Encana posts better-than-expected operating profit
By Nia Williams
CALGARY, Alberta (Reuters) - Encana Corp (ECA.TO: Quote), Canada's No. 2 oil and natural gas producer, reported a better-than-expected quarterly operating profit on Thursday, helped by a cash tax recovery.
The Calgary-based company also updated 2017 guidance, forecasting capital expenditures between $1.6 billion and $1.8 billion and production between 320,000 and 330,000 barrels of oil equivalent per day.
The capital spending estimate is roughly in line with earlier 2017 forecasts given by Encana but is well above 2016 spending, the latest sign of confidence among Canadian producers as crude prices recover from a two-year slump.
Encana Chief Executive Doug Suttles told investors on a fourth-quarter earnings call he expected the company would be able to hold year-over-year drilling and completion costs flat despite cost inflation in some oilfield services.
The company lowered those costs by 30 percent in 2016 versus the previous year.
TD analyst Menno Hulshof said in a note to clients Encana had largely de-risked its 2017 drilling program by building up activity before the end of 2016, which meant less competition for services in January and February.
Suttles also gave an update on talks between western Canadian natural gas producers and TransCanada Corp (TRP.TO: Quote) regarding tolls on TransCanada's so-called Mainline system that takes gas to eastern markets.
TransCanada held an open season to gauge interest in a long-term tolling structure for the Mainline in November but halted the process after shippers said prices were too high. Continued...