Canada's Encana lays off 200 employees in July amid oil slump

Fri Jul 24, 2015 1:41pm EDT
 
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By Shubhankar Chakravorty and Amrutha Gayathri

(Reuters) - Encana Corp (ECA.TO: Quote), Canada's No.1 natural gas producer, said it had laid off about 200 employees this month, joining a growing list of oil producers cutting jobs to cope with a steep fall in crude prices.

Encana's shares fell 10 percent to a 13-year low of C$10.10 after the company reported a bigger-than-expected quarterly loss due to weak production.

The company's U.S.-listed shares (ECA.N: Quote) fell 10 percent to $7.73, their lowest since December 2002.

Encana cut about 1,200 jobs in 2013 as part of a strategic shift away from low-value natural gas production. The company, which has been increasing oil and natural gas liquids production under Chief Executive Doug Suttles, had 3,129 employees as of Dec. 31.

"Our costs will continue to come down, and they need to, because the price of our product has dropped," Suttles said on a media call.

Still, Encana's capital expenditure of $743 million in the second quarter ended June 30 was well ahead of analysts' average estimate of $560 million.

"(Encana's) cost structure still does not strike us as particularly strong," Barclays analysts wrote in a note, noting that the company continued to outspend cash flow.

Encana's cash flow, an indicator of its ability to pay for new assets and drilling, fell 72.4 percent to $181 million in the quarter.   Continued...

 
President and CEO of Encana Doug Suttles addresses shareholders at the company's annual meeting in Calgary, Alberta, May 13, 2014. REUTERS/Todd Korol