Encana Turns To Profit In Q4

(RTTNews) - Encana (ECA, ECA.TO) reported net earnings of $1.03 billion or $1.08 per share in the fourth quarter 2018, compared to a loss of $ 229 million in the prior year.

Non-GAAP operating earnings for the fourth quarter were $305 million, or $0.32 per share, compared to $114 million in the previous year.

Total company production in the fourth quarter of 2018 was 403,400 BOE/d, up 20 percent year-over-year. Fourth quarter liquids production grew more than 25 percent year-over-year, to 192,700 bbls/d.

Encanas 2019 full-year proforma outlook includes estimates of Newfield activity, including capital expenditures and production volumes from January 1, 2019 through to the close of the transaction on February 13, 2019.

Encanas full-year proforma capital budget for 2019 is $2.7 to $2.9 billion (includes approximately $200 million associated with Newfield operations from January 1, 2019 through to the close of the transaction on February 13, 2019). More than 75 percent of the capital investments will be allocated to its Core 3 liquids plays Permian, Anadarko and Montney. The remainder of the budget will be allocated to maximize cash flow from its other high-margin liquids assets.

The Company is proceeding with its previously announced programs to return cash to shareholders through a $1.25 billion share buyback and its 25 percent dividend increase.

Under the 2019 proforma outlook, liquids are expected to comprise over half of total proforma production. Full-year proforma liquids production is expected to be 300,000 to 320,000 barrels per day (bbls/d) and total company production is expected to be 560,000 to 600,000 barrels of oil equivalent per day (BOE/d).

The Companys Core 3 assets are expected to generate approximately 15 percent year-over-year proforma liquids growth in 2019.

Encanas streamlined organizational structure positions it to surpass the original target of $125 million in annualized G&A cost savings.

The 2019 proforma outlook is expected to maintain Encanas strong capital structure. Since 2013, long-term debt has been reduced by nearly $3 billion and the Company intends to manage its mid-cycle leverage target of 1.5x. At year-end 2018, Encana had more than $5 billion of total liquidity including approximately $1.1 billion in cash and cash equivalents on hand and $4 billion available through the Companys undrawn credit facilities.