EnCana reports $2.1 billion cash flow, down 26%
Plans to split into two independent companies
November 13, 2009
EnCana Corporation (TSX & NYSE: ECA) reported their third quarter 2009 financial results. EnCana generated third quarter cash flow of US$2.1 billion, or $2.77 per share, and operating earnings of $775 million, or $1.03 per share – down 26 and 46 percent respectively compared to the third quarter of 2008. Below are some highlights from their report:
Shut-in and curtailed gas coming back on this winter
To help preserve shareholder value on the expectation that natural gas prices would rise to more economic levels, EnCana curtailed or shut in about 500 million cubic feet per day (MMcf/d) of natural gas production in the third quarter. These shut-in and curtailed volumes are expected to be brought back on stream during the winter of 2009/10. "To help preserve the value of our resource base, we have curtailed significant natural gas production in many of our operating areas and have significant productive capacity available to bring to market as prices recover," said Randy Eresman, EnCana’s President & Chief Executive Officer.
EnCana Third Quarter 2009 Financial Highlights
(all year-over-year comparisons are to the third quarter of 2008)
• Cash flow was $2.1 billion or $2.77 per share, a decrease of 26 percent
• Operating earnings were $775 million or $1.03 per share, down 46 percent
• Net earnings were $25 million or 3 cents per share
• Capital investment, excluding acquisitions and divestitures, was $1.3 billion, down 16 percent, primarily due to lower drilling and completion expenditures as a result of fewer wells drilled and cost deflation
• Free cash flow was $741 million, down 39 percent
• Realized natural gas prices were $7.31 per thousand cubic feet (Mcf), down 8 percent, and realized liquids prices were $57.39 per barrel (bbl), down 37 percent. These prices include financial hedges. At the end of the quarter, debt to capitalization was 25 percent and debt to adjusted EBITDA was 1.1 times. These ratios do not include the $3.5 billion of debt securities intended for use by Cenovus, the proceeds of which have been placed in escrow pending the completion of the split transaction
• Paid a dividend of 40 cents per share
• EnCana’s integrated oil business venture with ConocoPhillips generated $266 million in operating cash flow, including $180 million from the Foster Creek and Christina Lake upstream projects, and $86 million from the downstream business
Corporate developments - Split transaction preparation proceeding
Planning is on track to split EnCana into two independent companies: a pure-play natural gas company, EnCana, and an integrated oil company, Cenovus Energy Inc. A shareholders’ meeting to vote on the proposed transaction is set for November 25, 2009. Subject to the required shareholder and court approvals being obtained and the satisfaction of conditions, the company expects to complete the transaction on November 30, 2009.
Click on this link for the full media release by the company: EnCana 3rd Quarter Financial Report
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