The artist formerly known as Encana announced its Q2 earnings and I give them some credit.  Sure, they went with the “Q2 was unprecedented, we are in this together, so proud of everyone, yada yada yada…” but, they also said this:

The Company recorded a net loss in the second quarter of $4.4 billion. Results were impacted by the following items:

• A non-cash ceiling test impairment of $3,250 million, before-tax, primarily related to the decline in 12-month average trailing commodity prices which reduced SEC proved reserves.
• A non-cash charge of $568 million related to a deferred tax asset valuation allowance.
• A non-cash unrealized loss on risk management of $679 million, before-tax, related to the mark-to-market value of derivative positions.
• A restructuring charge of $81 million, before-tax, related to a 25% reduction in Ovintiv’s workforce as staffing levels were balanced with planned activity levels.

Those ARE the four bullet points that matter. Asset value impact, tax impact derivative impact, and head count impact.

Now, the market didn’t love it, but they are taking their medicine, getting the skeletons out of the closet and cleaning this up to make a Noble like transaction more likely. Hope is not a plan, taking Medicine is.

#hottakeoftheday