Encana Corp. fell to the lowest in more than three months after the company cut its dividend by 79 percent and reduced spending and production plans for 2016 as oil prices briefly dipped below $35 a barrel.
The shares dropped 9 percent to C$7.56 ($5.50 U.S.) at 10:35 a.m. in Toronto, after falling to C$7.45 ($5.42), the lowest intraday since Aug. 24, according to data compiled by Bloomberg.
The Canadian oil and natural gas producer will reduce its annual dividend to 6 cents a share. It forecast a capital program between $1.5 billion and $1.7 billion for next year, about 25 percent less than its 2015 budget, the Calgary-based company said in a statement Monday.
Production is forecast to be the equivalent of 340,000 to 370,000 barrels of oil a day, down about 13 percent from 2015.
“While the capital budget was in line with expectations, both total production and liquids production fell short of expectations, which will likely see our cash flow estimates come down with leverage increasing further,” said Kyle Preston, an analyst at National Bank Financial in Calgary, calling the news “negative.”
Encana, which is shifting its focus from gas to oil, is among energy producers shelving drilling plans, cutting workers and lowering payments to investors. In October, to the Denver-based Broe Group for $900 million.
