Encana Corp. reported its fourth straight quarterly loss, cut its annual spending forecast and lowered the dividend amid tumbling oil and natural-gas prices.
The net loss was $612 million in the fourth quarter, compared with net income of $198 million a year earlier, the Calgary-based company said Wednesday in a statement. Excluding one-time items, the 13-cent-a-share result beat the 1-cent average of 18 analyst estimates compiled by Bloomberg.
Energy companies are lowering dividends, cutting jobs and setting aside drilling rigs to weather an oil-market crash that has dragged on for 20 months. U.S. crude is hovering around $30 as fears of slowing demand mount and investors remain unconvinced that a proposal last week to freeze output between Russia and some members of the Organization of Petroleum Exporting Countries could ease a global glut.
Encana expects to spend $900 million to $1 billion this year, a 55% decline from 2015 and lower than the $1.5 billion-to-$1.7 billion range it estimated in December. The company cut its quarterly dividend to 1.5 cent a share from 7 cents and forecast a 20% reduction in its workforce this year.
“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,” CEO Doug Suttles said in the statement.
While Encana has focused on increasing oil and liquids production from four areas in North America—the Eagle Ford and Permian in the U.S. and the Montney and Duvernay in Canada—it still produces mostly natural gas. Encana, which got about 90% of its output from gas in 2014, has profit margins for the fuel that are well below those of its peers as it has allowed costs to creep up, according to Chris Feltin, an analyst at Macquarie Capital Securities in Calgary.
North American gas prices averaged $2.235 per million British thermal units in the fourth quarter, while West Texas Intermediate crude averaged $42.16/bbl. Crude is still down about 70% from its high in mid-2014.
Encana reported results before the start of regular trading on North American markets. The shares, which have 10 buy recommendations, 16 hold and one sell from analysts, fell 8.6% to C$4.15 on Tuesday in Toronto. The stock is down 41% this year.