Calgary-based energy producer Encana Corp. (NYSE: ECA) on Friday reported second-quarter adjusted earnings per share of $0.34, shattering the consensus estimate of $0.04 per share. Revenue climbed to $1.08 billion, well above the consensus estimate of $796.65 million. In the year-ago quarter, Encana posted EPS of $0.10 and revenue of $364 million.

Operating expenses fell to $762 million from $1.27 billion in the second quarter of 2016, and operating income totaled $321 million after posting a loss of $912 million a year ago. Net earnings totaled $331 million compared with 2016 second-quarter loss of $601 million.

Cash flow from operations improved to $351 million from $278 million, juiced by a corporate margin of $12.09 per barrel of oil equivalent, up by 25% year over year.

The company lowered its 2017 total production guidance slightly, to a range of 310,000 to 320,000 barrels per day from 320,000 to 330,000 barrels, primarily in natural gas production. In its core areas, however, Encana expects production to rise by 25% to 30%.

Cash costs are now estimated at $3.60 to $4.00 a barrel, down from $3.75 to $4.25 in the prior outlook. Capex guidance was unchanged at $1.6 billion to $1.8 billion for the year.

Chief Executive Officer Doug Suttles said:

“Our updated guidance reflects our strong performance, efficiency and confidence. We are generating significant momentum and are well positioned for 2018 when we expect to grow within cash flow, even if commodity prices remain at today’s levels.”

In a presentation accompanying the earnings announcement, Encana said 75% of second-half production is hedged on oil, gas, and natural gas liquids.

Although Encana did not specify its hedged price, the company’s hedge positions were almost certainly entered into late last year and early this year when crude oil prices were at their recent highs. Most other producers did the same thing and that is one reason why low prices for crude oil have had little impact on production. Producers have locked in higher prices for the rest of this year, and some have even bought hedges for the first part of next year.

Encana’s realized price per barrel on its U.S. second-quarter crude oil production was $46.14 per barrel. Its hedges added $2.17 per barrel.

The company’s stock rose 2.6% to $9.91 a share in late morning trading as is in a 52-week price range of $7.50 to $13.85. Trading volume is already almost 50% higher than the daily average of 12.2 million shares. The stock’s 12-month price target is $12.91.

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