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Energy Summary for July 21, 2016

2016-07-21 19:47 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery lost 56 cents to $44.19 on the New York Merc, while Brent for September lost 51 cents to $45.69 (all figures in this para U.S.). Western Canadian Select traded at a discount of $14.70 to WTI ($29.49), down from a discount of $14.60. Natural gas for August added 8.5 cents to $2.777. The TSX energy index lost a fraction to close at 193.16.

EnCana Corp. (ECA) touched an intraday high of $11.45 before settling at $10.81, up 38 cents, on 17.4 million shares. It helped kick off the second quarter reporting season this morning with better-than-predicted results and a guidance boost. Cash flow of 21 U.S. cents a share was in line with analysts' predictions, while operating income came to 10 U.S. cents a share, well above the predictions of analysts, who had forecast an operating loss of eight U.S. cents a share. EnCana attributed the results to cost cuts and "pace-setter" performance in its plays. The company produced 368,300 barrels of oil equivalent a day during the second quarter, above analysts' predictions of 361,000 barrels a day, though below the first quarter level of 383,400 barrels a day. Production from the four core assets, being the Montney and Duvernay plays in Western Canada and the Permian and Eagle Ford plays in Texas, held steady in both quarters at 268,000 to 269,000 barrels a day. Declines in those plays were offset by new activity, most notably a 14-well pad in the Permian, which EnCana finished in the spring and has been palpably excited about ever since. As management noted during a conference call in May, EnCana drilled the 14 wells using four rigs and completed all of the wells at the same time, taking just three months in total, compared with the 11 months it would have taken using a single rig and completion approach. This "pad drilling philosophy" has led to "incredible" savings, gushed management, with president and chief executive officer Doug Suttles adding, "I don't know if you've picked it up -- we're pretty excited about this." Having set the drum rolling, the company released the results of the pad today: peak production of 12,000 barrels a day and current production of 10,000 barrels a day, or proof of a continuing "track record as a leading innovator," as EnCana put it. The company also drilled "pace-setter" wells in the Eagle Ford and the Duvernay. It apparently still has a lot of work to do in the Montney, where results were merely "strong."

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