Encana announce a highly focused 2015 capital program

Encana announce a highly focused 2015 capital program

Encana (TSX: ECA) (NYSE: ECA) announced a highly focused 2015 capital program of between $2.7 billion and $2.9 billion, with approximately 80 percent directed to four of its highest margin growth plays; the Montney, Duvernay, Eagle Ford and Permian.

“Following the launch of our new strategy, we took aggressive action and transformed our portfolio, significantly reduced our cost base and built a culture that drives efficiencies throughout our business,” says Doug Suttles, Encana President & CEO. “We enter 2015 focused on our long-term strategy, increasing liquids production, capturing new efficiencies throughout the business and protecting our balance sheet. We’re well positioned as the steps we’ve taken have given us the resilient portfolio, organizational agility and operational expertise needed to thrive throughout the commodity price cycle. Built into our 2015 plan is the flexibility to respond to the challenges and act on potential opportunities presented in this volatile price environment.”

Encana expects to generate approximately 75 percent of its 2015 cash flow from oil and liquids production. The company estimates total liquids production will grow approximately 70 percent compared to 2014 to between 140,000 and 160,000 barrels per day (bbls/d) and anticipates overall production of between 405,000 and 440,000 barrels of oil equivalent per day (boe/d). Encana expects total cash flow between $2.5 billion and $2.7 billion, reflecting the impact of higher margin production and continued cost efficiencies, partially offset by anticipated lower commodity prices.

“In 2015, we plan to continue to execute our strategy and capitalize on the portfolio we have built by investing in our highest margin plays and highest impact projects to keep us on track to reach our long-term strategic goals,” adds Suttles. “Operational excellence will continue to lie at the heart of all we do and we believe the current lower commodity price environment will create opportunities to drive further cost efficiencies throughout the supply chain.”

Encana is committed to protecting its balance sheet through a prudent capital investment program. The company’s 2015 capital program is based on assumptions of $70 WTI oil prices and NYMEX natural gas prices of $4 per million British thermal units (MMBtu). In addition, the company expects to generate net proceeds of around $800 million in the first quarter of 2015 through the completion of the previously announced divestiture of the majority of its Clearwater assets and other anticipated transactions.

2015 Key Deliverables

— Invest approximately 80 percent of capital into four of the company’s highest margin assets

— Deliver an approximate 70 percent year-over-year growth in liquids production

— Continue to realize capital and cost efficiency improvements

— Protect balance sheet and maintain financial flexibility to respond to market dynamics

— Optimize and enhance cash flow from base assets

Source: Encana

Oil and Gas Press