Encana Corp. (ECA), Canada’s biggest natural-gas producer, fell the most in 18 months after it said it will increase spending this year and doesn’t intend to further curtail production amid low prices for the furnace fuel.
The shares fell 7.9 percent to C$20.39 at the close in Toronto, the most since Dec. 1, 2008.
Encana will invest an additional $600 million this year to boost production of higher priced petroleum liquids to help offset declining cash flow from gas production, Randy Eresman, chief executive officer of the Calgary-based company, said in a webcast presentation to analysts today. Gas prices in New York fell to their lowest in 10 years in April.
The company is sticking with plans to cut back gas production by 250 million cubic feet a day this year and will increase production next year, Eric Marsh, an Encana vice president, said in an e-mail. The company expects prices to rise to about $4 per British thermal units by the end of this year.
“There were no real positive surprises,” Phil Skolnick, an analyst at Canaccord Genuity Inc. in Toronto, said in a note to investors today.
Encana will probably spend more than its cash flow next year and is counting on joint ventures to contribute as much as $1.5 billion and compensate for the cash-flow decline, he said.
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