Encana vows to grow production after Q1 output and income miss expectations

CALGARY — The chief executive of Encana Corp. says the company will ramp up output from its U.S. and Canadian oil and gas fields this year after it reported first-quarter operating earnings and production that missed analyst expectations.

"We are well-positioned to execute another year of strong growth for Encana as we prepare to cross the 400,000 boe (barrels of oil equivalent) per day milestone later this year," said Doug Suttles on a conference call.

Encana reported first-quarter production of 324,400 barrels of oil equivalent per day, with 145,200 barrels per day of more valuable oil and natural gas liquids and the rest dry natural gas.

That's up from 317,900 boepd in the same period last year, but short of analyst consensus expectations of 338,000 boepd, according to a report from analyst Kristopher Zack of Desjardins Capital Markets, who had forecast for 331,500 boepd.

He said the miss is partly due to timing of drilling wells and producing from them.

"In the second half of last year, and particularly in the Duvernay and the Eagle Ford, we ramped down activity and we restarted and ramped up that activity here in the first quarter," said Suttles.

"We'll actually see production build in the second half of the year in those two assets."

Encana is focused on four areas, the Permian and Eagle Ford regions in Texas and the Montney and Duvernay regions on the Alberta-B.C. border. It said most of its growth this year will come from its more highly developed Permian and Montney assets while output from the other two will remain flat.

Encana said it expects fourth-quarter production this year to be between 400,000 and 425,000 boepd. It left its 2018 spending plan unchanged at between US$1.8 billion and US$1.9 billion.

The Calgary-based company, which reports in U.S. dollars, had operating income of US$156 million in the three months ended March 31, missing analyst expectations of US$168 million according to Thomson Reuters. A year ago, its operating income was US$104 million.

Revenue in the quarter came to US$1.3 billion, beating the forecast for US$1.26 billion, and up from US$1.29 billion in the same quarter last year.

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Dan Healing, The Canadian Press