Cash flow set to triple
According to Encana’s investor day presentation on October 5, 2016, the company expects significant cash flow growth due to production growth and margin expansion over the next five years.
Assuming $55 per barrel for WTI (West Texas Intermediate) crude oil and $3 per mmBtu (million British thermal units) for Henry Hub natural gas pricing, Encana expects total cash flow to rise more than 300.0% in the next five years. It projects that its capital program will be self-funded from cash flow after 2017.
In 3Q16, Encana reported cash flow of $0.22 per share and negative free cash flow of -$0.02 per share. Due to lower energy prices, most S&P 500 (SPY) energy companies have reported lower year-over-year cash flows. Southwestern Energy (SWN), Murphy Oil (MUR), and Range Resources (RRC) reported $0.36 per share, $0.96 per share, and $0.18 per share, respectively, in cash flows in 3Q16.