Nucor Corp., the largest U.S. steelmaker by market value, said it suspended a natural-gas drilling program with Canada’s Encana Corp. because of “weak” prices for the fuel.
The move will reduce Nucor’s 2014 capital expenditure by about $400 million, the Charlotte, North Carolina-based company said in a statement today. In July it had forecast spending of $1.1 billion next year.
In 2012, Nucor agreed to pay Encana more than $3 billion to get access to gas for more than 20 years. Nucor sought low-priced gas for a plant it’s building in Convent, Louisiana, to produce direct reduced iron, a steelmaking raw material.
Gas for January delivery rose 0.1 percent to $4.29 per million British thermal units at 4:26 p.m. in New York. The price will average $4.04 next year and $4.37 in 2015, according to the mean of analysts’ estimates compiled by Bloomberg.
Nucor also said today it will earn 35 to 40 cents a share in the fourth quarter, compared with 43 cents a year earlier. The average of 18 estimates compiled by Bloomberg was for profit of 40 cents. Nucor’s projection includes 6 cents per share of inventory expenses, compared with a 14-cent credit a year earlier, the company said.
The shares dropped 1 percent to $51.51 in New York.