"Quality growth" was the theme at Encana’s Investor Day event in New York City on October 5, where the company’s leaders outlined a five-year growth trajectory which they believe is second to none among Encana’s multi-basin and pure play competitors.
"Encana is a very different company compared to three years ago,” said Doug Suttles, Encana President & CEO. “We have a leading portfolio with over 10,000 premium return inventory locations and are one of, if not the, lowest cost, highest performing operators in each of our core four assets. We are positioned to deliver exponential growth and returns over the next five years."
Over the next five years the company has the potential to deliver an approximate 300 percent increase in cash flow, a doubling of corporate margins and an over 60 percent increase in production.
"The only way to lead is to improve faster than our competitors." – Doug Suttles
In a testament to the quality of its portfolio and focus on investing in only the highest return assets, Encana expects it can reach this potential by using only a fraction of its current premium well inventory. In order for a location to be considered a part of this premium inventory, it must be able to deliver a greater than 35 percent after-tax rate of return.
This growth potential is based on a flat $55.00 per barrel WTI oil price and $3.00 per Mcf NYMEX natural gas price. The company emphasized that these figures are not a prediction of future prices but were used to highlight that Encana’s business model is not dependent on a price recovery to succeed.
"When you look at the leading growth potential of our portfolio over the next five years, 2017 is a critical year to increase investment in our core four assets," said Sherri Brillon, Encana's Chief Financial Officer. "Consistent with strategy, our public share offering enabled us to reduce debt and fund part of our 2017 capital plan. It was an important catalyst to maintain operational momentum, accelerate activity in the Permian and set us on a growth trajectory."
"Our operational goal is simple; drill better wells for lower costs." – Mike McAllister
Next year (2017) should be considered the kick-off to the company’s growth phase. Subject to the detailed work currently underway on the 2017 budget, Encana expects its core four will switch into growth mode around mid-year. Much of the growth potential over the five years is expected come from the Permian and Montney.
"Our operational goal is simple; drill better wells for lower costs," added Mike McAllister, Encana’s Chief Operations Officer. "We do this by innovating, testing and rapidly deploying ideas that work across the portfolio. We also firmly believe that the safest operations are the most efficient and we take great pride that Encana leads its peers with one of the lowest total recordable injury rates in the industry." The company’s leadership underscored that core to achieving Encana’s impressive five-year potential is its culture of discipline, efficiency and innovation.
"Our team's drive to relentlessly improve is as strong today as when we started," added Doug. "We will continue to make our company better every day because we believe the only way to lead is to improve faster than our competitors."Legal Advisory