January 5, 2011 / 11:16 PM / 7 years ago

UPDATE 1-Encana to lower spending as gas price languishes

* Production growth in the single digits expected

* Weak gas prices can’t sustain previous spending levels (Adds quote, details. In U.S. dollars unless noted)

SAN FRANCISCO, Jan 5 (Reuters) - Encana Corp (ECA.TO), North America’s second-largest natural gas producer, will spend less money on operations in 2011 as prices for the fuel remain weak, the head of the company’s U.S. operations said on Wednesday.

Jeff Wojahn, president of the company’s USA Division, told a conference in San Francisco he expects a range of $4 billion to $4.5 billion when Encana releases details of its capital spending budget in about three weeks.

Production growth for the year will likely be in the single digit percentage range, Wojahn said.

In October, Calgary-based Encana cut its 2010 budget by $200 million to $4.8 billion and warned 2011 could be a leaner year if gas prices stay weak. The company is known for its unconventional gas plays in British Columbia, the U.S. Rockies, Texas and Louisiana.

“We haven’t announced it yet, but $4-$4.5 billion is a good range,” Wojahn said of 2011 capital spending.

Encana shares were pressured late last year as Chief Executive Randy Eresman warned that the stated goal of spending about $6 billion a year for annual production growth of 14 percent would not be sustainable with natural gas prices hovering around $4 per million British thermal units.

Gas settled down 19.6 cents at $4.55 per mmBtu on the New York Mercantile Exchange on Wednesday.

Encana shares fell 17 Canadian cents to $29.14 on the Toronto Stock Exchange. They are down 19 percent in the past year.

$1=$1 Canadian Reporting by Braden Reddall, writing by Jeffrey Jones; editing by Rob Wilson

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