(Refiles to correct spelling of analyst’s name in paragraph 10 to Philip from Phillip)
* Not yet ready to revisit break-up plans
* Third-quarter EPS $4.73, revenue $10.77 billion
* Q3 operating EPS of $1.92 tops estimates of $1.76
* Shares rise 4 pct in Toronto (Closes shares. In U.S. dollars unless noted)
By Scott Haggett
CALGARY, Alberta, Oct 23 (Reuters) - EnCana Corp (ECA.TO) will not revisit its postponed plans to split into natural gas and oil sands arms until turmoil from the credit crisis calms, Canada’s biggest oil and gas producer said on Thursday.
The company, which also reported its third-quarter profit tripled on rising oil and gas prices and big gains from its hedging program, put a hold last week on plans to ask shareholders to approve the split it first outlined in May.
Now, with its shares down more than a third since the end of August and worries about the cost of raising the cash needed by its oil sands business, EnCana said it does not yet know when it will be able to proceed with the spinoff of its oil sands operation, dubbed Cenovus Energy.
“The fundamental rationale for the proposed split remains unchanged,” Randy Eresman, the company’s chief executive, said on a conference call. “The economic environment however, has changed dramatically. It is too difficult to assess at this time when the debt and equity markets may stabilize and present us with the right opportunity to proceed with the transaction.”
Cenovus would have encompassed EnCana’s oil sands and U.S. refining joint venture with ConocoPhillips (COP.N) and parts of its Canadian natural gas business. The company had contended that the split would have created two focused companies more attractive to investors.
The end of the split is just one of the changes forced on Canadian energy companies to cope with the U.S. credit crisis and the 50 percent fall in oil prices since topping $147 a barrel in July on fears the turmoil will spark a global recession.
Indeed both Petro-Canada PCA.TO and Suncor Energy Inc (SU.TO) said on Thursday they plan to delay construction of expensive oil sands upgrader to cope with weakening conditions.
Still, Eresman said EnCana will still proceed with an internal reorganization of its operations into the two operating arms so “we are prepared to announce the transaction when we determine that the market conditions are appropriate.”
While the company will not finalize its capital outlays for next year until December, Eresman said the economic turmoil has convinced the company to be prudent with its capital spending plans.
“They’ve already hinted that there will be some slowdown in their activity,” said Philip Skolnick, an analyst with Genuity Capital Markets. “There’s no way to avoid it.”
EnCana’s profit more than tripled in the third quarter, rising to $3.55 billion, or $4.73 a share, from $934 million, or $1.24 a share in the year-prior quarter.
EnCana said the earnings boost was primarily due to unrealized mark-to-market gains on natural gas hedges of $2 billion in 2008, compared with losses of $69 million in 2007.
Operating earnings, which exclude most one-time gains and charges, rose nearly 40 percent to $1.44 billion, or $1.92 a share, beating analysts’ average per-share profit forecast of $1.76 a share, according to a Reuters Estimates.
EnCana’s cash flow, a key measure of its ability to pay for new projects and drilling, rose about 27 percent to $2.80 billion, or $3.74 per share, from $2.22 billion, or $2.93 per share, a year earlier.
Revenue nearly doubled to $10.77 billion.
The company produced 3.9 billion cubic feet of gas and 133,600 barrels of oil per day. That up 8 percent from output of 3.6 billion cubic feet of gas and down nearly 2 percent from 136,000 barrels of oil per day a year earlier.
EnCana’s shares rose $1.76 to C$52.50 late afternoon on Thursday on the Toronto Stock Exchange. ($1=$1.26 Canadian) (Additional reporting by Shradhha Sharma; editing by Rob Wilson)