The net loss was $431 million, compared with net income of $12 million a year earlier, the Calgary-based company said today in a statement. It reported a non-operating foreign-exchange loss of $101 million, after an $86 million gain the prior year.
The result was “largely due to mark-to-market accounting of the company’s unrealized risk-management position and a non- operating foreign-exchange loss,” Encana said. It expects cost- reduction efforts to be reflected in second-half figures.
Encana sells some of its output forward to protect itself from falling prices. U.S. gas averaged $3.478 a million British thermal units in the quarter, 39 percent more than a year earlier as producers reduced drilling and demand was pushed higher by cold temperatures. The futures recovered from a decade-low last April on the New York Mercantile Exchange.
Encana had hedged about 1.52 billion cubic feet a day of expected April-to-December output as of March 31, locking in prices at $4.39 per 1,000 cubic feet. It hedged 1.5 billion cubic feet a day of 2014 production at $4.19 and 825 million cubic feet a day of 2015 output at $4.37, today’s filing shows.
The company reported a 48 percent increase in oil and natural-gas liquids volumes, with average production rising to 43,500 barrels a day in the first quarter. Average natural-gas volumes were 2.88 billion cubic feet a day.
Chief Executive Officer Randall Eresman resigned in January after six years in the role and was replaced by board member Clayton Woitas until a permanent successor could be found. The selection committee has drawn up a short-list of candidates and plans to complete its search by the end of June, Encana said today.
The company released results before the start of regular trading on North American markets. The shares, which have four buy, 18 hold and five sell recommendations from analysts, rose 0.6 percent to C$19.28 yesterday in Toronto. Encana has dropped 1.9 percent this year.
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