Calgary-based Encana says cost cutting includes 15% job reduction
The CEO of Encana Corp. says it cut its total workforce by 15 per cent and reduced its ranks of executives by 35 per cent in just over a week after closing its deal to buy U.S. rival Newfield Exploration Co. in mid-February.
The move has put Calgary-based Encana, which reports its results in U.S. dollars, on track to realize its vowed annual savings of $250 million from the acquisition, CEO Doug Suttles said on a conference call on Thursday.
"Eight days – once again, eight days – after closing, we completed reorganizing the combined company," he said.
"In total, we reduced the executive and senior management roles by 35 per cent and total positions by 15. The senior team of the combined company today is smaller than Encana's senior team was before the merger."
The company hasn't said how many employees were laid off, but in U.S. regulatory filings early last year, Newfield reported having 1,010 employees, almost all in the U.S., while Encana had 1,160 staff in Canada and 950 in the U.S.
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A 15 per cent cut would represent a total of about 470 lost jobs. It's unclear how many jobs were cut in Canada.
Suttles said employee cost reductions account for half of the savings – the other half will come by cutting at least $1 million from the cost of each future unconventional well drilled into the Anadarko basin of Oklahoma, formerly owned by Newfield.
When announced in November, Encana said the deal was worth about $5.5 billion in shares, but its stock has since fallen by more than 20 per cent. It also adopted $2.2 billion of Newfield debt.
Encana has adjusted its exploration priorities in the wake of the Newfield acquisition to focus on three basins – the Anadarko, the Montney of Western Canada, and the Permian of West Texas and New Mexico – because they produce more valuable petroleum liquids and less natural gas than its other prospects.
It said it will focus 75 per cent of its 2019 capital budget of $2.7 billion to $2.9 billion on those three plays.
Encana reported a fourth-quarter profit of US$1.03 billion or $1.08 per share for the quarter ended Dec. 31, compared with a loss of $229 million or 24 cents per share in the last three months of 2017.
Operating earnings for the quarter amounted to $305 million or 32 cents per share, up from an operating profit of $114 million or 12 cents per share a year earlier.
Revenue for the quarter was $2.38 billion, up from $1.21 billion.
Total production in the fourth quarter of 2018 was 403,400 barrels of oil equivalent per day, up from 335,200 a year ago.
Encana shares rose by as much as six per cent in early trading on the Toronto Stock Exchange on Thursday as analyst reports indicated its fourth-quarter results were largely in line with expectations.
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