CALGARY, Alberta, Dec 11 (Reuters) - Encana Corp, Canada’s largest natural gas producer, will boost liquids production by 30 percent in 2014 as it moves to execute a plan from its new chief executive to concentrate spending on regions rich in high-value gas liquids and oil.
The company said on Wednesday it will focus three-quarters of its planned 2014 capital spending of $2.4 billion to $2.5 billion on five shale regions in Western Canada and the U.S. South and Southwest.
Encana said these regions - Montney in British Columbia, Duvernay in Alberta, the DJ Basin in Colorado, the San Juan Basin in U.S. Southwest, and the Tuscaloosa Marine Shale in the U.S. South - will account for about 25 percent of production in 2014.
It said they will also generate about 45 percent of the company’s total upstream operating cash flow, excluding the impact of hedging.
Encana was hurt by low natural gas prices last year, leading the company to write down the value of its gas assets by $2.89 billion and cut output of gas with little or no liquids content.
Doug Suttles, a former BP Plc executive who was appointed Encana’s chief executive in June, launched a corporate restructuring last month, shedding 20 percent of Encana’s staff, slashing the dividend and spinning off its Alberta freehold lands into a separate company.
While the changes have helped raise Encana’s share price above the year low of C$17.40 touched in June, the shares fell sharply on Wednesday on weaker natural gas prices and concern that the company won’t produce more liquids next year.
“The liquids guidance was disappointing relative to expectations,” said Mike Dunn, an analyst at FirstEnergy Capital.
The company’s shares were down 4.7 percent at C$19.38 at midday on the Toronto Stock Exchange.
Encana said it expects total liquids production in 2014 to average between 70,000 and 75,000 barrels per day, and natural gas production to average between 2.6 billion and 2.8 billion cubic feet per day.
The company said it has completed its restructuring program and would take a related charge of about $65 million in the current quarter.
The increase in liquids production next year will likely offset a small decline in gas production, Encana said.
Encana said it expects a 10 percent rise in gross profit in 2014 as a result of the increased production of higher-margin liquids.