CALGARY, Alberta, Feb 11 (Reuters) - EnCana Corp and its oil sands and refining spinoff Cenovus Energy Inc posted their first earnings as separate companies on Thursday with both seeing a drop in net profit due to lower prices and reorganization costs.
The two companies released results that analysts said were muddied by the split, completed at the end of November. Analysts had provided widely varying estimates of their results as they sought to understand how the two companies would perform as separate businesses.
'There is tremendous noise in these numbers given the corporate restructuring with (Cenovus), with the Street's estimates displaying considerable variance,' Andrew Potter, an analyst at UBS Securities, wrote of EnCana's results in a note.
EnCana, which separated from Cenovus to concentrate on natural gas production, said its net income fell 65 percent in the fourth quarter to C$233 million, or 85 cents a share, down from $671 million, or 89 cents, in the final quarter of 2008, on charges and lower natural gas prices.
The figures are pro forma and exclude Cenovus's results.
Operating income, which excludes most one-time items, fell 32 percent to $373 million, or 50 cents a share, from $546 million, or 73 cents.
The operating result surpassed the average estimate of analysts of 42 cents, according to Thomson Reuters I/B/E/S, due to higher than expected production.
'It was pretty messy quarter and hard to draw comparisons,' said Lanny Pendill, an analyst at Edward Jones. 'But if you look at some of the key metrics, EnCana is definitely off to a good start.'
EnCana's cash flow fell 38 percent to $930 million, or $1.24 a share, from $1.5 billion, or $2.00.
On a pro-forma basis, EnCana's total production fell to 2.831 billion cubic feet equivalent per day from 3.17 bcfed in the year-before quarter as it shut in some wells because of low prices.
Natural gas prices were sharply lower in the quarter, with the benchmark U.S. price down 23 percent from the year-earlier period at $4.39 per million British thermal units as the recession cut demand while supplies rose. Oil prices, however, strengthened, gaining 29 percent to an average $76.13 per barrel.
Cenovus, whose main business is an oil sands and refining joint venture with ConocoPhillips, said its pro-forma net income fell 94 percent in the fourth quarter to $24 million from $380 million in the fourth quarter of 2008 on the costs of the split and charges.
Operating earnings rose to $152 million, or 20 cents a share, from a year-earlier loss of $123 million, or 16 cents.
The company's cash flow was $225 million, or 30 cents a share, compared with a year-earlier cash deficit of $174 million, or 23 cents a share.
Cenovus's oil and natural gas liquids production averaged 114,590 barrels a day, up 11 percent from 103,317 bpd a year earlier.
Natural gas output fell 13 percent to 765 million cubic feet per day.
Cenovus's shares were up 76 Canadian cents, or 3 percent, at C$25.50 early on Thursday afternoon on the Toronto Stock Exchange. EnCana shares rose 41 Canadian cents, or 1.3 percent, to C$32.88.
($1=$1.05 Canadian)
(Reporting by Scott Haggett; editing by Peter Galloway) Keywords: ENCANA CENOVUS/ (scott.haggett@thomsonreuters.com; Reuters Messaging: scott.haggett.reuters.com@reuters.net; +1 403 531-1622) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The two companies released results that analysts said were muddied by the split, completed at the end of November. Analysts had provided widely varying estimates of their results as they sought to understand how the two companies would perform as separate businesses.
'There is tremendous noise in these numbers given the corporate restructuring with (Cenovus), with the Street's estimates displaying considerable variance,' Andrew Potter, an analyst at UBS Securities, wrote of EnCana's results in a note.
EnCana, which separated from Cenovus to concentrate on natural gas production, said its net income fell 65 percent in the fourth quarter to C$233 million, or 85 cents a share, down from $671 million, or 89 cents, in the final quarter of 2008, on charges and lower natural gas prices.
The figures are pro forma and exclude Cenovus's results.
Operating income, which excludes most one-time items, fell 32 percent to $373 million, or 50 cents a share, from $546 million, or 73 cents.
The operating result surpassed the average estimate of analysts of 42 cents, according to Thomson Reuters I/B/E/S, due to higher than expected production.
'It was pretty messy quarter and hard to draw comparisons,' said Lanny Pendill, an analyst at Edward Jones. 'But if you look at some of the key metrics, EnCana is definitely off to a good start.'
EnCana's cash flow fell 38 percent to $930 million, or $1.24 a share, from $1.5 billion, or $2.00.
On a pro-forma basis, EnCana's total production fell to 2.831 billion cubic feet equivalent per day from 3.17 bcfed in the year-before quarter as it shut in some wells because of low prices.
Natural gas prices were sharply lower in the quarter, with the benchmark U.S. price down 23 percent from the year-earlier period at $4.39 per million British thermal units as the recession cut demand while supplies rose. Oil prices, however, strengthened, gaining 29 percent to an average $76.13 per barrel.
Cenovus, whose main business is an oil sands and refining joint venture with ConocoPhillips, said its pro-forma net income fell 94 percent in the fourth quarter to $24 million from $380 million in the fourth quarter of 2008 on the costs of the split and charges.
Operating earnings rose to $152 million, or 20 cents a share, from a year-earlier loss of $123 million, or 16 cents.
The company's cash flow was $225 million, or 30 cents a share, compared with a year-earlier cash deficit of $174 million, or 23 cents a share.
Cenovus's oil and natural gas liquids production averaged 114,590 barrels a day, up 11 percent from 103,317 bpd a year earlier.
Natural gas output fell 13 percent to 765 million cubic feet per day.
Cenovus's shares were up 76 Canadian cents, or 3 percent, at C$25.50 early on Thursday afternoon on the Toronto Stock Exchange. EnCana shares rose 41 Canadian cents, or 1.3 percent, to C$32.88.
($1=$1.05 Canadian)
(Reporting by Scott Haggett; editing by Peter Galloway) Keywords: ENCANA CENOVUS/ (scott.haggett@thomsonreuters.com; Reuters Messaging: scott.haggett.reuters.com@reuters.net; +1 403 531-1622) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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