Encana to focus on five liquids-rich plays, cut workforce
BY TINA DAVIS
CALGARY, Canada (Bloomberg) -- Encana Corp., Canada’s largest natural gas producer, will cut its workforce by 20 percent, slash its dividend and sell shares in a new royalty company as it seeks to boost cash flow in the coming years.
Encana is focusing spending for 2014 on five oil and liquids areas—the Duvernay, Montney, DJ basin, San Juan basin and Tuscaloosa Marine shale—the Calgary-based company said today. At least 800 jobs will be lost, based on the size of the workforce in 2012 reported on the company’s website.
Doug Suttles, who became CEO in June, said at a September investor conference the company needs to “clean up its portfolio” and will review its dividend as part of a strategic review. Encana, which has maintained a 20-cent quarterly payout since 2009, today announced a 7-cent dividend.
“Through its disciplined and focused growth strategy the company believes it can average a more than 10 percent compound annual growth rate in cash flow per share through 2017,” Encana said in a statement.
Encana will put 5 million acres of land with gas and oil royalty production into a separate company, with an initial public offering in mid-2014. The workforce will be cut by about 20 percent and offices will be combined in Calgary and Denver.
Capital spending next year will be $2.5 billion, the company said.
Encana last month reported a return to profit, with third-quarter results beating analysts’ estimates after oil and petroleum liquids output increased. The company has been directing more spending to oil production after North American gas prices hit a 10-year low last year.
The shares closed little changed yesterday in Toronto at C$18.59. They are down 5.4 percent this year.
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