Encana Corporation (TSX, NYSE: ECA) is planning to invest an additional $600 million during the remainder of 2012 to take advantage of positive initial results achieved in a number of oil and liquids rich natural gas plays. In addition to the revised capital guidance, the company also increased its expected total liquids production for the year by seven percent to 30,000 barrels per day (bbls/d).
“We’re encouraged with the success we have realized so far this year in our oil and liquids rich natural gas plays. Increasing our 2012 capital investment supports our goal of developing a more diversified production portfolio,” says Randy Eresman, Encana President & CEO. “Our teams have been successfully transitioning their technical and commercial expertise from the development of natural gas plays to oil and natural gas liquids rich plays, and through their efforts, we expect to achieve a more balanced operating cash flow stream in 2013.”
Encana’s original 2012 plan to drill between 40 and 45 wells has been expanded to drill between 115 and 120 wells in 10 plays primarily focused on oil. The company is expecting to drill approximately 350 oil and liquids rich wells in 2013.
Encana projects liquids production in 2013 to range from 60,000 bbls/d to 70,000 bbls/d, about 40 percent of which is expected to be comprised of oil and field condensate. This represents a two year compound annual growth rate of approximately 65 percent, based on the midpoint of the range. Annualized natural gas production is expected to remain near current levels of approximately 3 billion cubic feet per day for 2012 and 2013. For 2013, capital investment is estimated to range between $4.0 billion to $5.0 billion, cash flow to be between $2.5 billion to $3.5 billion and net divestitures to be in the range of $1.0 billion to $1.5 billion.