Encana delivers strong finish to 2017; innovation, execution and efficiency set the stage for self-funded growth in 2018
January 09 2018 - 5:00AM
Encana (TSX:ECA) (NYSE:ECA) delivered strong performance
through the fourth quarter of 2017 to close another year
successfully executing its strategy, delivering significant oil and
condensate growth and driving additional efficiency gains.
Supported by the strong finish to 2017, the company is firmly on
track to meet or exceed the targets in the five-year plan shared at
its Investor Day in October 2017.
Driven by its focus on innovation and execution
efficiency, Encana’s core assets delivered production growth of
approximately 31 percent from the fourth quarter of 2016 to the
fourth quarter of 2017. This growth significantly exceeds the
company’s original target of greater than 20 percent and is above
the top end of its revised 25 to 30 percent guidance range. Encana
accomplished this growth with a capital investment of approximately
$1.8 billion.
“Consistent with our plan, we delivered a strong
finish to 2017," said Doug Suttles, Encana President & CEO. “We
have established a powerful track record of meeting and beating our
targets, continuously driving efficiency and capital discipline. We
are positioned to deliver significant value growth in 2018 while
funding our capital program from corporate cash flows.”
The company expects its 2018 capital program
will be similar to 2017 with modest allocation adjustments to
optimize delivery. Encana plans to invest virtually all its
anticipated 2018 capital in its core assets, with around 70 percent
directed to the Permian and Montney. The company anticipates
between 25 to 35 percent production growth from its core assets
from the fourth quarter of 2017 to the fourth quarter of 2018, with
significant oil and condensate growth in the second half of the
year.
Encana’s large-scale cube development model
continues to maximize returns and resource recovery from its
stacked, unconventional reservoirs. This development approach also
maximizes capital efficiency. Cube development and enhanced
completion designs delivered strong performance in the Permian
where fourth quarter production exceeded 80,000 barrels of oil
equivalent per day (BOE/d), well ahead of the company’s target of
75,000 BOE/d.
In the Montney, liquids production more than
doubled from the fourth quarter of 2016 to the fourth quarter of
2017 driven by a focus on condensate rich wells and the early
start-up of the Tower, Saturn and Sunrise processing plants. In
2018, Encana expects to grow its liquids production as it fills
capacity at the new plants and completes two additional liquids
hubs in the second half of the year. Encana has minimized its
exposure to AECO pricing through a focus on growing condensate
production and diversifying market access. Overall, approximately
four percent of expected total 2018 revenue is exposed to AECO
pricing.In the fourth quarter, Encana further focused its portfolio
with the sale of most of its Wheatland assets in south central
Alberta. These assets consisted of approximately 520,000 net acres
and approximately 4,750 gas wells. In 2017, Encana’s production
from the assets was approximately 60 million cubic feet per day
(MMcf/d) of natural gas.
The company plans to issue 2018 guidance along
with its 2017 fourth quarter and year-end results on February 15,
2018.
Encana CorporationEncana is a
leading North American energy producer that is focused on
developing its strong portfolio of resource plays, held directly
and indirectly through its subsidiaries, producing oil, natural gas
liquids (NGLs) and natural gas. By partnering with employees,
community organizations and other businesses, Encana contributes to
the strength and sustainability of the communities where it
operates. Encana common shares trade on the Toronto and New York
stock exchanges under the symbol ECA.
ADVISORY REGARDING NON-GAAP MEASURES
Certain measures in this news release do not
have any standardized meaning as prescribed by U.S. GAAP and,
therefore, are considered non-GAAP measures. These measures may not
be comparable to similar measures presented by other companies and
should not be viewed as a substitute for measures reported under
U.S. GAAP. For additional information regarding non-GAAP measures,
including reconciliations, see the Company’s website and Encana’s
most recent Quarterly Report on Form 10-Q or Annual Report on Form
10-K as filed on SEDAR and EDGAR.
- Non-GAAP Cash Flow is a non-GAAP measure
defined as cash from operating activities excluding net change in
other assets and liabilities, net change in non-cash working
capital and current tax on sale of assets.
ADVISORY REGARDING OIL AND GAS
INFORMATION - The conversion of natural gas volumes to
barrels of oil equivalent (BOE) is on the basis of six thousand
cubic feet to one barrel. BOE is based on a generic energy
equivalency conversion method primarily applicable at the burner
tip and does not represent economic value equivalency at the
wellhead. Readers are cautioned that BOE may be misleading,
particularly if used in isolation.
ADVISORY REGARDING FORWARD-LOOKING
STATEMENTS - This news release contains forward-looking
statements or information (collectively, “FLS”) within the meaning
of applicable securities legislation, including the United States
Private Securities Litigation Reform Act of 1995. FLS include:
ability to meet or exceed targets in five-year plan; increased
efficiency and capital discipline; anticipated capital program,
source of funding and allocation thereof; projected production and
value growth, commodity composition and revenue; benefits of cube
development; timing of infrastructure; exposure to AECO pricing;
and timing for issuance of guidance.
Readers are cautioned against unduly relying on
FLS which involve assumptions, risks and uncertainties that may
cause FLS not to occur or results to differ materially. These
assumptions include: future commodity prices; assumptions contained
in corporate guidance and five-year plan; results from innovations;
access to transportation and processing facilities; assumed tax,
royalty and regulatory regimes; and expectations and projections
made in light of Encana's historical experience and its perception
of historical trends. Risks and uncertainties include: commodity
price volatility; ability to secure adequate transportation and
potential curtailments; delays in infrastructure construction;
unexpected technical difficulties; access to sources of liquidity;
failure to achieve efficiency initiatives; and other risks and
uncertainties impacting Encana's business, as described in its
Annual Report on Form 10-K and from time to time in other periodic
filings as filed on SEDAR and EDGAR.
Although Encana believes the expectations
represented by FLS are reasonable, there can be no assurance FLS
will prove to be correct. Readers are cautioned that the above
assumptions, risks and uncertainties are not exhaustive. FLS are
made as of the date of this news release and, except as required by
law, Encana undertakes no obligation to update publicly or revise
any FLS. The FLS contained herein are expressly qualified by these
cautionary statements.
Further information on Encana Corporation is
available on the company’s website, www.encana.com, or by
contacting:
Investor contact:Corey CodeVice-President,
Investor Relations(403) 645-4606 Patti
PosadowskiSr. Advisor, Investor Relations(403)
645-2252 |
Media contact:Simon
ScottVice-President, Communications(403)
645-2526Jay AverillDirector, Media Relations(403)
645-4747 |
SOURCE: Encana Corporation |
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