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Encana (ECA) Q4 Earnings Top on Output, Pricing Gains

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Encana Corporation (ECA - Free Report) reported fourth-quarter 2017 operating earnings of 12 cents per share, surpassing the Zacks Consensus Estimate of 10 cents. The better-than-expected results can be attributed to production growth from its core assets: Permian, Montney, Eagle Ford and Duvernay. The company also benefited from higher realized liquids prices. The bottom line increased from 9 cents per share reported in the year-ago quarter.

Quarterly revenues of $1,210 million also topped the Zacks Consensus Estimate of $1,016 million. Revenues were 47.2% higher than the prior-year figure of $822 million.

Encana Corporation Price, Consensus and EPS Surprise

Encana Corporation Price, Consensus and EPS Surprise | Encana Corporation Quote

Production & Prices

Total fourth-quarter production came at 335,200 barrels of oil equivalent per day (BOE/d) compared with 321,500 BOE/d in the prior-year quarter. The four core assets accounted for 93% of the total production.

Quarterly natural gas production declined approximately 14% year over year to 1,096 million cubic feet per day, while liquids production rose 40% from the prior-year quarter to 152.6 thousand barrels per day.

Encana's realized natural gas price was $2.34 per thousand cubic feet, compared with the year-ago quarter level of $2.35. Meanwhile, realized liquids price rose to $55.4 per barrel from $49.29 in the fourth quarter of 2016.

Costs & Expenses

Total operating expenses increased 8.2% from fourth-quarter 2016 to $948 million. The rise is primarily attributed to an increase in depreciation, depletion and amortization charges along with transportation expenses.

Capital Spending and Balance Sheet

Encana's capital investments during the quarter were $509 million. As of Dec 31, 2017, cash and cash equivalents were $719 million and long-term debt was $4,197 million. This, in turn, represents a debt-to-capitalization ratio of 38.4%.

About the Company

Based in Calgary, Alberta, Encana is a focused pure-play natural gas exploration and production (E&P) company. It is the second largest gas producer in North America, holding a highly competitive position in terms of land and resource among a number of promising shale and tight gas resource plays in the region. This provides the company with a low risk, long-life and a sustainable growth profile.

Zacks Rank and Stocks to Consider

Encana carries a Zacks Rank #3 (Hold).

A few better-ranked players in the energy space are ConocoPhillips (COP - Free Report) , NuStar GP Holdings, LLC (NSH - Free Report) and TOTAL S.A. (TOT - Free Report) . While ConocoPhillips sports a Zacks Rank #1 (Strong Buy), TOTAL and NuStar GP Holdings carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips delivered average positive earnings surprise of 144.45% in the trailing four quarters.

NuStar GP Holdings is expected to witness a year-over-year increase of 27.82% in revenues for  2018.

TOTAL delivered average positive earnings surprise of 3.53% in the trailing four quarters.

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