Net income rose to $1.36 billion, or $1.65 a share, from $266 million, or 30 cents, a year earlier, the Calgary-based company said in a statement today. Sales after royalty payments rose 31 percent to $3.92 billion.
EnCana lowered its 2006 gas-production forecast to 3.36 billion to 3.4 billion cubic feet a day from an earlier 3.42 billion to 3.56 billion. The reduction reflects reduced drilling because of higher costs and lower gas prices, said Jim Hall, a portfolio manager at Mawer Investment Management in Calgary.
``There were no big surprises, one way or the other, in quarter,'' said Hall, who oversees the equivalent of about $665 million including 500,000 EnCana shares. ``Gas prices are weaker and costs are up, so why would you go out and drill like crazy when there is no need to at this time?''
Chief Executive Officer Randy Eresman, 48, has sold assets to focus on natural-gas fields in North America and oil-sands projects in northern Alberta. EnCana and Houston-based ConocoPhillips on Oct. 5 agreed to spend $10.7 billion to produce and refine oil from oil sands.
Shares of EnCana fell 40 cents to $C53.35 at 9:39 a.m. on the Toronto Stock Exchange. The stock, which has 14 buy recommendations from analysts, 11 holds and three sells, has gained 1.5 percent this year.
Less Drilling
The results included gains of $255 million from the sale of a stake in a Brazilian offshore oil discovery and $285 million from the increased value of derivatives contacts used to lock in prices for gas and oil, EnCana said. In the second quarter of 2005, the hedging practice reduced earnings by $604 million.
Excluding such one-time items, EnCana earned 98 cents a share, exceeding the estimate of 95 cents from Andrew Potter, an analyst at UBS Securities LLC in Calgary. Higher-than-forecast gas prices and lower spending contributed to better-than-expected performance, Potter said in a note today.
EnCana said it expects to drill about 3,650 wells this year, down 15 percent from 2005. Gas futures traded in New York were 36 percent lower than a year earlier in the third quarter, averaging $6.182 per million British thermal units, down from a record $15.78 in December.
Third-quarter gas production rose 4.3 percent to an average of 3.36 billion cubic feet a day, and the fuel sold for an average of $5.75 per thousand cubic feet, down 21 percent from a year earlier.
Daily output of oil and natural-gas liquids was little changed at 150,565 barrels, compared with 150,457 a year earlier, and the liquids sold for $50.37 a barrel, a gain of 9.1 percent.
