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Encana (ECA) Beats Earnings Estimates in Q4, Sets 2017 Capex
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Calgary, Alberta-based Encana Corp. reported operating earnings per share of 9 cents, ahead of the Zacks Consensus Estimate of 3 cents. The outperformance came on the back of successful cost containment efforts.
However, the bottom line slumped from the year-ago period profit of 13 cents per share amid sharply lower natural gas prices and volumes.
Quarterly revenues – at $822 million – came above the Zacks Consensus Estimate of $772 million but fell 20% from the prior-year figure of $1,031 million.
Production & Prices
In the fourth quarter, natural gas production declined approximately 19% year over year to 1,276 million cubic feet per day, while liquids production fell 25% year over year to 108.9 thousand barrels per day.
Encana's realized natural gas price were $2.35 per thousand cubic feet, down 31% from the year-ago quarter level of $3.43. Meanwhile, realized liquids price rose to $42.96 per barrel from $39.11 in the fourth quarter of 2015.
Costs & Expenses
Total operating expenses halved from the fourth quarter of 2015 to $876 million.
Encana reported operating costs of $152 million for the reported quarter, 11% lower than the year-ago quarter level. Meanwhile, transportation and processing expenses fell 38% to $186 million.
Cash Flows
Encana generated cash flows from operations of $302 million or 31 cents per share as against $383 million or $45 cents per share in the fourth quarter of 2015.
Capital Spending and Balance Sheet
Encana's capital investments during the quarter were $353 million. As of Dec 31, 2016, cash and cash equivalent was $834 million and long-term debt was $4,198 million. This represents a debt-to-capitalization ratio of 40.7%.
Encana Corporation Price, Consensus and EPS Surprise
Encana has set $1.6-$1.8 billion as 2017 capital expenditure budget, while total production for the year is expected to be between 320 thousand barrels of oil equivalent per day and 330 thousand barrels of oil equivalent per day. The company expects total natural gas output in the 1,150–1,200 million cubic feet per day band. Liquids production is anticipated to range between 125 and 130 thousand barrels per day.
Incorporated in 1959, Houston, TX-based McDermott International is an engineering and construction company, solely focused on the offshore oil and gas business. The company’s expected EPS growth rate for 3 to 5 years is currently 20%, as compared to the industry growth rate of just 0.10%.
Houston, TX-based Ultra Petroleum is an independent energy firm engaged in the acquisition, development, exploration and production of oil and gas properties. The company’s operations are focused on the Green River Basin of southwest Wyoming, mainly covering the Pinedale and the Jonah fields. It surpassed estimates in each of the last two quarters.
Finally, NOW Inc. – a distributor of energy and industrial products based in Houston, TX – has surpassed/met estimates in each of the last four quarters at an average rate of 9.15%.
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Encana (ECA) Beats Earnings Estimates in Q4, Sets 2017 Capex
Calgary, Alberta-based Encana Corp. reported operating earnings per share of 9 cents, ahead of the Zacks Consensus Estimate of 3 cents. The outperformance came on the back of successful cost containment efforts.
However, the bottom line slumped from the year-ago period profit of 13 cents per share amid sharply lower natural gas prices and volumes.
Quarterly revenues – at $822 million – came above the Zacks Consensus Estimate of $772 million but fell 20% from the prior-year figure of $1,031 million.
Production & Prices
In the fourth quarter, natural gas production declined approximately 19% year over year to 1,276 million cubic feet per day, while liquids production fell 25% year over year to 108.9 thousand barrels per day.
Encana's realized natural gas price were $2.35 per thousand cubic feet, down 31% from the year-ago quarter level of $3.43. Meanwhile, realized liquids price rose to $42.96 per barrel from $39.11 in the fourth quarter of 2015.
Costs & Expenses
Total operating expenses halved from the fourth quarter of 2015 to $876 million.
Encana reported operating costs of $152 million for the reported quarter, 11% lower than the year-ago quarter level. Meanwhile, transportation and processing expenses fell 38% to $186 million.
Cash Flows
Encana generated cash flows from operations of $302 million or 31 cents per share as against $383 million or $45 cents per share in the fourth quarter of 2015.
Capital Spending and Balance Sheet
Encana's capital investments during the quarter were $353 million. As of Dec 31, 2016, cash and cash equivalent was $834 million and long-term debt was $4,198 million. This represents a debt-to-capitalization ratio of 40.7%.
Encana Corporation Price, Consensus and EPS Surprise
Encana Corporation Price, Consensus and EPS Surprise | Encana Corporation Quote
2017 Guidance
Encana has set $1.6-$1.8 billion as 2017 capital expenditure budget, while total production for the year is expected to be between 320 thousand barrels of oil equivalent per day and 330 thousand barrels of oil equivalent per day. The company expects total natural gas output in the 1,150–1,200 million cubic feet per day band. Liquids production is anticipated to range between 125 and 130 thousand barrels per day.
Zacks Rank and Key Stock Picks
Currently, Encana carries a Zacks Rank #3 (Hold).
Meanwhile, one can look at better-ranked energy players like McDermott International Inc. , Ultra Petroleum Corp. and NOW Inc. (DNOW - Free Report) . All these companies carry Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Incorporated in 1959, Houston, TX-based McDermott International is an engineering and construction company, solely focused on the offshore oil and gas business. The company’s expected EPS growth rate for 3 to 5 years is currently 20%, as compared to the industry growth rate of just 0.10%.
Houston, TX-based Ultra Petroleum is an independent energy firm engaged in the acquisition, development, exploration and production of oil and gas properties. The company’s operations are focused on the Green River Basin of southwest Wyoming, mainly covering the Pinedale and the Jonah fields. It surpassed estimates in each of the last two quarters.
Finally, NOW Inc. – a distributor of energy and industrial products based in Houston, TX – has surpassed/met estimates in each of the last four quarters at an average rate of 9.15%.
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In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>