Encana Corp., Canada’s largest natural gas producer, beat analysts’ estimates for the fourth quarter as it raised oil and liquids output.
Excluding one-time items, the company’s 31-cent per-share profit exceeded the 18-cent average of 16 estimates compiled by Bloomberg. Its net loss widened to $251 million from $80 million a year earlier, the Calgary-based company said today in a statement on Marketwired.
Encana directed spending to oil and liquids after North American gas prices fell to a 10-year low in 2012. Chief Executive Officer Doug Suttles has cut jobs, lowered dividend payments and proposed selling shares in a new royalty company to boost cash flow. He’s also said he’s considering asset sales outside of five primary regions Encana is now focusing on.
“While we applaud the recognition of needed change, we believe it will take time for the new strategy to bear fruit,” Phil Skolnick, an analyst at Canaccord Genuity Corp. in New York, wrote in a note last month.
The company announced a 20 percent reduction in workforce in November. Costs associated with the cuts, amounting to about 800 jobs, resulted in a $64 million charge in the fourth quarter, Encana said. The company also slashed its dividend 65 percent.
Liquids output averaged 66,000 barrels a day in the fourth quarter, up 82 percent from a year earlier. The company is forecasting a 30 percent increase in liquids output for 2014, offsetting gas production declines.
The company began full commercial production at its Deep Panuke gas facility off the coast of Nova Scotia in mid-December. North American gas futures rose 8.7 percent in the fourth quarter from a year earlier to average $3.854 per million British thermal units on the New York Mercantile Exchange. Strong winter gas pricing may highlight the possibility of selling the Deep Panuke, a move Encana has suggested it’s considering, Skolnick said.
Encana released the results before the start of regular trading on North American markets. The shares, which have eight buy, 16 hold and three sell recommendations from analysts, have risen 6.8 percent this year. Encana gained 1.5 percent to C$20.48 yesterday in Toronto.