Encana swings to US$1.2B loss as it writes down more assets
Loss contrasts with US$2.8 billion net profit in the same quarter last year
CALGARY—Encana Corp. says it had a US$1.2-billion net loss in the third quarter, mainly as 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 third-quarter net loss, reported in U.S. currency, included a US$1.1 billion non-cash item reflecting the impaired value of its assets, bringing the total impairment recognitions for the first nine months of 2015 to $3.6 billion.
It also recorded a $2 million loss on divested assets, contrasting with a $2.4 billion gain on divested assets a year earlier.
Excluding impairments, divestments and other items, Encana had a small 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 $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.
Encana chief executive Doug Suttles says the Calgary-based company made progress in the third quarter and delivered sustainable performance improvements that helped offset the impact of lower prices.
“Decisive action across the organization is continuously strengthening our business,” Suttles said in a statement.
The company says it has decided to carry on the positive momentum into 2016 and has chosen to begin work earlier than expected on advancing one of its core areas in the southern United States.
As a result, Encana is increasing investment in the Permian formation in 2015 by $150 million – bringing the company’s overall capital spending for this year to the upper end of its guidance range of $2.2 billion.
Encana has identified four main areas – the Permian and Eagle Ford formations in the southern United States and the Duvernay and Montney formations in western Canada – and has been divesting other holdings.
Most recently, it announced plans to divest is Haynesville and DJ Basin assets for a total of US$1.75 billion.
Total Encana production in the third quarter averaged the equivalent of 389,300 barrels per day, down 15 per cent from the third quarter of 2014.