Encana CEO: Cost Improvement Initiatives Showing Results

Encana Corporation recorded a second consecutive profitable quarter with third quarter 2013 net earnings of $188 million or $0.25 per share, cash flow of $660 million or $0.89 per share and operating earnings of $150 million or $0.20 per share. Year to date, the Company has generated net earnings of $487 million or $0.66 per share, cash flow of $1.9 billion or $2.58 per share and operating earnings of $576 million or $0.78 per share.

Oil and natural gas liquids (NGLs) production volumes in the quarter averaged approximately 58,200 barrels per day (bbls/d), a 92 percent year-over-year increase compared to the third quarter of 2012. The company remains on track to achieve total liquids production of 50,000 bbls/d to 60,000 bbls/d for the year, compared to an average of 31,000 bbls/d in 2012, and expects to exit the year with liquids production in the 70,000 bbls/d to 75,000 bbls/d range. Year-to-date, 64 percent of Encana’s liquids production is comprised of higher-value condensate and light oil.

Third quarter natural gas production volumes averaged approximately 2.7 billion cubic feet per day (Bcf/d). Encana has revised its guidance for expected 2013 natural gas production to be between 2.7 Bcf/d and 2.8 Bcf/d, an adjustment which reflects asset divestitures and delays associated with ongoing work to ramp up the Deep Panuke offshore project to its full production capacity.

Earlier in the year, Encana set a target to achieve cost savings and capital efficiency gains of $100 million to $150 million over 18 months relative to budgeted plans; by year-end, the Company expects to realize about $110 million of that total. The Company expects full year cash flow to be near the high end of its current guidance range and has lowered its capital spending guidance to reflect a planned spend in the range of $2.7 billion to $2.9 billion. Encana finished the quarter with a period end balance of about $3.3 billion in cash and cash equivalents.

“The effort our staff has made in reducing costs has contributed to improved cash flow. Our disciplined capital focus through the year along with our stronger cash balance, positions us well as we prepare to make changes to align the business with our future strategic direction,” says Doug Suttles, Encana President & CEO. “In addition, we are on track to hit our year-end exit rate liquids production target of 70,000 bbls/d to 75,000 bbls/d.”

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Press Release, October 23, 2013