Encana Corp., Calgary, reported plans to spend $2.7-2.9 billion on its capital budget with roughly 80% of this total directed towards four of what the company is calling its “highest margin growth plays,” namely the Montney and Duvernay shale areas in Canada and the Eagle Ford and Permian areas in the US. Encana expects to generate about 75% of its 2015 cash flow from oil and liquids production.
“Following the launch of our new strategy, we took aggressive action and transformed our portfolio, significantly reduced our cost base, and built a culture that drives efficiencies throughout our business,” said Doug Suttles, Encana president and chief executive officer.
The company estimates it will increase its total liquids production next year to 140,000-160,000 b/d, up 70% vs. 2014. It expects overall production to reach 405,000-440,000 boe/d.
Encana expects total cash flow to reach $2.5-2.7 billion, “reflecting the impact of higher margin production and continued cost efficiencies, partially offset by anticipated lower commodity prices.”
Suttles said, “In 2015, we plan to continue to execute our strategy and capitalize on the portfolio we have built by investing in our highest margin plays and highest impact projects to keep us on track to reach our long-term strategic goals.”
The company’s 2015 capital program is based on assumptions of $70/bbl West Texas Intermediate crude oil prices and New York Mercantile Exchange natural gas prices of $4/MMbtu.
In addition, the company expects to generate net proceeds of around $800 million in the first quarter of 2015 through the completion of the previously announced divestiture of the majority of its Clearwater assets and other anticipated transactions.