Canada's major natural gas producer EnCana Corp. (ECA, ECA.TO) Wednesday reported a sharp decline in first-quarter profit, hurt by lower natural gas prices. The weak results also reflected an unrealized mark-to-market hedging loss while it was a gain in the prior-year quarter. EnCana, however, confirmed its production outlook for the full-year 2011.
The company's first-quarter net earnings were $78 million or $0.11 per share, down from $1.49 billion or $1.96 per share last year.
Results for the 2011 first quarter included unrealized mark-to-market hedging loss of $88 million after tax, compared with a gain of $912 million a year ago.
In addition, the company's latest first-quarter results included a divestiture gain of $83 million after-tax and a non-operating foreign exchange gain of $68 million. In the prior-year period, these items were $34 million and $147 million, respectively.
On an adjusted basis, operating earnings declined to $15 million or $0.02 per share from $397 million or $0.53 per share last year.
On average, 13 analysts polled by Thomson Reuters expected earnings of $0.16 per share for the quarter. Analysts' estimates typically exclude one-time items.
In the preceding fourth quarter, the Calgary, Canada-based company had posted a net loss of $42 million or $0.06 per share.
Cash flow declined 17 percent in the first quarter to $955 million mainly due to lower natural gas prices.
In the first quarter, the company's production totaled about 3.34 billion cubic feet equivalent per day or Bcfe/d, up 2 percent from 3.27 Bcfe/d in the previous year, with natural gas production rising 2 percent and natural gas liquids and oil production dropping 4 percent.
While Canadian division production increased 18 percent year-over-year USA division production decreased 8 percent.
During the quarter, the company realized natural gas prices of $5 per thousand cubic feet or Mcf, compared with $6.14 Mcf a year ago. Liquids prices realized were $80.70 per barrel or bbl, higher than last year's $67.07 bbl.
The company stated that as of March 31, 2011, it has hedged approximately 50 percent of expected April to December 2011 natural gas production at an average NYMEX price of $5.75 per Mcf.
Encana's board has declared a quarterly dividend of 20 cents per share, payable on June 30 to common shareholders of record as of June 15.
Going forward, Encana said it is on track to meet its 2011 production outlook of between 3.475 Bcfe/d and 3.525 Bcfe/d.
ECA closed Tuesday's trading at $32.66 while ECA.TO ended at C$31.18.
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