CALGARY – Encana Corp. (TSX:ECA) is deferring some investment plans in Alberta until the provincial government completes its royalty and climate change reviews.
Chief executive Doug Suttles said Thursday the company is deferring the decision to build its next gas plant in the Duvernay area even though plant capacity is the limiter to growth in the area.
“It will mean the growth will a little slower because we’ll make that decision after we see the outcome of their current reviews,” Suttles told analysts on a conference call to discuss the company’s third quarter.
Encana lost US$1.2-billion in the three-month period, mainly due to the recognition of the impaired value of some of its assets given the current low-price environment.
The loss amounted to US$1.47 per share and contrasted with a US$2.8 billion net profit in last year’s third quarter, when oil and gas prices were more than double the current levels.
Encana’s loss, reported in U.S. dollars, included a US$1.1-billion non-cash item reflecting the impaired value of its assets, bringing the total impairment charges for the first nine months of 2015 to US$3.6 billion.
Excluding impairments, divestments and other items, Encana had an operating loss of US$24 million or three cents per share in the third quarter.
That contrasted with a year earlier operating profit of US$281 million or 38 cents per share, but was an improvement over the previous quarter’s operating loss of US$167 million or 20 cents per share
The third-quarter operating loss was also one cent better than analyst estimates of a loss of four cents per share, according to Thomson Reuters.
The company has been working since 2013 to shift its assets to a greater balance between oil and natural gas production and has focused operations on four main areas — the Permian and Eagle Ford formations in the southern United States and the Duvernay and Montney formations in Western Canada.
As part of its restructuring and to strengthen its balance sheet the company has been selling other holdings, including the recent sale of its Haynesville and DJ Basin assets for a total of US$1.75 billion.
Encana chief financial officer Sherri Brillon said on the conference call that with July’s job cuts the company has reduced its workforce by 40 per cent since the end of 2012.
The company also announced it was advancing spending on its Permian formation assets in the southern United States by US$150 million — bringing the company’s overall capital spending for this year to the upper end of its guidance range of US$2.2 billion.
Total production in the third quarter averaged the equivalent of 389,300 barrels per day, down 15 per cent from the third quarter of 2014.