* Reduces capital spending forecast
* New strategy to be released by year end
* Shares rise 2 pct
CALGARY, Alberta, Oct 23 Encana Corp,
Canada's largest natural gas producer, reported a third quarter
net profit, after a year ago loss, and lowered its capital
spending forecast as a part of its push to restructure
operations under new Chief Executive Doug Suttles.
The company said it now expected capital spending to be
between $2.7 billion and $2.9 billion this year, down from $3.0
billion to $3.2 billion.
Encana is restructuring its operations as prices for natural
gas are expected to remain low due to abundant shale gas
Suttles, a former BP Plc executive, was appointed
chief executive in June. He has already begun making changes,
restructuring the company's senior management and promised last
month to cut dry gas production and revamp Encana's businesses
to cope with weak cash flow.
Suttles said on Wednesday that the final details of the
restructuring and a revised strategy for the company will be
released before the end of December.
"We are on track to announce the strategy and ensure 2014
plans are built around the new strategy before year end,"
Suttles said on a conference call.
Suttles said the release of the new strategy will include an
announcement on Encana's dividend, which now costs the company
$600 million annually. Some analysts speculate that a cut is
looming as Encana looks to free up cash to boost production.
"I think a dividend cut is highly likely," said Lanny
Pendill, an analyst with Edward Jones. "We've seen various
indications from the management team since (Suttles) took over
that that would be something they would consider."
The company's cash flow, a key measure of its ability to pay
for new projects and drilling, fell 28 percent to $660 million,
or 20 cents per share, in the third quarter.
Encana however, said it expected full-year cash flow to be
near the high end of its current forecast range of $1.5 billion
to $2 billion.
The company reported a net profit of $188 million, or 25
cents per share, for the third quarter ended Sept. 30. It
reported a net loss of $1.24 billion for the year ago period.
Excluding most one-time items, the company posted operating
income of $150 million, or 20 cents per share. Analysts on
average had expected 17 cents per share, according to Thomson
Encana's oil and natural gas liquids volumes in the quarter
nearly doubled to average about 58,200 barrels per day. Daily
natural gas production averaged 2.7 billion cubic feet.
Encana shares were up 37 Canadian cents to C$19.16 by late
afternoon on the Toronto Stock Exchange.