(Reuters) - Encana Corp’s (ECA.TO) quarterly profit topped expectations on higher crude prices, but its total output missed estimates because of low production in two of its core basins.
While production surged at its oilfields in the prolific Permian Basin, overall gains were limited as output in its Duvernay field in Canada and Eagle Ford assets in Texas continued to underwhelm.
The Calgary, Alberta-based company’s total production rose to 324,400 barrels of oil equivalent per day (boe/d) in the first-quarter, above analysts’ average estimate of 338,000 boed.
Eight capital analyst Phil Skolnick said he did not see the production miss “as a negative” as production in the larger Permian basin was up.
As part of a five-year plan to boost output, Encana is focusing on high-margin, liquids-rich production from the Montney and Duvernay oilfields in Canada and the Eagle Ford and Permian in the United States.
Production from its Permian Basin fields jumped 49 percent to 83,800 barrels of oil equivalent per day, from a year earlier. Encana said it continues to expect 30 percent output growth from the U.S. basin.
Jefferies analyst Zach Parham said he expects Duvernay and Eagle Ford basins to return to growth in the second half of the year.
Encana reported a rise in realized prices of all its products including oil, natural gas and natural gas liquids, reflecting a broad rise in global prices.
“Consistent with our plan, we expect significant high-margin oil and condensate growth in the second half of 2018,” said Encana Chief Executive Doug Suttles in a statement.
Encana also bought back 10 million shares for $111 million in the quarter, as part of its $400 million buyback program.
“This combination of robust production growth and significant margin expansion should drive peer-leading growth in cash flow,” said Raymond James analyst Chris Cox in a note.
Encana’s adjusted income rose to $156 million, in the quarter ended March 31, from $104 million, a year earlier.
Encana earned 16 cents per share, above an expected 13 cents, according to Thomson Reuters I/B/E/S.
Encana’s Toronto shares were up 1 percent in early trading.
Reporting by John Benny in Bengaluru; Editing by Saumyadeb Chakrabarty and Patrick Graham