Staff Compiled

CALGARY - EnCana Corp., Canada’s largest natural-gas producer, and major operator in Colorado’s Piceance Basin reported second-quarter profit fell less than analysts estimated on contracts used to lock in commodity prices.

The key for EnCana was locking in higher gas prices before they declined in recent months. Menno Hulshof, an analyst with Dundee Securities Corp. told Bloomberg that, “The hedges were a massive boost. They had stronger cash flow than I anticipated on oil production and processing,” he said.

Net income for the company fell 80 percent to $239 million, or 32 cents a share, from $1.22 billion, or $1.63, a year earlier, EnCana said in a statement. Excluding gains and losses from the contracts, profit was $1.22 a share, 28 cents above the average of 15 analyst estimates compiled by Bloomberg.

EnCana said it has sold about 2.6 billion cubic feet a day of gas under contracts that run through October at an average price of $9.13 per thousand cubic feet. Natural gas averaged $3.81 per million British thermal units in the second quarter on the New York Mercantile Exchange. A million Btu is roughly equivalent to a thousand cubic feet.

The company has sold roughly 2 billion cubic feet a day at $6.09 per thousand cubic feet under contracts that run from November to October of next year.

Gas production output for EnCana fell 1.4 percent to 3.79 billion cubic feet a day. The company produces the fuel from fields in Western Canada, Texas, Wyoming and Colorado. Oil and natural-gas liquids production rose to 136,000 barrels a day from 128,000, boosted by output increases at the Foster Creek and Christina Lake projects in Alberta.

Total production was the equivalent of 4.6 billion cubic feet of gas a day, little changed from a year earlier. Revenue declined 49 percent to $3.76 billion.

EnCana will hold a conference call to discuss its earnings at 1 p.m. New York time. To listen, dial +1-800-733-7560.