Canada: Encana Production Climbs

Encana Corporation’s solid operational performance in the second quarter resulted in a 69 percent year-over-year increase in oil and natural gas liquids (NGL) volumes with average production rising to approximately 47,600 barrels per day (bbls/d). Natural gas production volumes for the second quarter averaged approximately 2.8 billion cubic feet per day (Bcf/d).

The company reported net earnings of $730 million or $0.99 per share, $665 million in cash flow or $0.90 per share and $247 million in operating earnings or $0.34 per share during the second quarter of 2013. Year-to-date the company generated $299 million in net earnings or $0.41 per share, $1.2 billion in cash flow or $1.69 per share and $426 million in operating earnings or $0.58 per share.

“Our results over the first half of the year have us well-positioned to deliver on our guidance targets for 2013,” said Doug Suttles, Encana’s President & CEO, whose appointment was announced in June. “Our focus moving forward is to continue to exercise capital discipline while working to achieve ever greater efficiencies in how we run our business. We expect to see cost savings materialize throughout the rest of the year as a result of those efforts.”

Encana is expecting full-year capital investment to be in the lower part of its 2013 guidance range of $3.0 billion to $3.2 billion while cash flow is expected to be in the middle to higher end of the guidance range of $2.3 billion to $2.5 billion. The company maintained its strong liquidity position during the quarter with a period-end balance of about $2.9 billion in cash and cash equivalents, primarily due to net divestiture proceeds. Encana does not expect any significant changes to its capital spending plan for 2013. In addition, Encana increased its hedging position to 2,255 million cubic feet per day (MMcf/d) of expected July to December 2013 natural gas production at an average price of $4.37 per thousand cubic feet (Mcf). This enhanced hedge position represents approximately 75 percent of expected natural gas production for the rest of the year.

An internal strategy development team, composed of diverse skillsets and a broad range of experience, has recently been tasked with thoroughly evaluating the company’s assets, identifying Encana’s key strengths and capabilities, and quantifying its current performance and competitive positioning. This team reports directly to the President & CEO.

“My focus is on developing a strategy that will deliver sustainable growth in shareholder value during a period of modest commodity prices,” said Suttles. “That means we need to take the time to do this right and consider a range of alternatives. I fully expect this work will be completed this year and that 2014 will be the first year of implementing our new strategy.”

David P. O’Brien steps down as Board Chairman

After serving with distinction for more than 10 years, David P. O’Brien has stepped down as the Chairman of the Board of Directors and will remain a Director of Encana. One of the founders of Encana, Mr. O’Brien has held leadership roles with Encana or one of its predecessor companies for more than 20 years. As Chairman since 1990 and Interim CEO of PanCanadian Energy Corporation from October 2001 to April 2002, he oversaw its merger with Alberta Energy Company Ltd. to form Encana. He had previously served as Chairman, President & CEO of Canadian Pacific Limited (energy, hotels and transportation) from May 1996 to October 2001.

During his distinguished career, Mr. O’Brien has brought his in-depth acumen and expertise to a number of public company directorships including Enerplus Corporation, Molson Coors Brewing Company, Royal Bank of Canada and TransCanada Corporation. Among the numerous awards recognizing his contributions, Mr. O’Brien was appointed an Officer of the Order of Canada in 2008; named a Fellow of the Institute of Corporate Directors in 2005; and entered the Canadian Business Hall of Fame in 2004.

Clayton H. Woitas has been appointed Board Chairman, as well as Chair of the Nominating and Corporate Governance Committee and an ex-officio member of all other Board Committees. Peter Dea has assumed the role of Chair of the Corporate Responsibility, Environment, Health & Safety Committee, of which Mr. Woitas was previously the Chair. All members of Encana’s Board Committees are considered independent.

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