Calgary, Alberta-based Encana Corp.’s operating earnings per share of 4 cents compared favorably with the Zacks Consensus Estimate of a loss of 1 cent. In the year-ago quarter, the company incurred operating loss of 3 cents per share. The outperformance in the quarter was backed by the reduction in net debt and successful cost-containment efforts.
Also, quarterly revenues (net of royalties) of $979 million came in significantly above the Zacks Consensus Estimate of $740 million. Impressive operational performance supported the top-line growth. However, the top line plunged 25.4% from the prior-year figure of $1,312 million.
Production & Prices
In the third quarter, natural gas production declined 14% year over year to 1,326 million cubic feet per day (MMcf/d). Encana's realized natural gas prices were $2.02 per thousand cubic feet compared with the year-ago quarter level of $3.71.
The company's oil and liquids production declined 17% year over year to 117.0 thousand barrels per day. Encana’s sold liquids price rose to $41.82 per barrel from $39.09 in the third quarter of 2015.
Cash Costs
Encana’s operating costs were $145 million in the reported quarter, down 19.9% from the year-ago quarter level. Transportation and processing expenses fell 36.3% to $202 million.
Cash Flows
Encana generated cash flows from operations of $252 million or 29 cents per share as against cash flows of $371 million or 44 cents per share in the third quarter of 2015.
Capital Spending and Balance Sheet
Encana's capital investments during the quarter were $205 million. As of Sep 30, 2016, cash and cash equivalent was $766 million and long-term debt was $4,198 million. This represents a debt-to-capitalization ratio of 40.2 %.
ENCANA CORP Price, Consensus and EPS Surprise
Guidance and Outlook
Encana’s 2016 capital expenditure budget lies in the range of $1.1–$1.2 billion.
The company’s total production guidance for 2016 lies in the range of 340,000–360,000 BOE/d. Given that Encana was successful in lowering its operating expenses and transportation and processing costs on a year-over-year basis, it updated its 2016 guidance to reflect lower costs.
Zacks Rank and Key Stock Picks
Currently, Encana carries a Zacks Rank #2 (Buy).
Other well-ranked players from the broader energy sector include North Atlantic Drilling Limited , Ultra Petroleum Corp. and McDermott International Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, North Atlantic Drilling posted an average positive earnings surprise of 148.4%.
Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
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Encana (ECA) Q3 Earnings Crush Estimates on Cost Control
Calgary, Alberta-based Encana Corp.’s operating earnings per share of 4 cents compared favorably with the Zacks Consensus Estimate of a loss of 1 cent. In the year-ago quarter, the company incurred operating loss of 3 cents per share. The outperformance in the quarter was backed by the reduction in net debt and successful cost-containment efforts.
Also, quarterly revenues (net of royalties) of $979 million came in significantly above the Zacks Consensus Estimate of $740 million. Impressive operational performance supported the top-line growth. However, the top line plunged 25.4% from the prior-year figure of $1,312 million.
Production & Prices
In the third quarter, natural gas production declined 14% year over year to 1,326 million cubic feet per day (MMcf/d). Encana's realized natural gas prices were $2.02 per thousand cubic feet compared with the year-ago quarter level of $3.71.
The company's oil and liquids production declined 17% year over year to 117.0 thousand barrels per day. Encana’s sold liquids price rose to $41.82 per barrel from $39.09 in the third quarter of 2015.
Cash Costs
Encana’s operating costs were $145 million in the reported quarter, down 19.9% from the year-ago quarter level. Transportation and processing expenses fell 36.3% to $202 million.
Cash Flows
Encana generated cash flows from operations of $252 million or 29 cents per share as against cash flows of $371 million or 44 cents per share in the third quarter of 2015.
Capital Spending and Balance Sheet
Encana's capital investments during the quarter were $205 million. As of Sep 30, 2016, cash and cash equivalent was $766 million and long-term debt was $4,198 million. This represents a debt-to-capitalization ratio of 40.2 %.
ENCANA CORP Price, Consensus and EPS Surprise
ENCANA CORP Price, Consensus and EPS Surprise | ENCANA CORP Quote
Guidance and Outlook
Encana’s 2016 capital expenditure budget lies in the range of $1.1–$1.2 billion.
The company’s total production guidance for 2016 lies in the range of 340,000–360,000 BOE/d. Given that Encana was successful in lowering its operating expenses and transportation and processing costs on a year-over-year basis, it updated its 2016 guidance to reflect lower costs.
Zacks Rank and Key Stock Picks
Currently, Encana carries a Zacks Rank #2 (Buy).
Other well-ranked players from the broader energy sector include North Atlantic Drilling Limited , Ultra Petroleum Corp. and McDermott International Inc. . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, North Atlantic Drilling posted an average positive earnings surprise of 148.4%.
Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>