CALGARY, Alberta (Reuters) - EnCana Corp (ECA.TO) said on Thursday its profit rose 63 percent in the fourth quarter, driven by higher prices and production and a contribution from the downstream portion of its year-old oil sands refining venture.
EnCana, Canada’s largest oil and gas company, reported net income of $1.08 billion, or $1.43 a share, up from $663 million, or 82 cents a share, a year earlier.
The company’s profit included a net $233 million in gains on lower taxes and foreign exchange costs. Its operating earnings, which exclude one-time gains and charges, rose 26 percent to $849 million, or $1.12 per share, from $675 million, or 84 cents, in the third quarter of 2006.
The operating result lagged the average forecast of $1.26 a share among analysts polled by Reuters Estimates.
There “was a lower than expected contribution from integrated oil sands,” Adam Zive, an analyst with Desjardins Securities, wrote in a note to clients.
EnCana said its quarterly results were driven by higher oil and gas output and climbing prices. The firm sold natural gas for an average of $7.32 per million cubic feet in the fourth quarter, a 9 percent increase on the year-earlier period, while the benchmark oil price surged by half to average $90.50.
EnCana’s oil and gas liquids production rose 4 percent to 136,000 barrels a day. Natural gas output climbed 9 percent to 3.7 billion cubic feet a day.
Cash flow, a key measure of the company’s ability to pay for new projects and drilling, rose 10 percent to $1.93 billion, or $2.56 per share, from $1.76 billion, or $2.18 a year earlier.
“Cash flow increased ... primarily due to an increase (in profits from) hedging, higher volumes from upstream operations and our new downstream division added another $180 million of operating cash flow before tax,” Brian Ferguson, EnCana’s chief financial officer, said on a conference call.
Cash flow from the refining side of its oil sands joint venture with ConocoPhillips (COP.N) was $1.07 billion — twice as much as expected in its first year of operation, the company said.
EnCana expects 2008 natural gas production to increase by about 6 percent to about 3.8 billion cubic feet a day, while it sees oil and gas liquids dropping 1 percent to 132,000 barrels, mostly because of a natural decline in mature properties.
EnCana said its total proved reserves at the end of 2007 rose 12 percent to 18.9 trillion cubic feet of gas equivalent.
The company also reiterated plans, first announced in December, to double its quarterly dividend to 40 cents a share.
EnCana shares rose C$1.02 to C$71.02 on Thursday on the Toronto Stock Exchange. The shares have climbed 22 percent over the past 12 months
Reporting by Scott Haggett and Scott Anderson; Editing by Rob Wilson