(Reuters) - EnCana Corp (ECA.TO), Canada’s No.1 natural gas producer, reported a 25 percent fall in first-quarter operating profit due to hedging losses.
Encana’s net operating income, which excludes most one-time items, fell to $179 million, or 24 cents per share, in the first quarter, from $240 million, or 33 cents per share, a year earlier.
“We expect the cost reduction efforts we’ve made at the beginning of this year to have an impact on our financial results during the second half of the year,” said interim CEO Clayton Woitas.
EnCana, which continues to focus on the development of its oil and liquids-rich natural gas plays, said it plans to complete the search for the next chief executive by the end of June.
Randy Eresman, who was with Encana for 35 years, retired unexpectedly in early January. Eresman faced criticism from investors because of poor share price performance and a U.S. Department of Justice probe into whether the company illegally colluded with Chesapeake Energy Corp (CHK.N) to lower the price of Michigan exploration lands.
The company reported a first-quarter net loss of $431 million, compared with a profit of $12 million a year earlier.
Encana’s gas production averaged 2,877 million cubic feet per day, down 12 percent, while its oil and natural gas liquids output rose 48 percent to 43,500 barrels per day (bbls/d).
The results come as natural gas prices surge due to declining stocks and cool spring weather in much of North America. The benchmark price of the fuel on the New York Mercantile Exchange rose 39 percent from the first quarter of 2012 to average $3.47 per million British thermal units.
Cash flow, a key indicator of the company’s ability to pay for new projects and drilling, fell to $579 million, or 79 cents per share, from $1.02 billion, or $1.39 per share, a year earlier.
Shares of the Calgary-based company closed at C$19.29 on Monday on the Toronto Stock Exchange.
Reporting by Scott Haggett in Calgary and Bhaswati Mukhopadhyay in Bangalore; Editing by Supriya Kurane