Encana: U.S. shale tops agenda despite low oil prices

Canadian company envisions WTI at $70 per barrel for 2015 capital program.
By Daniel J. Graeber  |  Dec. 16, 2014 at 8:59 AM
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CALGARY, Alberta, Dec. 16 (UPI) -- Capital efforts in U.S. shale basins for 2015 are tailored to account for a "volatile price environment," Canadian energy company Encana said Tuesday.

Encana said it was directing about 80 percent of its capital expenses, or around $2.2 billion, toward the Montney, Duveray, Eagle Ford and Permian shale reserve areas in the United States.

Dough Suttles, the company's president and chief executive officer, said Encana was moving forward with a new aggressive strategy in mind.

"Built into our 2015 plan is the flexibility to respond to the challenges and act on potential opportunities presented in this volatile price environment," he said.

West Texas Intermediate, the U.S. oil price index, has shed close to half of its value since June. Prices are at the point where some drillers may have trouble generating a profit, which could slow the shale oil boom in the United States.

In its short-term energy report for December, the U.S. Energy Information Administration said drillers may be struggling already, though 2015 production should still be at its highest level in more than 40 years.

Oil prices are expected to remain high enough in 2015 to support new drilling in North American shale, EIA Director Adam Sieminski said.

Encana in September acquired Texas rival Athlon Energy to become one of the largest oil players in the Permian shale basin.

Permian production increased 58 percent from 2007 to reach 1.35 million barrels per day last year, which represents 18 percent of total U.S. crude oil production.

"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," Suttles said.

Combined, the Canadian company said it expects production to grow by as much as 70 percent over 2014 levels to around 150,000 bpd next year.

The company said it's basing its 2015 program on WTI at $70 per barrel, about $15 more than the current price.

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