CALGARY, Alberta (Reuters) - Encana Corp (ECA.TO), Canada’s largest natural gas producer, slashed its 2015 capital budget by a quarter on Wednesday in response to a slump in global crude oil prices.
The company joins a slew of other Canadian oil and gas producers, including Suncor Energy (SU.TO) and Cenovus Energy (CVE.TO), that have cut back spending as benchmark crude prices CLc1 more than halved since June.
Encana said it will spend between $2 billion and $2.2 billion in 2015, down from the original budget of $2.8 billion announced in December.
Chief Executive Officer Doug Suttles also said Encana, which since 2013 has been selling off natural gas assets to concentrate spending on regions rich in high-value gas liquids and oil, will look to see if there are further opportunities to trim its portfolio.
“We are well prepared to act ... The lower points in the commodity cycles are usually the most exciting times,” Suttles said in response to a question on the potential for more asset sales during a fourth-quarter earnings call. “We’re prepared to respond if the right opportunities come along.”
Encana posted an 85 percent drop in fourth-quarter operating profit as oil output rose but realized prices fell.
Operating profit, which excludes most one-time items, slumped to $35 million, or 5 cents per share, in the three months ended Dec. 31, from $226 million, or 31 cents per share, a year earlier.
Analysts on average had expected 21 cents per share, according to Thomson Reuters I/B/E/S.
Oil crashed by about 60 percent between June and January to a post-2009 low of $45 a barrel, with losses accelerating after OPEC decided in November to hold output at 30 million barrels per day to try to preserve its market share.
Encana’s fourth-quarter cash flow dropped to $377 million from $677 million in the year-ago quarter, partly due to the early repayment of long-term debt belonging to Texas oil producer Athlon Energy, which Encana bought in September for $5.93 billion.
Oil and natural-gas liquids production rose 61 percent to average 106,400 barrels per day in the fourth quarter, while natural gas output fell nearly a third to 1.9 billion cubic feet per day.
Calgary-based Encana’s shares were up almost 3 percent on the Toronto Stock Exchange by mid-session, trading at C$16.79.
Additional reporting By Shubhankar Chakravorty in Bengaluru; Editing by Maju Samuel and Alan Crosby