Calgary-based Encana Corp. outlined how it has lowered drilling costs across its core plays and expects additional cost reductions throughout the year. It also increased its 2016 production expectations despite the ongoing oil price slump.
“We are one of the lowest-cost, highest-performing operators in each of our core four plays,” said Doug Suttles, Encana president and chief executive officer. The core areas are the Eagle Ford and Permian basin in Texas and the Duvernay and Montney in Western Canada.
“Our success in capturing significant capital efficiency gains continues to increase our returns,” Suttles said. “By reinvesting savings and modestly increasing capital, we are adding 50% more drilling and completions activity to our 2016 program.”
Encana plans to use proceeds from asset divestitures to strengthen its balance sheet. The company expects its 2016 statistics will show a $100 million reduction in transportation, processing, and operating costs.
Second-quarter drilling and completion costs across Encana’s four core assets were more than 30% lower than the 2015 full-year average, Encana statistics showed.
In a July 21 earnings statement, Encana said its net loss for the quarter ended June 30 was $601 million compared with $1.61 billion for the same period a year ago. Both quarters involved impairment charges and hedging losses.
Drilling costs reduced
Encana completed a 14-well pad in the Midland basin, saying production peaked at 12,000 boe/d and is currently at more than 10,000 boe/d gross.
The company’s average Midland basin average drilling and completion costs declined 10% quarter-over-quarter and were 31% lower than the full-year 2015 average.
Average Eagle Ford drilling and completion costs in the second quarter were 38% lower than the 2015 average. Encana said it drilled and completed an Eagle Ford well for $3 million.
In the Duvernay, Encana drilled and completed a well for $6.8 million. The plays second-quarter average drilling and completion costs were down 40% compared with its 2015 average.
In the Montney, Encana said second-quarter average drilling and completion costs were down 14% compared with the first quarter and 33% lower than its full-year 2015 average.
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