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Encana (ECA) Q3 Earnings Miss Estimates on Lower Production


Exploration and production company, Encana Corporation ECA reported third-quarter 2017 operating earnings of 2 cents per share, missing the Zacks Consensus Estimate of 5 cents. Further, the bottom line declined from 4 cents per share reported in the year-ago quarter. Lower production adversely impacted results.

Quarterly revenues of $861 million however beat the Zacks Consensus Estimate of $827 million due to a rise in realized commodity prices. However, revenues were 12.1% lower than the prior-year figure of $979 million.

Encana Corporation Price, Consensus and EPS Surprise

Encana Corporation Price, Consensus and EPS Surprise | Encana Corporation Quote

Production & Prices

Quarterly natural gas production declined approximately 29% year over year to 939 million cubic feet per day, while liquids production rose 9% year over year to 127.5 thousand barrels per day. Total production declined 16% to 284 thousand barrels of oil equivalent per day (MBoe/d).

Encana's realized natural gas price was $2.23 per thousand cubic feet, up 10.4% from the year-ago quarter level of $2.02. Meanwhile, liquids price rose marginally to $41.86 per barrel from $41.82 in the third quarter of 2016.

Costs & Expenses

Total operating expenses increased 1.7% from third-quarter 2016 to $865 million. The rise is primarily attributed to an increase in depreciation, depletion and amortization charges.

Encana reported operating costs of $132 million, 9% lower than the year-ago quarter level. Also, transportation and processing expenses fell 1.5% to $199 million. Administrative expenses were down 5.5% to 86 million.

Capital Spending and Balance Sheet

Encana's capital investments during the quarter were $473 million. As of Sep 30, 2017, cash and cash equivalent was $889 million and long-term debt was $4,197 million. This, in turn, represents a debt-to-capitalization ratio of 37.6%.

About the Company

Based in Calgary, Alberta, Encana is a focused pure-play natural gas exploration and production (E&P) company. It is the second largest gas producer in North America, holding a highly competitive land and resource position among a number of promising shale and tight gas resource plays in the region. This provides the company with a low risk, long-life and a sustainable growth profile.

Q3 Price Performance

Encana has gained 33.8% in the third quarter compared with 18.1% growth of its industry.

Zacks Rank and Stocks to Consider

Encana currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are Braskem S.A. BAK, Par Pacific Holdings, Inc. PARR and Northern Oil and Gas, Inc. NOG. All these sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Braskem’s 2017 earnings are expected to grow 12.1% year over year. The company delivered a positive earnings surprise of 68.5% in the second quarter of 2017.

Par Pacific’s sales for 2017 are expected to increase 28.5% year over year. The company delivered an average positive earnings surprise of 203% in the last four quarters.

Northern Oil and Gas’s sales for 2017 are expected to increase 44.1% year over year. The company delivered an average positive earnings surprise of 66.7% in the last four quarters.

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