Encana's (ECA - Get Report) aggressive cost-cutting is paying off.

The Calgary, Alberta, company said Thursday, July 21, that its net loss shrank to $601 million, or 71 cents per share, versus $1.6 billion in the same period last year. But on an operating basis, it earned $8 million, or 10 cents per share, versus what analysts thought would be an 8 cent per share loss this year.

Encana shares jumped about 9% to $8.71 per share Thursday midday after its second quarter results beat analysts' expectations. Despite the good earnings news, Encana's sales came in lower than expectations at $364 million for the period versus an estimated $775 million.

Encana exceeded production estimates, especially in West Texas' Permian Basin, which added 5 million barrels of oil equivalent per day over last quarter -- more than offsetting flat results in South Texas' Eagle Ford and lower ones in the Montney area of Western Canada, where it's pulled back.

The company has been cutting costs through the downturn, including $100 million in the quarter. CEO Doug Suttles said on a conference call with analysts that operating costs were down 32% in the period.

Encana has also been selling assets, including its Gordondale assets in the Montney area last month to Birchcliff Energy for $500 million and properties in Colorado's Denver Julesburg Basin last fall to a joint venture controlled by the Canada Public Pension Investment Board for $900 million, both of which came in below expectations. Before that it sold its Haynesville properties in East Texas and northern Louisiana to Blackstone (BX - Get Report) -backed GeoSouthern for $850 million.

The asset sales allowed the company to raise its capital expenditure guidance by $200 million this year to more than $1 billion, with most of it spent later in the year. Analysts expect Encana to add 9% to 10% of incremental growth next year. "We're positioning for growth while increasing our production and expect to continue to reduce net debt," Suttles said. "We think the combination will deliver the most value to shareholders."

When asked by analysts, Suttles said the company would probably sell more non-core assets in the second half of the year but wouldn't identify which ones.

Tudor, Pickering, Holt & Co. was impressed, saying it's returning Encana to its top beta pick list based on valuation, operations outlook and leverage. The firm said it's positive to see most of its added capex will go to its U.S. onshore plays ($150 million of the $200 million) while there's a "massive opportunity set" in the Montney should the North American natural gas environment merit accelerated development there.

Encana is considered one of the largest natural gas producers in North America. It's led by Doug Suttles, an ex-BP (BP - Get Report) executive who began running the company in the summer of 2013. It agreed to buy Permian-focused player Athlon Energy in October 2014 for $7.1 billion just as the downturn was beginning in the oil and gas industry.