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UPDATE 1-Encana records another $1 bln charge amid oil slump

Published 2015-07-24, 08:02 a/m
UPDATE 1-Encana records another $1 bln charge amid oil slump
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(Adds details, background, shares)
July 24 (Reuters) - Encana Corp ECA.TO ECA.N , Canada's
No.1 natural gas producer, recorded another billion-dollar
impairment charge as oil and gas prices remain weak, pushing it
to a quarterly loss.
The company had spent about $9 billion last year to add
assets in the oil-rich Eagle Ford and Permian Basin shale fields
in Texas to lower its exposure to weak natural gas prices.
But the acquisitions proved to be ill-timed, with global
crude prices plummeting by about 50 percent since June last
year.
Encana recorded impairment charges of $1.33 billion in the
second quarter ended June 30 and $1.22 billion in the preceding
quarter.
Diversified U.S. miner and energy producer Freeport-McMoran
Inc FCX.N on Thursday recorded $2 billion charges due to
writedowns on its oil and gas properties.
Encana, which is also focusing on the Duvernay and Montney
shale fields, had cut its capital budget by a quarter to $2
billion-$2.2 billion in February. ID:nL4N0VZ2SM
The company's net loss was $1.61 billion for the second
quarter, compared with a year-ago profit of $271 million.
ID:nMKWbVrBFa
Calgary-based Encana's operating loss, which excludes most
one-time items, was $167 million, or 20 cents per share,
compared with a profit of $171 million, or 23 cents per share, a
year earlier.
The operating loss was mainly due to lower commodity prices.
Realized liquids prices fell by more than a third in the
quarter, while realized natural gas prices fell 14 percent.
Encana's cash flow, an indicator of its ability to pay for
new assets and drilling, fell 72.4 percent to $181 million.
Up to Thursday's close of C$11.23, the company's shares had
fallen nearly 53 percent in the past year.

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