EnCana Corporation continued its strong performance in the first quarter with increases in cash flow and operating earnings driven by increased natural gas and liquids production and higher commodity prices.
"EnCana achieved outstanding operational and financial results during the first quarter putting the company well on track to achieve its 2008 forecast. These results continue to reinforce the strong value-generating capability of our sustainable, low-risk resource play strategy. EnCana has assembled an extensive portfolio of unconventional assets and our teams have a demonstrated track record of disciplined execution excellence while maintaining a focus on cost management," said Randy Eresman, EnCana's President & Chief Executive Officer.
"Our resource plays continue to deliver excellent performance, driven by our industry-leading positions in plays such as the Deep Bossier formation of East Texas, the emerging Montney formation of Cutbank Ridge in northeast British Columbia and Jonah in Wyoming. In addition, EnCana teams have recently achieved some promising exploration results in a number of North American shale plays, such as the Horn River in northeast B.C. We have built sizeable land positions in various emerging shale plays and believe that over time they have the potential to add significant depth to our very strong portfolio of natural gas assets across the North American unconventional fairway. We are clearly well positioned for the future."
Natural gas production increased 10 percent in the first quarter to 3.7 Bcf/d, strongly positioning EnCana to achieve full-year guidance of 3.8 Bcf/d. Gas production in the U.S. increased 27 percent, benefiting from incremental volumes from the Deep Bossier acquisition - which doubled EnCana's interest to 100 percent - and drilling programs in the East Texas, Jonah and Piceance resource plays. Production volumes in Canada remained relatively unchanged with increases in coalbed methane (CBM), Cutbank Ridge, Bighorn and Greater Sierra, offset by natural declines from Shallow Gas and conventional properties.
The integrated oil business generated $170 million in operating cash flow, up from $161 million from the same quarter in 2007. The upstream business benefited from an average realized heavy oil price of $59.67 per bbl, up 79 percent from $33.28 per bbl. Operating cash flow from the downstream business was impacted by weaker refining margins. The Chicago 3-2-1 crack spread of $7.69 per bbl was down 40 percent from $12.90 per bbl. First quarter oil production at Foster Creek and Christina Lake was up 26 percent to 29,400 bbls/d (net to EnCana) from the same period last year. The weaker refining margins were offset by the higher upstream realized pricing, which highlights the benefit of the company's integration strategy.
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