Encana Corp. (ECA.TO,ECA) Tuesday reported a loss for its first quarter, reflecting unrealized hedging loss as well as foreign exchange loss. Operating earnings exceeded analysts' expectations.
The Canadian energy producer said its focus remains on reducing costs and increasing its profitability, and expects the cost reduction efforts to have an impact on its second-half results. The firm said it experienced growth in its overall liquids production, which resulted in a 48 percent increase in oil and natural gas liquids or NGL volumes.
Unrealized hedging loss in the period was $266 million, compared to a gain of $45 million last year. The firm also recorded a non-operating foreign exchange loss of $101 million, against a gain of $86 million in the prior year.
The company said its search for next president and CEO is progressing and plans to complete its search by the end of June.
In the first quarter, Encana posted a net loss of $431 million, compared to net profitof $12 million in the previous year. The company posted a first quarter net loss largely due to mark-to-market accounting of the company's unrealized risk management position and a non-operating foreign exchange loss.
Operating earnings, a non-GAAP figure, declined to $179 million or $0.24 per share from $240 million or $0.33 per share in the prior year. On average, 13 analysts polled by Thomson Reuters expected the company to earn $0.06 per share for the quarter. Analysts' estimates typically exclude special items.
Natural gas production declined 12 percent to 2,877 million cubic feet per day or Mmcf/d. Oil and natural gas liquids production was 43,500 barrels per day or bbls/d, up 48 percent from the preceding year.
Encana realized gas price dropped to $3.86 per Mcf from $4.58 Mcf last year. Realized liquids price was $69.45 per bbl, lower than $83.77 per bbl a year ago.
Encana anticipates total liquids production to increase from an exit rate of about 37,000 bbls/d at the end of 2012 to between 70,000 bbls/d and 75,000 bbls/d by the end of 2013.
On April 22, the company's board declared a dividend of $0.20 per share, to shareholders of record on June 14, 2013, payable on June 28.
ECA closed Monday's regular trading at $18.79 on the NYSE. In the Toronto Stock Exchange, the shares ended at C$19.29.
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