-to-date the company generated cash flow of approximately $2.7 billion or $3.71 per share and operating earnings of $701 million or $0.95 per share.
Oil and natural gas liquids (NGLs) production volumes in the quarter averaged over 30,000 barrels per day (bbls/d), an increase of nearly 6,000 bbls/d compared to the third quarter of 2011. The Canadian Division volumes were higher primarily due to the extraction of additional liquids volumes at the Musreau plant in Bighorn and a successful drilling program in the Peace River Arch area. The USA Division volumes were higher primarily due to drilling programs across the company's oil and liquids-rich plays.
"The strong quarter-over-quarter growth in our oil and NGLs volumes is the result of a focused effort by our teams to accelerate the development of our oil and liquids-rich plays," said in a press release Randy Eresman, Encana President & CEO. "We expect to see this trend continue as we progress our plans to diversify our commodity portfolio and achieve a more balanced stream of future cash flows."
Average natural gas production volumes were 2.9 billion cubic feet per day, down about 460 million cubic feet per day from the same period of 2011 primarily due to voluntary capacity reductions, divestitures and natural declines. In the Canadian Division, declines were partially offset by successful drilling programs in the Bighorn and Cutbank Ridge areas. In the USA Division, declines were partially offset by a successful drilling program in the Piceance Basin.
Encana launched an internal investigation in June after allegations emerged that the company and a U.S. rival colluded to suppress land prices in Michigan.
In September, Encana said its board of directors found no evidence the company and Chesapeake Energy discussed ways to avoid bidding against one another for land leases 2010.
The U.S. Department of Justice and Michigan's attorney general investigations continue.