Encana raises savings target from Newfield deal, profit beats

FILE PHOTO: Encana offices is pictured in Parachute, Colorado, U.S. on December 10, 2014. REUTERS/Jim Urquhart/File Photo

(Reuters) - Canadian oil and gas producer Encana Corp said on Tuesday it expects cost savings from its acquisition of Newfield Exploration to be 20 percent higher than its estimates, and reported a 6 percent rise in quarterly adjusted profit as it sold oil at higher prices.

The company bought Newfield for $5.5 billion in November to boost its operations in the SCOOP and STACK region, a fast-growing shale oil field in the Anadarko basin in Oklahoma.

Encana said it now expects to deliver annual general and administrative savings of at least $150 million from the Newfield deal.

The deal has helped the Calgary-based company to shield itself from recent volatility in the Canadian oil market owing to its growing operations in the United States.

Adjusted operating earnings rose to $165 million in the first quarter ended March 31, from $156 million a year earlier.

Excluding one-time items, the company earned 14 cents per share, beating analysts’ average estimate of 8 cents per share, according to IBES data from Refinitiv.

Total adjusted production rose to 566,600 barrels of oil equivalent per day (boe/d) from 500,900 boe/d a year ago, while realized prices for oil increased nearly 3 percent to $57.34 per barrel.

Encana also reiterated its plans to spend $2.7 billion to $2.9 billion annually and reaffirmed its production targets, including about 15 percent liquids growth from its core growth assets.

Reporting by Shradha Singh in Bengaluru; Editing by Shinjini Ganguli and Saumyadeb Chakrabarty