April 22, 2009 / 7:54 PM / 9 years ago

UPDATE 1-EnCana CEO says weak gas price may mean capex cut

(Adds quotes, details; in U.S. dollars unless noted)

CALGARY, Alberta, April 22 (Reuters) - EnCana Corp (ECA.TO), Canada’s biggest energy company, may be forced to cut its 2009 capital spending if natural gas prices do not rebound from current levels, its chief executive said on Wednesday.

CEO Randy Eresman also told reporters that investors should forget about EnCana’s plans to split itself into natural gas and oil sands arms, given the current environment of weak commodity prices and financial uncertainty.

In its first-quarter results on Wednesday, EnCana said it was sticking with its 2009 budget of $6.1 billion for now.

“If gas prices stay this low until the end of the second quarter, we will start having to think very hard about reducing our capital program for the remainder of the year,” Eresman told reporters.

U.S. natural gas prices averaged $4.47 per million British thermal units in the last quarter, down 49 percent from a year earlier. Gas closed at $3.53 an mmBtu on Wednesday.

He said, however, the company can remain financially strong even if it is opts let production slide amid low prices, as it has not major debt repayment commitments in the next year.

EnCana had planned to split into an unconventional natural gas producer and an integrated oil sands and refining firm, but shelved the idea last year as commodity and credit markets went into tailspins.

Several factors must fall into place before EnCana rekindles the plans, Eresman said.

“I think you should forget about it in the current environment,” he said.

For the split-up to work, pure plays must fetch a higher value than diversified companies, energy-market “normalcy” must return and credit markets must allow debt to be placed into the new oil vehicle at a reasonable price, he said. (Reporting by Jeffrey Jones and Scott Haggett; editing by Rob Wilson)

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