"It has been a nice uplift. We like it. But, at the same time, it hasn't really shifted our view in the short to medium term on gas price," CEO Doug Suttles said in an interview Thursday after reporting quarterly results that beat market expectations.
Suttles said he's sticking to his view that natural gas will remain "range bound" between US$3.50 and US$4.50 per 1,000 cubic feet for the next three or four years, with better prospects in the longer term. In Thursday trading in New York, natural gas for March delivery was above US$5.
Encana started up its Deep Panuke offshore platform in Nova Scotia in December, just as extreme cold descended on the northeastern part of North America, driving up demand for the home-heating fuel. As an added bonus, gas from Deep Panuke sells at daily spot prices, not through monthly contracts.
"It's performing quite well and clearly it's performing quite well at the exact right time," said Suttles on a conference call with analysts.
Deep Panuke is seen as being outside of Encana's new strategy — focused on just five regions throughout North America, instead of dozens — but the company is not "actively" looking to sell it at this point, the CEO said.
Deep Panuke, 250 kilometres southeast of Halifax, is designed to produce 300 million cubic feet per day of gas from four wells. It was initially slated to start up in 2010, but was completed late last year.
Suttles, a former executive at BP, took the reins of Encana last June.
In order to be convinced of a sustained increase in natural gas prices, he said he'd need to see new demand.
"The biggest lever in the short term is really the economy," he said. Longer term, Suttles said he's looking at whether natural gas can be exported to energy-hungry Asian markets via liquefied natural gas export terminals and whether the commodity could see widespread use as a transportation fuel.
The recent bad weather has had a downside. In December, about 2,300 barrels per day were off-line in Alberta and Colorado, with ice blocking the flow of gas from some wells and poor driving conditions making it tough to transport fuel by truck.
Earlier Thursday, Encana Corp. posted US$226 million in operating earnings for the fourth quarter, down 23 per cent year over year but better than analyst estimates.
The operating earnings for the three months ended Dec. 31, reported in U.S. currency, amounted to 31 cents per share.
That was 11 cents above the average analyst estimate.
However, lower natural gas prices drove down Encana's operating earnings from $296 million or 40 cents per share a year earlier.
Encana got an average of US$4.34 per 1,000 cubic feet of gas, down 13 per cent from US$5.02 in the fourth quarter of 2012.
Its cash flow, another key measure for energy companies, was also down year over year, dropping to $677 million, or 91 cents per share, from $809 million, or $1.10 per share.
Encana's operating earnings exclude a number of items such as the impact of the Calgary-based company's risk-management programs.
The quarter included $209 million of unrealized losses on its hedging program and a $124-million loss on foreign exchange, both up substantially from the fourth quarter of 2012.
With those items included, Encana had a net loss of $251 million in the fourth quarter, three-times the comparable loss of $80 million a year earlier.
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