Encana cuts capital spending plan by US$700M
Will continue to focus 80% of its capital investment on four main assets in Alberta, BC and Texas.
Oil & Gas
CALGARY — Encana Corp. is slashing $700 million from its capital budget this year as it continues to adjust to an environment of low crude prices.
Canada’s largest natural gas producer, which reports in US dollars, says the cut will bring its capital budget down to $2 billion to $2.2 billion.
“In recognition of current prices, we are acting decisively and prudently,” Encana CEO Doug Suttles told analysts during a conference call Feb. 25.
The Calgary company is basing its new guidance on estimates of US$50 a barrel for the benchmark West Texas Intermediate crude, about the level where prices have held after dropping from above US$100 a barrel last summer. Encana’s previous guidance in December had been based on a US$70 oil price.
Suttles said the revision should not come as a surprise as the oil and gas company prepares for a lower priced environment.
“We said if market conditions change, which they were doing quite rapidly at that point, we would make appropriate adjustments,” he said.
“(But) if anyone can prosper through this part of the commodity cycle, I’m convinced it will be Encana.”
The revised spending plan was announced as the company reported that it earned $198 million for the fourth quarter ended Dec. 31, compared with a loss of $251 million a year ago.
However, Encana said its operating earnings, which excludes certain one-time items, amounted to $35 million, down from $226 million a year ago. The earnings came in below analyst expectations of 24 cents per share, according to Thomson Reuters.
Revenue net of royalties totalled $2.25 billion, up from $1.42 billion.
Encana will continue focus 80% of its capital investment this year on four main assets: Permian Basin and Eagle Ford in Texas, Montney in BC and Duvernay in Alta.
Suttles said the company doesn’t have any plans to sell more assets but is open to the idea.
“The low points in the commodity cycle are easily the most exciting times,” he said. “I can tell you we’re prepared to respond if the right opportunities come along.”
The company expects its total cash flow for 2015 to be between $1.4 billion and $1.6 billion, as it benefits from net proceeds of around $800 million from previously announced divestitures.
© 2015 The Canadian Press