April 20, 2011 / 6:09 PM / in 7 years

CORRECTED-UPDATE 2-Encana Q1 profit plunges on low natural gas prices

(Corrects paragraph seven to show that the company maintained, not raised, its capital investment for the year at $4.6-$4.8 billion.)

* Q1 EPS $0.11 vs EPS $1.96 year ago

* Says will meet 2011 production target of 3.47-3.52 bcfe/d

* Sets 2011 capital investment at $4.6-$4.8 bln

* Q1 cash flow/shr $1.29 vs $1.56 year ago (Adds details)

April 20 (Reuters) - Canada’s biggest gas producer Encana Corp posted a 19-fold plunge in first-quarter profit as a result of lower natural gas prices, and backed its production target for the year.

For 2011, the company forecast an annual growth per share of 5-7 percent, and said natural gas prices remain at unsustainably low levels.

Along with gas producers across North America, Encana has struggled with stubbornly low prices for the fuel. During the quarter, gas on the New York Mercantile Exchange averaged $4.20 per million British thermal units, down 16 percent from the year before. Canadian gas prices were 23 percent lower.

Encana, which posted a 2 percent rise in quarterly production to about 3.34 billion cubic feet equivalent per day (bcfe/d), expects to produce 3.47-3.52 bcfe/d in 2011.

The company, which is working to close a $5.4 billion shale gas asset sale to PetroChina , earned $78 million, or 11 cents a share, down from $1.49 billion, or $1.96 a share, a year ago.

Analysts on an average expected earnings of 15 cents a share, according to Thomson Reuters I/B/E/S.

The natural gas producer maintained its capital investment for the year at $4.6-$4.8 billion.

Cash flow, a glimpse into the company’s ability to fund operations, fell 19 percent to $955 million, or $1.29 a share, from $1.17 billion, or $1.56 a share, in the first quarter of 2010.

First-quarter revenue, net of royalties, more than halved to $1.67 billion.

The company’s shares closed at C$31.18 on Tuesday on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Roshni Menon)

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