Encana to expand liquids production by 30%

Encana Corp. said it will focus 75% of its planned $2.4-2.5 billion capital for 2014 on liquids-rich assets in the Montney, Duvernay, DJ basin, San Juan basin, and the Tuscaloosa Marine shale, facilitating a 30% increase in year-over-year liquids production.

Those five assets are expected to comprise 25% of total production in 2014 while generating 45% of total upstream operating cash flow before the impact of commodity price hedging.

The company plans to derive three fourths of its cash flow from oil and natural gas liquids by 2017.

“Going forward through to 2017 we will measure success by our performance on three key indicators: our transition to a balanced commodity portfolio, operational excellence, and the integrity of our balance sheet,” said Doug Suttles, Encana’s president and chief executive officer.

Thirty percent growth in liquids production will offset a small decline in expected gas production for 2014. With growth in higher margin liquids, Encana estimates it will see a 10% increase in netbacks.

Encana in 2012 said it planned to invest an additional $600 million in numerous oil and liquids-rich natural gas plays, expecting to increase its total liquids production for the year to 30,000 b/d (OGJ Online, June 2, 2012).

The company's forecasted production, on a total equivalency basis, for 2014 is expected to remain unchanged from last year despite a more than 10% reduction in planned capital investment from 2013 levels.

The company said it will align its capital expenditures with cash flow and unlock value from its asset base through an initial public offering of its Clearwater Royalty business. Encana also plans to repay a $1 billion, 5.8% note maturity in cash due May 1, 2014.

Encana projected its full-year 2014 upstream operating cash flow, including hedging, to be $3-3.2 billion. Total cash flow is expected at $2.4-2.5 billion. Natural gas production is expected to average 2.6-2.8 bcfd with total liquids production 70,000-75,000 b/d.

The company said it can average a growth rate of more than 10% in cash flow per share through 2017.

Core play outline

Encana plans to accelerate its development of the oil and liquids-rich areas of Montney, specifically the Gordondale, Pipestone, and Tower areas, investing $800-900 million in 2014.

Total investment in the play for the year, including carry capital from the Cutbank Ridge Partnership with Mitsubishi, will reach $1.7-1.8 billion. The company plans to run a 6-8-drilling rig program to drill 80-85 net wells.

The company will move into full resource play hub development mode with pad drilling in the northern Kaybob area of the Duvernay, and complete its evaluation of the southern Willesden Green area. Encana will also work to finalize a midstream infrastructure solution to support future development.

The company plans to invest $250-300 million of its capital in this play, running a 6-8-drilling rig program with plans to drill 15-20 net wells in 2014. Total investment in the Duvernay, including the carry capital contributed as part of Encana's joint venture agreement with PetroChina, will be $1-1.2 billion for the year.

Encana's focus in the DJ basin will be to continuously improve capital efficiency with a goal to reach 70% year-over-year growth in production in the play. The company plans to invest $250-300 million and run a 4-6-drilling rig program to drill 40-50 net wells in 2014.

In the San Juan basin, Encana will continue to advance its pace of development and work to further reduce well costs through the optimization of its completions process. The company plans to invest $300-350 million while running a 2-4-drilling rig program to drill 45-50 net wells in 2014.

Encana will complete its assessment of the TMS with plans to invest $125-150 million to operate 1-3 drilling rigs and complete nine to 12 net wells.

Organizational alignment

Encana has completed the alignment of its organizational structure, resulting in 20% workforce reduction since the beginning of November. In fourth-quarter 2013, Encana expects to take a $65 million after-tax charge as a result of the restructuring.

Suttles, who was named to his position in June (OGJ Online, June 11, 2013), helped set up a new management structure as part of the company’s strategy development process, appointing a senior management team that reports directly to him (OGJ Online, Oct. 2, 2013).

Related Articles

EPA approves Magellan’s Corpus Christi splitter project

12/12/2014 The US Environmental Protection Agency has issued a final greenhouse gas prevention of significant deterioration construction permit to Magellan Pr...

Keyera to take majority interest in Alberta gas plant

12/12/2014 Keyera Corp., Calgary, will pay $65 million (Can.) to buy a 70.79% ownership interest in the Ricinus deep-cut gas plant in west-central Alberta.

PBF Energy, PBF Logistics make management changes

12/12/2014 Matthew Lucey, currently executive vice-president of PBF Energy Inc., will succeed Michael Gayda as the company’s president. Todd O’Malley, current...

TAEP: TPI still peaking, but ‘contraction unavoidable’ as oil prices fall

12/12/2014 The Texas Petro Index (TPI), a composite index based on a comprehensive group of upstream economic indicators released by the Texas Alliance of Ene...

MARKET WATCH: NYMEX crude oil price extends slump

12/12/2014 Crude oil prices extended their slump on the New York market with a Dec. 11 settlement of less than $60/bbl for January, and prices continued downw...

US needs more data before ending crude export ban, House panel told

12/11/2014 Much more environmental impact information is needed before the US can reasonably remove crude oil export limits, a witness told a House Energy and...

BOEM raises offshore oil spill liability limit to $134 million

12/11/2014 The US Bureau of Ocean Energy Management increased the liability limit for oil-spill related damages from offshore operations to $134 million from ...

Rosneft, Essar sign terms of oil supply agreement

12/11/2014 OAO Rosneft and Essar Energy PLC have signed key terms of an oil supply agreement in New Delhi. Rosneft said shipments to India may begin in 2015.

Barton introduces bill to remove US crude export limits

12/11/2014

US Rep. Joe Barton (R-Tex.) introduced legislation that would remove US crude oil export limits that have been in place for nearly 40 years.

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected