UPDATE 2-Gas-focused Encana's operating profit rises on higher oil output

Wed Jul 24, 2013 8:34am EDT
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* Oil and natural gas liquids volumes rise 69 pct in second quarter

* Says capital investment to be at lower end of forecast

* David O'Brien, one of the founders of Encana, steps down as chairman

July 24 (Reuters) - Encana Corp, Canada's largest gas producer, reported a 25 percent increase in second-quarter operating profit as its move to spend a bulk of its budget on developing more-lucrative oil and liquids-rich natural gas plays paid off.

The company has said it expects to spend 80 percent of its capital budget for the year to raise oil and natural gas liquids (NGL) production, while keeping natural gas output unchanged. Oil and NGL volumes jumped 69 percent in the quarter.

Encana's strong results come amid a rebound in natural gas prices due to declining inventories and a chilly spring in the United States.

The average benchmark price of the fuel on the New York Mercantile Exchange rose 75 percent in the second quarter from a year ago, when natural gas hit a 10-year low.

Low natural gas prices weighed on Encana for much of last year, leading the company to write down the value of its gas assets by about $2.89 billion.

"My focus is on developing a strategy that will deliver sustainable growth in shareholder value during a period of modest commodity prices," said Chief Executive Doug Suttles, who took the helm last month.   Continued...