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Encana’s 1Q15 Production Falls despite Liquids Production Surge

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Total production falls

Encana’s (ECA) 1Q15 production decreased compared to production in the same quarter last year. Its overall crude oil equivalent production volume decreased by 20%, down to 430.1 Mboebpd (thousand barrels of oil equivalent per day). In 1Q14, production came in at 536.1 Mboebpd.

Encana ’s (ECA) liquids production increased by 78%, while natural gas production decreased by 34% from 1Q14 to 1Q15. Liquids consist of crude oil, plant condensate, butane, propane, and ethane.

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The effect of hedging on realized price

Liquids and natural gas price realizations in 1Q15 were respectively 45% and 18% lower than 1Q14 price realizations. This includes the effect of realized financial hedging. Without this hedging effect, average price realization for liquids and natural gas would have been lower by 51% and 45%, respectively.

Effective March 31, 2015, Encana has hedged ~1,000 million cubic feet per day of expected natural gas production for April to December 2015 at $4.29 per thousand cubic feet. It has also hedged ~55,800 barrels per day of expected oil production for the rest of 2015 at $62.09 per barrel.

Production exceeds estimates

In 1Q15, Encana’s actual production exceeded analysts’ consensus estimates by 4%. On average, however, actual production fell 3.7% short of consensus estimated production in the past five quarters.

In comparison, Linn Energy’s (LINE) actual production exceeded consensus estimated production by 2% in 1Q15, and Ultra Petroleum’s (UPL) production exceeded estimates by 2% in 1Q15. WPX Energy’s (WPX) production, on the other hand, fell short of estimates by 10% in 1Q15.

Ultra Petroleum (UPL) makes up 1.25% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

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