Canadian oil and gas producer Encana Corp reported an unexpected quarterly operating profit, helped by a cost-cutting drive, and said it would raise its 2016 capital expenditure program.
Cost cuts helped the company post an operating profit, which excludes most one-time items, of $89 million, or 10 cents per shares, in the second quarter, compared with a loss of $167 million, or 20 cents per share, a year earlier.
Analysts on average were expecting Encana’s operating loss to drop to 8 cents per share, according to Thomson Reuters.
Encana’s net loss narrowed to $601 million in the quarter ended June 30 from $1.61 billion a year earlier when it recorded an impairment charge of about $1.3 billion.
The producer said it would use a portion of the proceeds from the sale of its Gordondale and DJ Basin assets to increase its capital program by $200 million from its previously announced range of $900 million to $1 billion.
Calgary-based Encana said that the increase in its capital budget would result in production rising by about 13,000 barrels of oil equivalent per day from its four core assets in the fourth quarter of 2016.
These core assets – located in the Permian, Eagle Ford, Duvernay and Montney basins – contributed 268,300 boe/d, or about 73 percent, of total second-quarter production of 368,300 boe/d.
The company said in June it would sell its Gordondale oil and gas assets in northwestern Alberta to Birchcliff Energy Ltd BIR.TO for C$625 million ($488 million). The deal is expected to close by the end of this month. (Full Story)
Buoyed by its cost-cutting plan, Encana said it expects its transportation, processing and operating costs to drop by $100 million for the year.