Encana profit beats estimates; cold weather boosts gas prices
By Scott Haggett
(Reuters) - Encana Corp (ECA.TO: Quote) on Tuesday reported a higher-than-expected quarterly profit, much of which coming from a field it may put up for sale as it looks to cut its dependence on natural gas production.
After years of weak prices for the fuel, Encana is selling off natural gas properties and adding more valuable oil and natural-gas liquids production to boost earnings. But much of its gains in the first quarter came from its recently opened Deep Panuke gas project offshore Nova Scotia, which supplies the northeastern United States.
Deep Panuke, a project the company has said it may consider selling, received an average price of $19.17 per thousand cubic feet for gas in the quarter, more than triple Encana's average gas price in the quarter of $5.82 per mcf, as cold temperatures kept demand high in the Boston market.
The quarter "was all about pricing and all about Deep Panuke," said Edward Jones analyst Lanny Pendill. "The bulk of the increase ... came on the natural-gas side."
Encana, Canada's largest natural gas producer, posted a net profit of $116 million, compared with a year-earlier loss of $431 million, which included an income tax adjustment of $243 million.
Excluding special items, earnings rose to 70 cents per share from 24 cents and came in well ahead of the analysts' average estimate of 53 cents, according to Thomson Reuters I/B/E/S.
MOVING TO OIL
After years of weak profits caused by its reliance on natural gas production, Encana has moved to rapidly boost its oil production. The company earlier this month agreed to pay $3.1 billion for Freeport-McMoran Copper & Gold Inc's (FCX.N: Quote) properties in the south Texas Eagle Ford shale-oil field. Continued...