(Corrects production figure in 12th paragraph to billion cubic feet from million cubic feet and shows production rose instead of fell.)
* Q1 helped by $912 mln hedging gain
* Q1 operating earnings $0.56/shr vs est $0.32/shr
* Q1 rev falls 4 pct (In U.S. dollars unless noted.)
April 21 (Reuters) - EnCana Corp (ECA.TO), Canada's largest natural gas producer, said on Wednesday its first-quarter profit rose three-fold, helped by hedging gains, and plans divestitures and share buybacks worth $500 million.
The company, which spun off its oil sands operations into Cenovus Energy Inc (CVE.TO) earlier this year to focus on gas production, reported net income of $1.48 billion, or $1.97 per share, including after-tax unrealized mark-to-market hedging fund gains of $912 million.
It earned $477 million, or 63 cents a share, last year.
EnCana's operating income, which excludes most one-time and unusual items like hedging gains and losses, fell 23 percent to $418 million, or 56 cents a share, from $544 million, or 72 cents a share, in the year-prior quarter.
The operating result beat the average analyst forecast for the measure of 32 cents, according to Thomson Reuters I/B/E/S.
Encana said it plans to achieve per share growth through double-digit organic production increases and by using proceeds from divestitures of producing assets to purchase shares to offset decreased per share production as a result of the sale of those assets.
The company said it will divest $500 million of non-core assets and make about the same amount of share repurchase in 2010.
Natural gas prices have yet to recover from recessionary lows as industrial demand waned while new production from shale gas fields in the United States boosted supply and pushed inventories of the fuel to record highs.
The benchmark price of the fuel averaged $5.17 per million British thermal units in the first quarter, up 11 percent from the year-prior period but well below what the natural gas commanded in better economic times.
Still, despite the weak price, EnCana said last month it planned to boost its 2010 capital budget by 20 percent, to $4.5 billion, as it looked to double its production over the next five years.
EnCana's first-quarter cash flow, an indicator of its ability to pay for its growth plans, fell 15 percent to $1.17 billion, or $1.57 per share.
The company's production rose to 3.27 billion cubic feet equivalent per day from 3.2 mmcfe/d.
Revenue fell 4 percent to $3.55 billion.
Shares of the company closed at C$31.77 Tuesday on the Toronto Stock Exchange.
For related alerts, please double click on [ID:nASA008R2] (Reporting by Isheeta Sanghi in Bangalore; Editing by Savio D'Souza)