CALGARY, Alberta (Reuters) - Encana Corp (ECA.TO), Canada’s largest natural gas producer, will speed its hunt for oil and natural-gas liquids as it looks to diversify its production away from low-value natural gas, the company said on Wednesday.
The company said it will raise spending on its promising liquids fields by $600 million over the remainder of 2012 and raised its estimated production of gas liquids and oil by 7 percent to 30,000 barrels per day, rising to as much as 70,000 bpd in 2013.
“We’re encouraged with the success we have realized so far this year in our oil and liquids rich natural gas plays, Randy Eresman, the company’s chief executive said in a release. “Increasing our 2012 capital investment supports our goal of developing a more diversified production portfolio.”
Encana, whose shares are down by a fourth in the past 12 months, faces pressure from investors to boost profits by moving away from the low-value gas production that had been the company’s mainstay.
To speed its hunt for new oil production, the company said it now plans as much as 120 new wells in 10 prospective oil fields this year, instead of the 40 to 45 initially planned.
In 2013, Encana plans to drill as many as 350 new oil and gas-liquids wells. It pegged 2013 capital spending at between $4 billion and $5 billion.
The company said it expects natural gas production of about 3 billion cubic feet in 2012 and 2013 and pegged 2013 capital spending at between $4 billion and $5 billion.
It also said 2013 cash flow is targeted at between $2.5 billion and $3.5 billion while it will sell as much as $1.5 billion worth of petroleum properties it no longer wants to develop.
While natural gas prices hover near $2.50 per thousand cubic feet, not far from decade lows, the company said it expects prices for the fuel to improve later this year and in early 2013.
Encana shares closed at C$22.13 on Wednesday on the Toronto Stock Exchange.
Reporting by Scott Haggett; Editing by Himani Sarkar