NEW YORK (TheStreet) -- Shares of Encana Corp. (ECA) - Get Report are soaring 19.93% to $3.61 on Wednesday after the company cut its 2016 capital budget and said it would trim its workforce by 20% this year.
In an effort to reduce costs amid slumping oil prices, the company anticipates spending $900 million to $1 billion this year, a 55% decline from 2015 and lower than the $1.5 billion to $1.7 billion range it forecast back in December.
The company will "invest virtually all of our capital in our core four assets and our cost structure will be about $550 million lower than in 2015," CEO Doug Suttles said. Its focus will be on the Permian and Eagle Ford shale fields in Texas, and the Duvernay and Montney fields in Canada.
Encana also added that it would lay off an additional 20% of its workforce this year, after cutting 200 jobs in July last year.
For the fourth quarter, the company yesterday reported earnings of 13 cents a share, surpassing expectations of 1 cent a share. Revenue of $1.03 billion missed analysts' projections of $1.14 billion. Along with these results, the company reduced its quarterly dividend to 1.5 cents a share from 7 cents a share.
Separately, TheStreet Ratings currently has a "Sell" rating on the stock with a letter grade of D.
The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: ECA