Encana Corp, 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 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.
Encana said on Friday it expects to focus its remaining 2015 capital budget on its core operations in the Permian, Eagle Ford, Duvernay and Montney shale fields.
The company expects the fields to account for about 65 percent of production in the fourth quarter, up from 57 percent currently.
Encana spent about $9 billion last year to add assets in the oil-rich Eagle Ford and Permian Basin in Texas but those acquisitions backfired, with global crude prices halving since June 2014.
Encana booked an impairment charge of $1.33 billion in the second quarter due to weak oil and gas prices. The company had booked a $1.22 billion charge in the first quarter.
The company’s realized liquids prices fell by more than a third in the second quarter, while realized natural gas prices fell 14 percent.
Encana’s quarterly production fell 10 percent to 389,000 barrels of oil equivalent per day (boepd) from the first quarter, missing analysts’ average estimate of 403,000 boepd.
Calgary-based Encana’s operating loss, which excludes most one-time items, was 20 cents per share. Analysts on average had expected 16 cents, according to Thomson Reuters I/B/E/S.
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