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(Adds detail and comments; updates share movement. In U.S. dollars unless noted.)
By Scott Haggett
May 13 (Reuters) - Encana Corp on Tuesday reported a higher-than-expected quarterly profit, much of which coming from a field it may put up for sale as it looks to cut its dependence on natural gas production.
After years of weak prices for the fuel, Encana is selling off natural gas properties and adding more valuable oil and natural-gas liquids production to boost earnings. But much of its gains in the first quarter came from its recently opened Deep Panuke gas project offshore Nova Scotia, which supplies the northeastern United States.
Deep Panuke, a project the company has said it may consider selling, received an average price of $19.17 per thousand cubic feet for gas in the quarter, more than triple Encana's average gas price in the quarter of $5.82 per mcf, as cold temperatures kept demand high in the Boston market.
The quarter "was all about pricing and all about Deep Panuke," said Edward Jones analyst Lanny Pendill. "The bulk of the increase ... came on the natural-gas side."
Encana, Canada's largest natural gas producer, posted a net profit of $116 million, compared with a year-earlier loss of $431 million, which included an income tax adjustment of $243 million.
Excluding special items, earnings rose to 70 cents per share from 24 cents and came in well ahead of the analysts' average estimate of 53 cents, according to Thomson Reuters I/B/E/S.
After years of weak profits caused by its reliance on natural gas production, Encana has moved to rapidly boost its oil production. The company earlier this month agreed to pay $3.1 billion for Freeport-McMoran Copper & Gold Inc's properties in the south Texas Eagle Ford shale-oil field.
Encana is paying for its oil acquisitions by selling gas fields as it concentrates its operations on six regions rich in oil and natural-gas liquids, including the Eagle Ford. The company closed the $1.8 billion sale of much of its Jonah gas field in Wyoming on Monday and has more properties still on the block.
"The execution of our new strategy is unfolding faster than many expected," Chief Executive Officer Doug Suttles said on a conference call.
The company said its output of oil and natural gas liquids averaged 67,900 barrels per day in the quarter, up 56 percent from a year earlier. Natural gas production fell 2 percent to 2.81 billion cubic feet per day.
The company's cash flow, a key indicator of its ability to pay for new projects and drilling, nearly doubled to $1.09 billion, or $1.48 per share.
The company's shares were up 36 Canadian cents at C$24.96 at midday on the Toronto Stock Exchange. The shares have risen about 20 percent over the past three months. (Additional reporting by Ashutosh Pandey; Editing by Savio D'Souza and Lisa Von Ahn)