CALGARY -- Encana Corp., under the leadership of a new CEO, is charting out a new strategy to help it thrive amid low commodity prices, the natural gas giant said Wednesday as it posted a higher operating profit.
In June, Encana appointed former BP executive Doug Suttles to the top job following Randy Eresman's abrupt departure earlier in the year.
"My focus is on developing a strategy that will deliver sustainable growth in shareholder value during a period of modest commodity prices," said Suttles in a release.
"That means we need to take the time to do this right and consider a range of alternatives. I fully expect this work will be completed this year and that 2014 will be the first year of implementing our new strategy."
An "internal strategy development team," which will report directly to Suttles, has been tasked with identifying Encana's key strengths and capabilities.
Encana's board looked at more than 100 candidates, from both inside and outside the company, before picking Suttles for the top job.
At BP, Suttles led the cleanup of the massive oil spill in the Gulf of Mexico, triggered by the blowout of the Macondo well in April 2010. Some 757 million litres of oil spewed into the waters off the Louisiana coast.
On Wednesday, Encana posted operating earnings of $247 million, or 34 cents per share -- widely beating the average analyst estimate of 19 cents per share, according to Thomson Reuters.
A year earlier, operating earnings -- which strip out one-time items -- were $198 million, or 27 cents per share
Net earnings were $730 million, or 99 cents per share, reversing a year-earlier loss of $1.48 billion.
Encana also announced David O'Brien -- one of the company's founders -- has stepped down as chairman of the board. He'll remain as a director of the company while Clayton Woitas takes on the role of board chairman.
O'Brien's move had been expected as part of a broader renewal at the upper echelons of Canada's largest natural gas producer, which has been hit by an extended period of low prices for its main commodity.
"Our results over the first half of the year have us well-positioned to deliver on our guidance targets for 2013," Suttles said in Encana's earnings announcement.
"Our focus moving forward is to continue to exercise capital discipline while working to achieve ever greater efficiencies in how we run our business. We expect to see cost savings materialize throughout the rest of the year as a result of those efforts."
Production of oil and natural gas liquids -- more valuable than ordinary dry natural gas -- rose 69 per cent year-over-year to 47,600 barrels per day.
Dry natural gas production during the quarter was essentially flat at 2.8 billion cubic feet per day.
Capital spending for the year will be in the lower part of its 2013 guidance range of $3 billion to $3.2 billion. Cash flow is on track to be in the middle to higher end of its guidance of between $2.3 billion to $2.5 billion.
The company also said Wednesday it is shielding itself from commodity price volatility by hedging nearly 2.3 billion cubic feet per day of its July-to-December 2013 production at an average price of US$4.37 per 1,000 cubic feet. That represents about three-quarters of its expected natural gas output for the rest of the year.
Encana shares rose four cents to $18.17 in mid-morning trading on the Toronto Stock Exchange.
