UPDATE 3-Encana to double oil output with $3.1 bln U.S. shale deal

Wed May 7, 2014 1:11pm EDT
 
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* Says deal to add a sixth focus area

* Assets being acquired produced 53,000 barrels of oil equivalent/day in Q1

* Deal to add to Encana's 2014 cash flow (Adds details on deal, restructuring in first six paragraphs; updates shares)

By Euan Rocha

TORONTO, May 7 (Reuters) - Encana Corp, Canada's largest natural gas company, said on Wednesday it is buying producing assets in the Eagle Ford shale field in Texas from Freeport-McMoRan Copper & Gold for $3.1 billion, nearly doubling its oil output and boosting its shares by as much as 6.2 percent.

The purchase adds another core region to the five shale fields Encana is concentrating spending on as it restructures its operations away from low-value natural gas to concentrate on valuable crude and natural gas liquids.

"Gaining a position in a world class, oil-rich resource play like the Eagle Ford accelerates the transition of our portfolio and underscores our investment focus on high margin assets" Encana Chief Executive Doug Suttles, said in a statement.

Encana shares were up C$1.14 to C$25.70 by early afternoon on the Toronto Stock Exchange after earlier touching C$26.08.

The acquisition is Suttles' first major purchase since the former BP Plc executive arrived at the Calgary-based Encana last June with a mandate to reshape a company that had endured a series of strategic missteps that had it relying on natural gas from wide flung operations throughout North America.   Continued...