Helped by production growth and lower costs, Canada's oil and gas producer Encana Corp (NYSE:ECA) returned to a net profit in the second quarter and revised upward its production guidance for its four core assets in North America.
Encana reported on Friday net earnings of US$331 million compared to a loss of US$601 million in the second quarter last year, easily beating analyst forecasts.
Production from the core assets-the Permian and the Eagle Ford in the U.S. and the Montney and Duvernay shale plays in Canada - increased by 9,200 barrels of oil equivalent per day (boe/d) compared to the first quarter to stand at 246,500 boe/d in the second quarter. Production from the core assets accounted for 80 percent of Encana's total production of 316,000 boe/d.
The company revised up its production guidance for this year, expecting its core assets to deliver 25 to 30 percent production growth. In May 2017, Encana was targeting at least 20 percent production growth in its core assets from the fourth quarter of 2016 to the fourth quarter of 2017.
The Canadian producer also increased well productivity across its four core assets and raised its premium return well inventory to over 11,000 locations.
In the Permian, Encana delivered a 20-percent increase in average initial production 180-day (IP180) type curves and grew premium return well inventory by 700 locations. In the Eagle Ford, Encana achieved a 45-percent increase in average IP180 type curves and grew oil and condensate production by 30 percent from the previous quarter.
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"Encana has protected over 75 percent of its expected oil, condensate and natural gas production for the remainder of 2017 and has limited its exposure to AECO natural gas and Midland oil regional pricing through 2020 through a combination of term financial basis hedging and physical transportation agreements," the company said, to attest that many North American producers are protecting future proceeds with hedging.
"We are generating significant momentum and are well positioned for 2018 when we expect to grow within cash flow, even if commodity prices remain at today's levels," Doug Suttles, Encana President & CEO, said in the press release.
By Tsvetana Paraskova for Oilprice.com
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