UPDATE 3-Canada's Encana to cut workforce, payout as gas prices stay low

Tue Nov 5, 2013 5:20pm EST
 
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* Workforce to be reduced by 20 percent

* Dividend cut to 7 cents/shr from 20

* Sees 2014 capex falling to about $2.5 bln

* Shares end higher

By Scott Haggett and Sayantani Ghosh

CALGARY, Alberta, Nov 5 (Reuters) - Encana Corp, Canada's largest natural gas producer, said on Tuesday it will cut about 20 percent of its workforce, slash its dividend, and focus future spending on just five regions rich in oil and gas liquids as it looks to move away from low-value natural gas production.

The new plan, which includes the spin off of its historic Alberta freehold lands into a separate company, is part of new Chief Executive Doug Suttles' push to boost earnings and raise cash flow as the company faces the prospect that natural gas prices will remain weak for years to come.

The strategy comes on the heels of a series of failed attempts to boost profits under former chief executive Randy Eresman, who left last year. Eresman spun off the company's profitable oil sands operations in 2009 in order to become a pure natural-gas producer just as a wave of new shale-gas production caused prices to plunge.

"The company has been a total disappointment for a long time," said John Stephenson, a portfolio manager at First Asset Investment Management, which owns Encana shares.   Continued...