Encana reported a successful first quarter of 2014 highlighted by solid operational performance and strong financial results, demonstrating that the company is hitting its stride with the execution of its new strategy.
During the quarter,Encana generated cash flow of approximately $1.1 billion or $1.48 per share, an 87 percent increase on a per share basis compared to the first quarter of 2013; net earnings of $116 million or $0.16 per share compared to a loss of $431 million for the same period last year; and operating earnings of $515 million or $0.70 per share, a 192 percent year-over-year increase on a per share basis.
“Our strong first-quarter financial and operational results demonstrate that we are making very good progress executing on our strategy and our teams are delivering on virtually all of the targets that we have set to date,” says Doug Suttles, Encana President & CEO. “Through our focused capital investment, we continue to build momentum in our core growth areas and we’re accelerating the transition to a more balanced portfolio through the recent transactions that we’ve announced.”
Encana’s increased capital focus was evident as approximately 80 percent of first-quarter capital spending was deployed to the five core growth plays prioritized by the company in last November’s strategy launch. Strong first-quarter operational performance was highlighted by liquids volumes of 67.9 thousand barrels per day (Mbbls/d), a 56 percent year-over-year increase. Natural gas production for the quarter was 2.8 billion cubic feet per day (Bcf/d), down 2 percent year-over-year.
The company also realized total cost savings of approximately $40 million in the first three months of 2014 due to organizational realignment and operating efficiencies achieved in both core and base production assets. Encanaended the quarter with approximately $2.2 billion in cash and cash equivalents on its balance sheet. The strong cash position includes a significant principal debt reduction in March following a cash tender offer conducted in the quarter.
“The strength of our balance sheet and our more agile organizational structure give us a competitive advantage by allowing us to be proactive and capture high-value opportunities when they emerge,” says Suttles. “This was apparent with our recent agreement to acquire a position in the prolific Eagle Ford resource play, where we were able to quickly and confidently execute a major transaction which we plan to close and fund with cash on hand. This financial flexibility, along with the strength of our base business, has us well positioned to capitalize on opportunities to enhance our portfolio.”