Encana Corp. says it’s planning a further 20 per cent reduction in its workforce as it works to achieve up to $250 million in additional cost savings this year, beyond what had previously been announced.
Details on how many jobs will be affected and when they’ll happen weren’t immediately available.
The Calgary-based oil and gas producer, with a heavy presence in Saskatchewan, announced the cuts with its fourth-quarter financial report, which included a $612 million net loss or 72 cents per share — mostly the result of asset writedowns and other non-operating items.
Those were partly offset by 36 per cent increase in Encana’s liquids production since the fourth quarter of 2014, and previous cost-cutting measures that helped increase Encana’s cash flow despite lower commodity prices.
Excluding $514 million in asset impairments and other items such as foreign exchange, Encana’s operating earnings in the fourth quarter were $111 million or 13 cents per share — up from $35 million or five cents per share a year earlier.
Encana chief executive Doug Suttles said the company enters 2016 with a strong balance sheet, a high-quality portfolio of assets and improved efficiency that offset the impact of reduced capital spending and lower prices for its oil and gas.
“Under our new plan, we will invest virtually all of our capital in our core four assets and our cost structure will be about $550 million lower than in 2015,” Suttles said in a statement.
That $550-million target includes between $200 million and $250 million of additional savings in Encana’s cost structure beyond its previous guidance.
Encana has also revised its 2016 capital plan to between $900 million and $1 billion, down 55 per cent from 2015. It expects the lower budget to have minimal impact on production levels this year.
The fourth-quarter asset impairments brought the total for 2015 to $4.1 billion. Net loss for the full year was nearly $5.2 billion, or $6.28 per share.
In 2014, Encana had a fourth-quarter profit of 27 cents per share or $198 million in the fourth quarter of 2014, when the current downturn in oil prices began to accelerate. It’s full-year net profit for 2014 was nearly $3.4 billion or $4.58 per share.
“We have the financial flexibility to withstand the current environment for an extended period of time,” Suttles said. The company has about $4 billion of liquidity, no risk of violating financial covenants, no debt due until 2019 and 75 percent of its debt isn’t due until 2030 and beyond, Suttles said.
Encana says the 2016 job cuts will have resulted in a 50 per cent reduction in its workforce since 2013.
The company’s shares surged the most in more than seven years after the company announced its budget cuts — jumping as much as 24 per cent in morning trading, the most since October 2008.