Encana posts profit as cost-cutting under new CEO pays off
Company reports earnings of $188M in third quarter
Encana Corp. says cost-cutting measures under its new CEO are beginning to pay off, as it reported third-quarter profits that beat analyst estimates.
The Calgary-based natural gas giant said Wednesday its 2013 capital spending is expected to come in between $2.7 billion to $2.9 billion, down from a range of $3 billion to $3.2 billion.
Encana said earlier this year it was is aiming at between $100 million and $150 million in cost savings and efficiency gains over the next 18 months. By the end of this year, it expects to have realized about $110 million of that amount.
Former BP executive Doug Suttles became CEO in June, replacing Randy Eresman, who abruptly parted ways with the company at the beginning of the year.
Suttles has since pared down the company's management ranks and signalled sales of dry-gas natural gas assets are in the works. Encana plans to announce its long-term strategic plan and fourth-quarter dividend — which some have speculated could be cut — by the end of the year.
"Our goal is to make Encana a more focused, dynamic and efficient organization," he said. "The changes we've made to date and the changes we will be making in the near term are positioning Encana to generate high quality returns for our shareholders."
Encana is tilting its focus away from dry natural gas, prices of which have been depressed for some time, and towards more lucrative natural gas liquids and oil projects.
Operating earnings for the quarter were $150 million, or 20 cents per share, besting the 17 cents per share analysts polled by Thomson Reuters had on average been expecting.
During the same quarter a year earlier, operating earnings were $263 million, or 36 cents per share.
The company is on track to achieve total liquids production of between 50,000 and 60,000 barrels per day for 2013 — a big increase from 31,000 barrels last year.
It expects to finish 2013 producing between 70,000 and 75,000 barrels per day.
Cost-reduction efforts contributed to cash flow, which was $660 million or 89 cents per share in the quarter — down from $913 million or $1.24 a year earlier.
Encana also reported US$188 million of net earnings in the third quarter, or 25 cents per share, which was an improvement from last year.
In the third quarter of 2012, Encana recorded more than $1 billion of asset impairments and a net loss of US$1.244 billion.