* Aim to double size pushed beyond 5 yrs
* Hires banks to help find Horn River, Sierra partners
* Operating EPS $0.02 vs $0.15 estimate
* Cash flow per shr down 18.5 pct to $1.29 (New throughout with CEO, analyst comments. In U.S. dollars unless noted)
By Jeffrey Jones
CALGARY, Alberta, April 20 (Reuters) - Stubbornly weak natural gas prices have prompted Encana Corp (ECA.TO), one of fuel’s most enthusiastic champions, to delay plans to double its size and to look for ways to squeeze out more high-priced liquid hydrocarbons, its chief executive said on Wednesday.
Encana CEO Randy Eresman said the company, which reported lower-than-expected first-quarter profit, has chopped the price forecast on which it evaluates projects and he signaled that more big joint ventures are on tap.
Encana is currently working to close a C$5.4 billion ($5.6 billion) sale of Canadian shale gas assets to PetroChina (601857.SS) and is offering stakes in other gas-rich acreage, such as the Horn River in British Columbia.
Last year, Encana set a goal to double production per share in Canada and the United States over five years, banking on gas prices at $6-$7 per million British thermal units.
However, gas prices have lagged expectations as the economic recovery slowed and companies brought on new shale gas supplies across North America. Prices averaged $4.20 per mmBtu in the first quarter, down 16 percent from the year before.
Encana now assumes a $6 per mmBtu gas price, has added to its hedges and cut short-term growth plans to put them in line with tempered cash flow, Eresman said, confirming a caution he first sounded late last year.
“I’d like to emphasize that we have not abandoned our goal to double our size on a per-share basis, we’ve just accepted that it may take a little longer than we originally planned to achieve it,” he told analysts.
The company’s shares were unchanged at C$31.18 on the Toronto Stock Exchange, close to levels of a year ago.
Encana, known for shale-gas operations in Western Canada, the U.S. Rockies, Texas and Louisiana, has signed deals with Chinese and South Korean companies to develop the acreage with the aid of third-party money.
The strategy is like those employed by other North American gas producers, such as Chesapeake Energy Corp (CHK.N) and Talisman Energy Inc TLM.TO.
This month, the Canadian government said it had lengthened its review of the Encana-PetroChina deal by 30 days as a federal election campaign got under way. The companies plan to jointly develop Encana’s Cutbank Ridge properties in British Columbia.
Encana has hired RBC Capital Markets and Jefferies & Co to help find partners for other B.C. acreage, including the Horn River and Greater Sierra holdings.
Encana said it will boost extraction of petroleum liquids from its gas from the current 4 percent to try to lift returns to levels oil producers now enjoy.
“We have a lot of irons in the fire right now regarding our exposure to liquids. I would say you are going to hear more and more as each quarter unfolds,” Eresman said.
It’s a big task, with 96 percent of output weighted strictly to gas, Canaccord Genuity analyst Phil Skolnick said.
“I think everybody realizes it’s a big company with a lot of gas and you have to do a lot of drilling to make a big change in their weighting,” Skolnick said.
In 2009, the company spun off its oil sands holdings into Cenovus Energy Inc (CVE.TO), a company now 18 percent larger than Encana by market value.
In the first quarter, Encana’s results were hindered by the low gas prices as well as higher operating costs, a jump in long-term compensation costs and the stronger Canadian dollar.
It earned $78 million, or 11 cents a share, down 95 percent from year-earlier $1.5 billion, or $1.96 a share. The prior-year figure was inflated by a $912 million hedging gain.
Excluding unusual items, profit was $15 million, or 2 cents a share, lagging an average estimate of 15 cents a share among analysts surveyed by Thomson Reuters I/B/E/S.
Cash flow, a glimpse into the company’s ability to fund operations, fell 18.5 percent to C$955 million, or $1.29 a share, from $1.17 billion, or $1.56 a share.
Production rose 2 percent to 3.2 billion cubic feet a day. ($1=$0.96 Canadian) (Additional reporting by Gowri Jayakumar; editing by Janet Guttsman)