Encana Corporation said it has achieved its core 2011 financial and operating targets, generating cash flow of US$4.2 billion, and total production of 3.5 billion cubic feet equivalent per day (Bcfe/d), a 5 percent increase from 2010. Operating earnings were $398 million.
In 2011, the company also significantly expanded natural gas liquids (NGLs) and oil growth initiatives on two fronts: the company continued to assemble a diverse portfolio of potential liquids-rich plays across North American basins where it is conducting extensive exploration, and it advanced NGLs extraction plans at three Canadian natural gas plants.
Exploration and development drilling in 2011 added proved reserves of 2.3 trillion cubic feet equivalent (Tcfe) of natural gas and liquids resulting in a production replacement ratio of 180 percent.
In 2011, Encana divested $2.1 billion in non-core assets and invested $515 million in acquiring prospective liquids-rich lands, resulting in net divestitures of $1.6 billion. Encana reports in U.S. dollars unless otherwise noted.
“We just completed one of our best operational years ever, hitting our targets for cash flow and production which offset lower prices and a significant delay to the start-up of our Deep Panuke production facility offshore Nova Scotia. We grew our resource base and replaced 180 percent of our production. We continued to make strong gains in operational efficiencies by expanding and optimizing our resource play hub developments and the long-reach horizontal wells they employ. Supported by our risk management program, we accomplished what we set out to do, all in a difficult natural gas market and very competitive service sector,” said Randy Eresman, Encana’s President & Chief Executive Officer.
“Our operational successes reinforce our industry leadership in delivering low-cost production, however, those accomplishments have largely been overshadowed by the oversupply of natural gas, which, in turn, has resulted in a significant reduction in futures prices for North American natural gas contracts. Although a litany of factors has caused the oversupply, it is abundantly clear that a continued reduction of drilling activity will be required to restore market balance. For the industry as a whole, near-term natural gas prices are at levels below what it costs to add most new production, and in some places, may even be below what it costs to produce from existing wells. Although we continue to believe that the long-term future for natural gas remains promising, until we see signs of a sustainable recovery in natural gas prices, we will be reducing our pace of natural gas development and slowing down production from some of our natural gas wells to preserve value. Our 2012 budget reflects these actions, as well as our target to maintain financial strength and flexibility by balancing capital investment spending plans with forecasted cash flow less anticipated dividends,” Eresman said.
LNG World News Staff, February 17, 2012