Encana boss paints a rosy picture

CEO Suttles offers rosy outlook after year of swift transition

CALGARY — Encana Corp.’s strategic overhaul is one or two years ahead of schedule, chief executive Doug Suttles said Thursday as the energy giant hiked its cash flow and liquids production targets for the year.

But that rosy outlook came as Encana posted lower profits for the second quarter.

Since Suttles took the reins just over a year ago, Encana has pared down its portfolio, made an entry into the hot Eagle Ford shale in Texas and spun out Alberta properties in one of the largest initial public offerings in Canadian history.

“Clearly, we’re getting there faster than we thought,” said Suttles, adding a bevy of asset sales and the $3.1-billion Eagle Ford deal have sped things along.

“We generally think we’re between one and two years ahead on our strategy delivery at this point,” he told a conference call.

Encana, which keeps its books in U.S. dollars, said cash flow is now expected to range from $3.4 billion US to $3.6 billion this year compared with $2.9 billion to $3 billion.

Suttles said a number of options are on the table, including debt reduction, returning cash to shareholders and investing back into the business.

He said that it’s too early to talk about changing the dividend, which had been slashed to seven cents from 20 cents when the new strategy was unveiled last November.

Production of valuable liquids is also expected to come in above previous targets at between 86,000 to 91,000 barrels per day from between 68,000 and 73,000 barrels per day. At the end of last year, Encana’s five main core areas produced about 29,000 barrels of liquids per day.

Capital spending is expected to rise by about $300 million as activity ramps up in the Eagle Ford, a sixth core area Encana added through the acquisition earlier this year.

During the quarter, Encana reached a deal to sell its Bighorn assets in west-central Alberta for about $1.8 billion, closed the $1.6-billion sale of its Jonah natural gas properties in Wyoming, mostly closed the $530-million sale of East Texas lands and made a number of other divestitures.

“All in all, that transformation is really happening fast,” said AltaCorp Capital analyst Dirk Lever.

“If you would have asked me a year ago if they could be as far along as they are now, I would never have thought it.”