EnCana achieved strong 2009 financial and operating performance during a major economic downturn and a year when benchmark natural gas prices averaged about US$4.00 per thousand cubic feet (Mcf), the lowest level in seven years. On a pro forma basis, which reflects EnCana as if it had completed its recent split transaction prior to 2009, the company generated cash flow of $5.0 billion, or $6.68 per share and operating earnings were $1.8 billion, or $2.35 per share. Fourth quarter pro forma cash flow was $930 million, or $1.24 per share. Pro forma operating earnings were $373 million, or $0.50 per share. Fourth quarter production on a pro forma basis was 2.8 billion cubic feet equivalent per day (Bcfe/d). Pro forma financial results in 2009 were enhanced by EnCana's favourable commodity price hedges, which resulted in realized hedging gains during the year of about $2.3 billion after-tax. Total production in 2009 was 3.0 Bcfe/d, on a pro forma basis.
Consolidated operating earnings in 2009 were $4.65 per share, $1.14 per share in the fourth quarter
EnCana's cash flow for 2009 was $6.8 billion, or $9.02 per share, on a consolidated basis, which includes the financial and operating results of the Cenovus Energy Inc. assets for the first 11 months of 2009. Operating earnings were $3.5 billion, or $4.65 per share and net earnings were $1.9 billion, or $2.48 per share. On a consolidated basis, total production in 2009 was 4.4 Bcfe/d, while natural gas production was 3.6 billion cubic feet per day (Bcf/d). In the fourth quarter of 2009, on a consolidated basis, cash flow was $603 million, or $0.80 per share. Consolidated operating earnings for the quarter were $855 million, or $1.14 per share and net earnings were $636 million, or $0.85 per share. On a consolidated basis, total production for the fourth quarter of 2009 was 3.8 Bcfe/d.
Pro forma proved reserves additions replaced 169 percent of 2009 production
On a pro forma basis, EnCana replaced 169 percent of its 2009 production at an average finding and development cost of $1.62 per thousand cubic feet of gas equivalent (Mcfe), while total reserves increased 3 percent to 12.8 trillion cubic feet of gas equivalent (Tcfe). These pro forma reserves metrics are "before SEC price revisions" and the methodology employed is comparable with that of several of EnCana's U.S. natural gas peer companies.
Strong performance in a challenging year of transformative change
"In a year of significant and widespread economic crisis, our company thrived at the same time that it completed a major corporate transformation into two highly-focused energy producers -- North America's newest and highly promising integrated oil producer Cenovus Energy Inc. and EnCana, a pure-play natural gas company. The new EnCana is now very well positioned to achieve even greater success through significant, low-cost organic natural gas production growth for many years ahead," said Randy Eresman, President & Chief Executive Officer.
"In 2009, we met our pro forma cash flow and operating cost expectations. During a year of substantially reduced drilling activity, we grew our total proved reserves by 3 percent at an attractive finding and development cost. We delivered on our key business objectives while maintaining financial strength, expanding our portfolio of unconventional natural gas opportunities, divesting of non-core properties and continuing to pay a stable dividend to shareholders. EnCana's 2009 performance again validated the strength of our resource play business model," Eresman said.
Well positioned to thrive by achieving strong growth and attractive margins in a competitive price world
"As we look ahead, we remain highly focused on achieving production growth that targets an average of 10 percent a year over the long term, and at a cost that is among the lowest in industry. While we recognize that the abundance of North American natural gas likely heralds a future of lower and less volatile natural gas prices, our operating practices, leading technologies and increasing efficiencies position us very well to continue to capture strong margins and thrive in a competitive price environment," Eresman said.
Large and diverse natural gas plays
"We are a leading North American producer of unconventional natural gas with a huge land position in four of the continent's six major natural gas shale plays. We have a strong balance sheet and are extremely well positioned financially to capitalize on attractive investment opportunities that may emerge. Our commodity price risk management program is aimed at continuing to underpin our capital investments and we are maintaining our focus on applying advanced technology to increase operational efficiencies across all of our projects. Our 2009 performance demonstrated our ability to create value for shareholders throughout the economic cycle and the resilience of EnCana's long-term strategy -- a historically successful approach that we plan to apply as we move forward," Eresman said.
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