EnCana Reports Second-Quarter Loss of $505 Million on Hedging, Currencies
CEO Randy Eresman said the company is actively looking for partners to defray the cost of exploring and developing its holdings in shale formations in Canada and the U.S. Photographer: Norm Betts/Bloomberg
EnCana Corp., Canada’s biggest natural-gas producer, increased its output forecast this year and added to its acreage in fuel-rich shale formations.
The company produced 12 percent more gas per share in the second quarter than the same period last year and boosted its output forecast to 3.365 billion cubic feet of gas equivalent a day, up 2 percent, according to a statement today. EnCana, based in Calgary, said it will increase capital investment 11 percent to $5 billion for 2010 to help growth next year.
The company said it has acquired about 250,000 net acres of land in the Collingwood gas shale formation in Michigan. It also said production in the Haynesville shale in the U.S. South will end the year at about 500 million cubic feet a day. Shale is a dense rock formation that requires the use of a high-pressure mix of water, sand and chemicals to fracture rocks and make gas flow.
New York gas futures averaged 14 percent higher for the second quarter than a year earlier as a recovering U.S. economy boosted demand for the fuel.
EnCana posted a $505 million loss in the second quarter as currency fluctuations increased foreign debt and hedging contracts locking in fuel prices dropped in value. The net loss was 68 cents a share, compared with net income of $92 million, or 32 cents, a year earlier.
The results don’t include EnCana’s oil-production and refining units, which were spun off as Cenovus Energy Inc. on Nov. 30.
Shale Partners
The company reported operating earnings of 11 cents a share, excluding changes in the value of hedging contracts and long-term debt. It was expected to earn 24 cents a share, the average of 14 analysts’ estimates compiled by Bloomberg.
Chief Executive Officer Randy Eresman said in an interview last month the company is actively looking for partners to defray the cost of exploring and developing its holdings in shale formations in Canada and the U.S.
EnCana signed a memorandum of understanding last month with China National Petroleum Corp., which may lead to a venture with the company to produce gas from shale in northeastern British Columbia.
EnCana fell 5 cents to C$34.44 at 8:43 a.m., before the start of regular trading on the Toronto Stock Exchange. The stock, which has 10 buy, 1 sell and 13 hold ratings from analysts, had risen 1.1 percent this year before today.
(EnCana is scheduled to hold an earnings conference call for investors and analysts, starting at 1 p.m. New York time. To access, go to http://www.encana.com.)
To contact the reporters on this story: Gene Laverty in Calgary at glaverty@bloomberg.net; Irene Shen in Calgary at ishen4@bloomberg.net
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