Encana Corp. says it lost US$1.48 billion in the second quarter as it booked charges related to the decline of natural gas prices, and warned it could face additional impairment charges due to the market.

The Calgary-based company, which reports in U.S dollars, says the $1.7 billion after-tax charge pulled down the quarterly results, which compared to a profit of $383 million a year earlier.

Operating earnings were $198 million, or 27 cents per share.

Analysts polled by Thomson Reuters were expecting Encana to earn 18 cents per share on average and bring in revenues of $1.62 billion.

The company says downward pressure continued on natural gas prices in the quarter, which contributed to a realized natural gas price of $4.79 per thousand cubic feet during the quarter.

The corporate logo of Encana is shown. (The Canadian Press)

"Given the current pricing environment, the company expects that further declines in 12-month average trailing natural gas prices will likely result in the recognition of future ceiling test impairments," the company said in a release.

Encana said quarterly cash flow was $794 million. Year-to-date, it generated cash flow of approximately $1.8 billion or $2.47 per share and operating earnings of $438 million or 59 cents per share.

Last month, emails surfaced that suggest Encana colluded with U.S. competitor Chesapeake Energy to suppress land prices in Michigan.

Encana's board of directors is looking into the allegations, which have not been proven in court.

Since it spun off its oil and refinery assets into Cenovus Energy Inc. in 2009, Encana has been focused exclusively on developing natural gas.

With prices of that commodity remaining dismally low, Encana's pure-play status has been particularly challenging.

Encana has been looking at partnership deals, drilling for more lucrative natural gas liquids, tapping export markets and asset sales in order to get by in the gloomy market.

Earlier this year, it announced Toyota Tsusho Corp. is investing $602 million to acquire a share of its extensive coalbed methane reserves in southern Alberta in a deal that will see the Japanese company acquire a 32.5 per cent royalty interest in about 5,500 existing and future wells.

In February, Encana said it would sell a 40 per cent chunk of its undeveloped Cutbank Ridge lands in British Columbia to Mitsubishi Corp. of Japan for $2.9 billion.

Encana had been banking on a $5.4-billion cash infusion from a joint-venture deal with PetroChina centred around assets in northeastern B.C. and Alberta. But that deal fell through last June when the two companies couldn't see eye-to-eye on an operating agreement.

Last month, Encana announced it's adding $600 million to its original $2.9-billion capital budget to produce more liquids-rich gas, which fetches a price more akin to oil than ordinary dry natural gas.

The company's stock plummeted sharply after that announcement as investors questioned the wisdom of spending more in such an ugly market environment.

Encana is also a partner in a project to build a liquefied natural gas export terminal in the northern West Coast port of Kitimat, B.C. U.S. firms Apache Corp. and EOG Resources are also involved.

At Kitimat, natural gas piped in from northeastern B.C. will be cooled into a liquid and loaded onto tankers for export to energy-hungry Asian markets. Natural gas fetches a drastically higher price overseas than it does in the oversupplied North American market. Shipments are targeted to begin in 2015.