(MENAFN- ProactiveInvestors) Encana () Canada's largest natural gas producer said it would spend more in 2015 as it shifts its focus to its four higher-margin oil-rich shale fields. Shares jump in morning trades.
The Calgary Alberta-based company said in a statement today that it would spend between $2.7 billion and $2.9 billion in 2015 with 80 percent directed towards the Montney in British Columbia Duvernay in Alberta Eagle Ford and Permian shale plays in Texas.
The company estimated in November that it would spend between $2.5 billion and $2.6 billion this year.
“We’re well positioned as the steps we’ve taken have given us the resilient portfolio organizational agility and operational expertise needed to thrive throughout the commodity price cycle” Encana chief executive officer Doug Suttles said in the statement.
Encana said its cash flow is expected to fall due partly to lower commodity prices.
Encana is bucking the trend of some of its peers who are scaling back spending plans as oil prices slump. Last week oil producer () lowered its 2015 capital-spending budget by about 15 percent and guided for a 29 percent drop in cash flow. It joined a host of other major energy firms paring back spending as a result of oil’s drop.
Crude oil prices have now fallen about 50 percent from their peak in June weighed down by sluggish demand and excess supply. West Texas Intermediate for January delivery fell as much as $1.90 to $54.01 a barrel in electronic trading on the New York Mercantile Exchange today.
Encana shares climbed 8.2 percent to C$14.66 at 10:17 a.m. in Toronto. The stock is down 24 percent this year.
Encana said about 75 percent of its cash flow next year would come from oil and liquids production which is expected to jump about 70 percent from 2014 levels. Overall production is targeted at between 405000 and 440000 barrels of oil equivalent a day.
The company puts cash flow for 2015 at between $2.5 billion and $2.7 billion which Encana said reflects higher-margin production and continued cost efficiencies partly offset by lower expected commodity prices.
Encana has been divesting some of its assets—particularly natural gas holdings—and increasing its focus on liquids production as part of a strategic shift away from natural gas.
The company recently completed its acquisition of Texas-based Athlon Energy— a $7.1 billion deal that gave Encana access to the Permian formation.
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