CALGARY, Alberta, Feb. 24 (UPI) -- North American shale player Encana Corp. said it was revising its 2016 spending plan to strengthen its balance sheet with only minor impacts on production.
President and CEO Doug Suttles said in a statement highlighting earnings and the 2016 spending plan that a move toward capital efficiency meant the company could ride on the strength of its four key North American shale holdings.
"Under our new plan, we will invest virtually all of our capital in our core four assets and our cost structure will be about $550 million lower than in 2015," he said.
Encana in 2014 received about $900 million in exchange for the sale of assets in the Denver-Julesburg shale basin in Colorado to an entity controlled in part by Canada Pension Plan Investment Board. In August, it sold its natural gas assets in the Haynesville shale basin in Louisiana for $850 million.
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From the Permian and Eagle Ford shale basins in the United States, and the Duvernay and Montney plays in Canada, the company said the spending plan will have only a minimal impact on full-year 2016 output. The company expects to produce between 340,000 and 360,000 barrels of oil equivalent per day this year.
Production from the four key basins for the fourth quarter was around 275,000 barrels of oil equivalent per day on average, up 35 percent year-on-year.
Oil and gas companies are trimming their spending plans under pressure from the durable slump in crude oil prices, which are off about 45 percent from this time last year. Oil prices are under pressure from a market that heavily favors that supply side, prompting some members of the Organization of Petroleum Exporting Countries to embrace a production cap.
