Encana reports net loss on impairment charge
(Reuters) - Encana Corp (ECA.TO: Quote), which faces antitrust investigations following a Reuters report that it colluded with Chesapeake Energy Corp (CHK.N: Quote) to lower the price of Michigan exploration lands, reported a second-quarter net loss on Wednesday as it wrote down assets because of declines in natural gas prices.
The company, Canada's largest natural-gas producer, reported a net loss of $1.5 billion, compared with a year-earlier profit of $383 million.
Encana said it had recorded a $1.7 billion noncash after-tax impairment charge resulting primarily from the decline in 12-month average trailing natural gas prices.
Operating income, which excludes most one-time items, fell 44 percent to $198 million, or 27 cents a share, from $352 million, or 48 cents a share.
Encana opened an internal investigation led by its board in late June into a the report that it and Chesapeake plotted to avoid bidding against each other in certain Michigan land deals. It has said it will not comment further on the matter until its probe is complete. Chesapeake has declined to comment beyond saying that it never bid jointly with Encana.
Encana's cash flow, a key indicator of the company's ability to pay for new projects and drilling, fell 27 percent to $794 million.
The company said natural gas production fell 15 percent to 2.8 billion cubic feet per day, due to voluntary capacity reductions, divestitures and natural declines. It has been refocusing its operations on producing oil and natural-gas liquids to offset stubbornly low gas prices.
Encana, which has projected average daily liquids production of 30,000 barrels per day for 2012, said it expected 2013 output to range from 60,000 to 70,000 barrels per day.
Oil and natural gas liquids production volumes averaged about 28,000 barrels per day in the second-quarter, increasing nearly 4,000 barrels per day from a year earlier, the company said. (Reporting by Euan Rocha in Toronto and Scott Haggett in Calgary; Editing by Lisa Von Ahn)
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