ENCANA, the Canadian natural gas producer run by former BP executive Doug Suttles, said yesterday it will cut about 20 per cent of its workforce, slash its dividend and invest nearly three-quarters of its 2014 capital spending budget in more lucrative oil and liquid gas assets.
The strategy is part of the new chief executive’s push to boost earnings as the company faces the prospect that natural gas prices will remain weak for years to come.
Encana, which had 4,193 employees on 31 December last year, said it will cut its dividend to seven cents per share from 20 cents.
The company, which is attempting to recover for a series of strategic missteps, forecast a capital spending programme of about $2.5bn (£1.6bn) for 2014, down from an expected $2.7bn to $2.9bn this year.
Encana said it will also sell assets and spin off its oil and natural gas royalty interests in the Clearwater field by mid 2014.
Encana said it will retain a “significant” stake in the new company that will manage the leasing activities in the area, allowing it to get more out of an undervalued business and generate higher cash flow in the longer term.
“The restructuring that is underway reflects our shift from funding about 30 different plays to focusing our resources on five key areas,” Suttles, a former BP executive who became CEO in June, said.
The company reported a net profit of $188m, or 25 cents per share, for the third quarter ended 30 September. It reported a net loss of $1.24bn for the year ago period.
City A.M. Reporter