Encana Outlines Capital Investment Objectives; Plans IPO Of Clearwater

(RTTNews) - Encana Corp. (ECA.TO, ECA) announced a capital program focused on generating growth through investment in five core liquids-rich resource plays. The company said, in 2014, it will maintain its balance sheet integrity by aligning its capital expenditures with cash flow and unlocking value from its asset base through an initial public offering of its Clearwater Royalty business. The company also plans to repay from cash a US$1 billion, 5.8 percent note maturity due May 1, 2014. Encana further said, maintaining a strong balance sheet and investment grade credit rating continues to be a priority for the company.

As a result of focused strategy and capital investment plan, Encana projects its full-year 2014 upstream operating cash flow, including hedging, to be between $3.0 billion and $3.2 billion. Total cash flow is expected to range between $2.4 billion and $2.5 billion. Natural gas production is expected to average between 2.6 billion cubic feet per day (Bcf/d) and 2.8 Bcf/d and total liquids production between 70 thousand barrels per day (Mbbls/d) and 75 Mbbls/d.

The company expects it can average a more than 10 percent compound annual growth rate in cash flow per share through 2017.

The company's capital program is focused on five core liquids-rich resource plays: Montney; Duvernay; DJ Basin; San Juan Basin; and TMS.

Encana will invest between $800 million to $900 million in Montney next year. Total investment in the play for 2014, including carry capital from the Cutbank Ridge Partnership with Mitsubishi, will reach $1.7 billion to $1.8 billion. The company plans to run a six to eight drilling rig program to drill 80 to 85 net wells in 2014.

Encana plans to invest between $250 million and $300 million of its capital in Duvernay play, running a six to eight drilling rig program with plans to drill 15 to 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 in the range of $1.0 billion to $1.2 billion for the year.

Encana plans to invest $250 million to $300 million in the DJ Basin and run a four to six drilling rig program to drill 40 to 50 net wells in 2014.

The company plans to invest between $300 million and $350 million in the San Juan Basin, while running a two to four drilling rig program to drill 45 to 50 net wells in 2014.

In 2014 Encana will complete its assessment of the TMS with plans to invest $125 million to $150 million to operate one to three drilling rigs and complete nine to 12 net wells.