Current ECA Stock Info

Encana Corporation (ticker: ECA) opened 2018 with Q1 net earnings of $151 million. This compares to Q1 2017’s net earnings of $431 million. Cash generated from operating activities reached $381 million, which compares to $106 million in Q1 2017.

Encana’s first quarter production totaled 324,400 BOEPD, of which the company’s core assets contributed 307,500 BOEPD. Total liquids production grew by 31% to 145,200 BPD compared to Q1 2017, with oil and condensate making up nearly 80%. Natural gas production was 1,075 MMcf/d.

Courtesy of Encana
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Analyst Commentary

From KLR Group - John Gerdes, Head of Research

Investment thesis:

We are increasing our ECA target price $2 to $18 per share due to stronger U.S. oil and Canadian gas price realizations.

Our ’18 production expectation of ~370 Mboepd is at the midpoint of company guidance (360-380 Mboepd). Core asset production in the fourth quarter should approximate 414 Mboepd, which is slightly above the midpoint of guidance (400-425 Mboepd). In 4Q/18, Permian Basin and Montney liquids production should approximate 95 Mboepd and 60-65 Mboepd, respectively.

Encana’s capital yield is 110%-115% versus the industry median cash recycle ratio of ~150% due to a lesser cash margin given the company’s weighting toward Canadian natural gas (~48% of total ’18 production).

Half-cycle economic rank:

Montney: Encana plans to conduct an eight-rig Montney program this year including at least one rig in Pipestone. The company plans to drill 85-95 net wells in Tower/Dawson South and 25-30 net wells in Pipestone this year.

Tower rich-gas condensate wells should recover ~1,500 Mboe (~185 Mboe/1,000’ lateral, ~20% condensate) for a cost of ~$4 million (~$500/ft.). Dawson South gas condensate wells should recover ~1,800 Mboe (~185 Mboe/1,000’ lateral, ~20% condensate) for a cost of ~$4.5 million (~$450/ft.).

Pipestone volatile-oil wells should recover ~1,300 Mboe (~145 Mboe/1,000’ lateral, ~60% oil) for a cost of ~$5.5 million (~$600/ft.).

Midland Basin: Encana is conducting a four to five-rig Midland Basin program with ~70% of the activity in Midland/Martin/Upton Counties. The company plans to drill/complete 100-115 net wells this year. Midland Basin wells cost of ~$5.6 million (~$750/ft.). Currently, approximately 40% of sand is locally sourced though by year-end local sand should constitute all of the company’s requirements. Wolfcamp A/B and Lower Spraberry wells in Midland/Upton Counties should recover ~1,000 Mboe (~135 Mboe/1,000’ lateral, 60%-70% oil). Lower Spraberry wells in Martin County should recover ~900 Mboe (~120 Mboe/1,000’ lateral, 70%-75% oil). Wolfcamp A/Lower Spraberry wells in Howard County should recover 800-900 Mboe (~115 Mboe/1,000’ lateral, ~75% oil). Glasscock County wells targeting the Wolfcamp A/B/Lower Spraberry should recover 750-800 Mboe (~105 Mboe/1,000’ lateral, 60%-70% oil).

Eagle Ford: Encana is conducting a three-rig program though expects to average two rigs and drill/complete 45-50 net wells this year (~60% Eagle Ford, ~40% Austin Chalk). Eagle Ford/Austin Chalk wells should recover ~800 Mboe (~160 Mboe/1,000’ lateral, ~70% oil) for a cost of ~$4.8 million (~$950/ft.).

Duvernay: Encana is currently running four-rigs in the Duvernay to fill midstream capacity available later this year. The company expects to average one to two rigs in the Duvernay this year. Encana plans to drill/turn-to-sales seven to nine net wells this year. In Simonette South, Duvernay very rich gas condensate wells should recover ~1,800 Mboe (~200 Mboe/1,000’ lateral, ~40% condensate) for a cost of approximately $9.6 million (~$1,075/ft.).  


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