Canada's Encana cuts 2016 capex, to lay off 20 pct of workforce

Wed Feb 24, 2016 8:37am EST
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(Reuters) - Canada's Encana Corp (ECA.TO: Quote) ECA.N cut its 2016 capital spending forecast to less than half its 2015 expenditure and said it would lay off 20 percent of its workforce this year.

The oil and gas producer cut its capital budget for 2016 to $900 million-$1 billion from $1.5 billion-$1.7 billion it forecast earlier as a steep drop in oil prices forces the company to focus on core assets and lower costs.

Encana's U.S.-listed shares rose about 3 percent in premarket trading on Wednesday.

Crude prices have dropped more than 70 percent since mid-2014, forcing companies such as Canada's Cenovus Energy Inc (CVE.TO: Quote) to cut capital spending, sell assets and lay off employees.

Encana will "invest virtually all of our capital in our core four assets and our cost structure will be about $550 million lower than in 2015," Chief Executive Doug Suttles said in a statement.

The company is focusing on the Permian and Eagle Ford shale fields in Texas, and the Duvernay and Montney fields in Canada.

U.S. natural gas producer Chesapeake Energy Corp (CHK.N: Quote) more than halved its annual capital budget on Wednesday and said it would sell more assets this year.

Encana also lowered the upper end of its production target for this year to 360,000 barrels of oil equivalent per day (boepd) from 370,000 boepd, maintaining the lower end at 340,000 boepd.

The Calgary-based company, which cut 200 jobs in July last year, has halved its workforce since 2013. Encana had about 4,193 employees at the end of 2012.   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