Tuesday, November 5, 2013

Encana Cuts (and Re-Re-Focuses on Liquids)

Encana announced its new operating strategy under CEO Doug Suttles (Gulf Coast residents might remember Mr. Suttles' tenure at BP during the 2010 Macondo oil spill).  Here is a link to the presentation.  There is lots of businesspeak mumbo jumbo in there, but the bottom line is that Encana will focus almost entirely on liquids plays, cut its dividend to try to maintain its investment grade rating, cut staff by 20% and spin off a Canadian asset.

Go figure:  another company shifting to liquids-rich plays.  Encana will consolidate its reduced U.S. operations to Denver, which is closer to its new favored plays in the Rockies, the DJ Basin in Colorado and the San Juan in New Mexico, and shutter its Dallas office, which was responsible for  the Haynesville Shale, among other things.  Also "in" is the Tuscaloosa Marine Shale.  Here's what they have to say about that play:


What they really like is their average 75% working interest in the TMS.  For 2014, Encana will invest between $200 and $300 million and run one to three rigs in the play.

Out is anything that resembles gas, like the Haynesville Shale.  Since Encana has a deal to supply Nucor in Louisiana, it will keep some operations in the Haynesville (they just won't mention it to Wall Street analysts - shhhh!).

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