CALGARY – Encana Corp. said Friday it has trimmed its workforce by more than 200 over the past month or so as it posted a net loss of US$1.6 billion during the second quarter.
The Calgary-based company now has 1,400 fewer workers than when it unveiled a new strategy in the fall of 2013. Close to 1,000 jobs were cut when Encana made that announcement and it has been paring down its workforce further since then.
“Obviously in today’s commodity price, our spending levels are lower than what we had anticipated when we originally launched our new strategy,” CEO Doug Suttles said of the most recent round of cuts.
U.S. benchmark crude is below US$50 a barrel, less than half of where it was last year.
Encana’s loss was mostly due to a US$1.3-billion non-cash, after-tax “ceiling test impairment” charge to do with the impact of lower commodity prices.
Without that and other unusual items in the mix, Encana’s operating loss was US$167 million.
During the same quarter a year earlier, Encana posted a net profit of US$271 million and an operating profit of US$171 million.
Encana shares were down nearly nine per cent on the Toronto Stock Exchange, settling at $10.26.
The company’s spending this year is focused on two oil deposits in Texas and two shale gas formations in Western Canada.
Suttles said oil prices are going to have to rise above US$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.”
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.
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