Encana Corp., Canada’s biggest natural gas producer, reported a narrower fourth-quarter loss as the company seeks to boost output of oil and natural gas liquids.
Net loss was $80 million, or 11 cents a share, from $476 million, or 65 cents, a year earlier, the Calgary-based company said in a statement on Marketwire today. Excluding one-time items, profit was 40 cents a share, 1 cent above the average of 18 analysts’ estimates compiled by Bloomberg.
Encana Chief Executive Officer Randy Eresman stepped down last month after seven years in charge of the company, which has declined 38 percent in the past two years as North American gas prices have dropped. Encana has brought in several joint venture partners, including PetroChina Co., to help fund production costs as it seeks to boost production of oil.
“We had tremendous success last year with joint venture and other third-party agreements and we expect that joint ventures and strategic divestitures will remain a key aspect of our strategy,” interim CEO Clayton Woitas said in the statement.
Encana sees gas production remaining near current levels this year, about 2.8 billion to 3 billion cubic feet a day, while oil and natural gas liquids will rise to as much as 60,000 barrels a day from an average of 31,000 after royalties last year.
Encana plans to spend $3 billion to $3.2 billion this year, with its joint venture partners adding another $750 million in capital investment. About 80 percent will be spent on oil and natural gas liquids production, with the rest on gas, the company said.
Cash flow will be $2.3 billion to $2.5 billion and Encana plans to sell $500 million to $1 billion in assets this year.
“The company’s capital budget and production expectations for the year are a key focus for investors,” including development of Encana’s liquids-rich acreage, George Toriola, a Calgary-based analyst at UBS AG, wrote in a Jan. 28 note. “We expect an update on the progress with the company’s joint venture activity, particularly the U.S. portfolio.”
A glut in supply due to shale-gas drilling has reduced profits for producers of the heating- and power-plant fuel, including Encana, whose output in the third quarter was 96 percent gas. PetroChina, Asia’s biggest oil producer, in December agreed to pay C$1.18 billion ($1.18 billion) for a 49.9 percent stake in Encana’s Duvernay acreage, which holds petroleum liquids that sell for higher prices than gas.
The company also sold its stake in the proposed Kitimat liquefied natural gas terminal on Canada’s Pacific Coast.
Encana released results before the start of regular trading on North American markets. The shares fell 0.3 percent to C$19.48 yesterday in Toronto. The company, which had its last profitable fourth quarter in 2009, has three buy, 17 hold and five sell recommendations from analysts.