If you look closely, there are early signs of a recovery in Canada’s energy sector. 

Encana swung to an operating profit of US$89 million in the second quarter from a US$167 million loss a year earlier, and cash flow held steady at US$182 million. The company is raising its 2016 capital spending plan by US$200 million to a range of US$1.1-US$1.2 billion.

The new budget is being funded in part by CEO Doug Suttles’ latest divestments, including the sale of Encana’s DJ Basin and Gordondale assets.

“This has been maybe the two toughest years in decades and some people could argue ever in this industry,” Suttles told BNN on Thursday. “But I do think we are seeing recovery.”

Suttles added the company has no more job cuts planned. Encana has cut nearly half its workforce, or about 2,300 positions, since Suttles became CEO in 2013, but Suttles said the company did “some creative things” when it announced its most recent headcount reduction earlier this year in order to position for an eventual recovery.

“We deployed 80 of our people largely into field positions held by service providers and these are people we plan to redeploy back into their traditional roles – geologists and engineers – when activity picked up again,” Suttles said, “so we positioned ourselves to have access to the talent we need.”

Precision Drilling saw its revenue more than halved in the second quarter to $164 million as rig use plunged across the company’s Canadian, U.S. and international footprints. However, CEO Kevin Neveu is seeing signs that customers are preparing for better days.

“Our customers appear to be looking beyond the oil price lows of earlier this year, resetting spending to current commodity price levels,” he said in a statement, “and beginning the early stages of planning for improved longer term fundamentals.”

Encana is joining other producers such as Northern Blizzard and Canadian Natural Resources in raising spending for the remainder of the year. Analysts have long been expecting any extra cash companies may generate in a low price environment will go to paying off debt and otherwise preserving balance sheet strength.

While Encana is maintaining its dividend at the lower level it announced in February, some income stocks are increasing payouts to shareholders. Infrastructure provider AltaGas announced a six per cent increase to its monthly dividend on Thursday morning along with an outlook that calls for a 20 per cent increase in profit over the course of this year compared to 2015.

The fact that an increasing number of producers are choosing instead to pump more money into expanded drilling programs is at the very least a sign of confidence in less volatile times ahead. In Encana’s case, the company has locked in prices for the vast majority of its remaining 2016 output (78 per cent of oil production at US$55.91 per barrel and 86 per cent of natural gas production at US$2.63 per million cubic feet), providing strong support for the increased spending plans.

Husky Energy will continue the second-quarter Canadian energy earnings parade before markets open Friday. Integrated producers like Husky – so called because they both produce and refine petroleum products – are expected to perform particularly well this quarter.