Canada's Encana slashes dividend, cuts capex

Mon Dec 14, 2015 1:12pm EST
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By Anet Josline Pinto

(Reuters) - Canadian oil and natural gas producer Encana Corp, responding to a sharp drop in oil prices, has slashed its dividend by about 79 percent and its 2016 capital budget by more than a quarter.

The company's shares fell as much as 10 percent on the Toronto and New York Stock Exchanges on Monday.

"The initial guidance that they put up for 2016 was little worse than what most people were expecting on the production side. And there is a risk the numbers could come down further because the guidance was based on WTI of $50," said Cormark Securities Inc analyst Amir Arif.

U.S. West Texas Intermediate was trading at about $35.56 per barrel at 1625 GMT.

Encana said it expected to produce an average 340,000-370,000 barrels of oil equivalent per day (boepd) next year, down from the 395,000-430,000 boepd it expects to produce in 2015.

The company expects to end 2015 with around 600 fewer staff, down to 2,900 from around 3,500. Around half of this decrease is attributable to natural attrition and divestitures, in which staff transitioned to the purchasing company. The remaining half is attributable to layoffs, Encana spokesman Doug McIntyre said.

Encana, which said in July that it had cut 200 jobs, plans to spend $1.5-$1.7 billion in 2016, compared with $2.2 billion this year.

The Calgary-based company, which cut its dividend for the first time since 2013, joins other oil producers who have reduced or suspended dividend to shore up their finances amid a nearly 70 percent slide in global oil prices since June 2014.   Continued...