Encana oil production rise offsets profit fall on weak natgas

Thu Jul 24, 2014 11:43am EDT
 
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By Nia Williams

(Reuters) - Canada's Encana Corp ECA.TO, which is restructuring operations to end its reliance on low-value natural gas, said on Thursday oil and natural gas liquids production climbed 43 percent year-on-year in the second quarter of 2014.

Canada's largest natural gas producer, also reported a steeper-than-expected 31 percent fall in quarterly operating profit, hurt by lower natural gas production and prices.

Analysts said overall the outlook for the company was positive given rapid progress in switching to more liquids production and cutting drilling costs.

Encana shares climbed 1.8 percent on the Toronto Stock Exchange to C$24.14.

"If you look at the headline numbers there was a slight miss relative to market consensus but look at it more from an operating perspective and the big picture is this was a good quarter," said Lanny Pendill, senior energy analyst at Edward Jones.

After years of weak profits caused by its reliance on natural gas, Encana Chief Executive Doug Suttles has moved to rapidly boost oil production.

The company acquired properties in the booming Eagle Ford shale oil play in south Texas earlier this year, where it will have four drilling rigs by the end of 2014, and is also boosting production in areas such as the liquids-rich Montney in Canada.

Encana is paying for its oil acquisitions by selling gas fields as it concentrates its operations on six oil and natural-gas liquids-rich regions.   Continued...

 
President and CEO of Encana Doug Suttles addresses shareholders at the company's annual meeting in Calgary, Alberta, May 13, 2014. REUTERS/Todd Korol