Encana posts loss and cuts 200 jobs

Calgary-based company says it is prepared to ride out downturn in world oil prices

CALGARY— Encana Corp. says it has trimmed its workforce by more than 200 over the past month or so.

The Calgary-based company now has1,400 fewer workers than when it unveiled a new strategy in late 2013. When Encana announced what it described as its new, more focused direction, it cut close to 1,000 jobs and has been paring down its head count further since then.

CEO Doug Suttles says one of the reasons for the recent job cuts is that today’s oil prices are much lower than what was expected when Encana launched its new strategy.

U.S. benchmark crude is below $50 (U.S.) a barrel, less than half of where it was last year.

Encana’s net loss for the second quarter was $1.6 billion, mostly due to an impairment charge. Without that and other unusual items in the mix, Encana’s operating loss was $167 million.

During the same quarter a year earlier, Encana posted a net profit of $271 million and an operating profit of $171 million.

Encana’s spending this year is focused on two oil deposits in Texas and two shale gas formations in Western Canada.

Encana shares were down almost 9 per cent in closing on the Toronto Stock Exchange at $10.26 (Canadian).

Suttles said oil prices are going to have to rise above $50 a barrel eventually to meet long-term global demand for energy. But for now, it’s hard to predict how long the doldrums are going to last, he said.

“We have to let the market rebalance. There’s been quite a bit of speculation about when and how that will occur, but it’s clearly trying to find its feet,” he said. Demand has been growing more than expected, but that’s been offset by higher output by the Organization of Petroleum Exporting Countries.

“The real question is does it work itself out over six months or does it take a couple of years and I don’t know the answer to that,” Suttles said. “We’re well prepared to manage through that, though.”

He signalled that Encana may want to tighten up its portfolio further and put assets up for sale. When Encana announced slimmed-down spending plans in February, Suttles said phones started ringing.