Encana warns upcoming restructuring will include more job cuts

Dan Healing, Calgary Herald  Published on: June 23, 2015 | Last Updated: June 23, 2015 5:06 PM MDT

More job cuts are coming at Calgary-based Encana Corp., a spokesman confirmed Tuesday, despite the company’s trimming of about 1,000 employees as it launched a major refocusing and downsizing of operations in late 2013.

Spokesman Jay Averill, responding to a Herald question about rumoured layoffs, said in an email Tuesday the company will enact changes to its organizational structure following a review expected to wrap up by the end of July, adding the moves are not necessarily related to oil prices which have remained stubbornly low after reaching about $107 US per barrel last summer.

“We do expect some staff reductions but nothing near the scale of what we undertook in 2013,” he wrote, adding the company’s head count is now at about 3,500 employees and contractors.

“Encana is a very different company today than it was 18 months ago as we have transformed our portfolio and become a more focused organization. We’re adjusting our organization to align with the well-documented and dramatic change we’ve experienced over the past year and a half and would likely be making these changes regardless of the commodity price.”

He said Encana aims to become a company that can thrive through every commodity price cycle and “the changes we expect to make over the coming weeks are being made to further that strategy.”

In November 2013, chief executive Doug Suttles announced Encana would cut one in five jobs from its 4,000 employees and 900 contractors, split off southern Alberta legacy freehold lands into a new publicly traded company (PrairieSky Royalty Ltd.) and chop its dividend by 65 per cent from 20 cents per quarter to seven cents.

He said Encana would focus 75 per cent of its capital expenditures, estimated at $2.5 billion in 2014, on just five oil or liquids-weighted resource plays in Canada and the United States and close its office in Plano, Texas, as it made a dramatic turn away from its core natural gas-weighted assets.

Encana made another major change in direction in the fourth quarter of 2014, when it spent $7.1 billion US to acquire Athlon Energy Inc., an oil producer with extensive land positions in Texas’s Permian basin, to accelerate that transition.

In its recent first-quarter earnings call, Suttles said the company would now dedicate 80 per cent of its spending to just four areas: the Montney and Duvernay shale gas plays in Alberta, and the Permian and Eagle Ford oil formations in Texas. That leaves out its previously highlighted assets in Colorado’s DJ Basin; the San Juan Basin of northern New Mexico; and the Tuscaloosa Marine Shale of Mississippi.

Analyst Menno Hulshof of TD Securities said in a note recently that Encana may look to sell non-core assets, including its Deep Panuke gas project off the coast of Nova Scotia and its extensive acreage in the Haynesville shale play of Louisiana, to unlock portfolio value.

dhealing@calgaryherald.com