Encana says 2016 costs down by $50 million

Wed Oct 5, 2016 12:38pm EDT
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By Nia Williams

CALGARY, Alberta (Reuters) - Encana Corp (ECA.TO: Quote) said on Wednesday it has made $50 million in cost savings in 2016, continuing a trend of Canadian oil and gas producers squeezing spending in response to the prolonged downturn in global crude prices.

Calgary-based Encana updated its 2016 guidance to reflect savings in production and mineral taxes, and operating, processing and transportation costs. The company now expects to spend S1.1 million-$1.2 million this year, it said in a statement ahead of its investor day in New York.

Shares in Encana were last up 3 percent on the Toronto Stock Exchange at C$14.31.

The update from Encana comes two weeks after fellow Canadian crude producer Imperial Oil (IMO.TO: Quote) said its 2016 sustaining capital had dropped 25 percent to C$900 million ($681.41 million) from a year earlier.

Both oil sands and conventional oil producers in Canada have been forced to cut costs aggressively in response to the two-year crude rout, in which prices have more than halved.

While much of savings came from squeezing suppliers into lowering their rates, a number of the major Canadian oil producers including Suncor Energy (SU.TO: Quote) and Cenovus Energy (CVE.TO: Quote) have said they think a third of those savings will be sustainable even when oil prices recover.

(Reporting by Nia Williams; Editing by Andrew Hay)

Encana offices Parachute, Colorado, December 10, 2014. Reuters/Jim Urquhart