Encana has cut 200 jobs, posts $1.6B US quarterly operating loss
Energy company has been reducing headcount since 2013
Encana Corp. says it has trimmed its workforce by more than 200 over the past month or so.
The Calgary-based company now has 1,400 fewer workers than when it unveiled a new strategy in the fall of 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 US a barrel, less than half of where it was last year.
2nd quarter earnings
Encana's net loss for the second quarter was $1.6 billion US ($2.1 billion Canadian), mostly due to an impairment charge. Without that and other unusual items in the mix, Encana's operating loss was $167 million US.
During the same quarter a year earlier, Encana posted a net profit of $271 million US and an operating profit of $171 million US.
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 more than nine per cent in mid-day trading on the Toronto Stock Exchange at $10.20.
'We have to let the market rebalance'
Suttles said oil prices are going to have to rise above $50 US 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."
Suttles signalled that Encana may want to tighten up its portfolio further and put assets up for sale.
Without divulging details of Encana's plans, Suttles said he sees deals picking up generally in the market during the second half of this year.
"The longer you're in a lower price, the more likely the buyer and the seller can get closer to what they expect to receive and I think that's happening," he said.
When Encana announced slimmed-down spending plans in February, Suttles said phones started ringing. Potential buyers were wondering whether assets that aren't getting capital this year may be up for grabs.
"We took that as a compliment because we think we have a quality set of assets — even the ones we're not investing into — run by a great set of people."