EnCana Corp. on Tuesday raised its sales growth forecast to 12% this year — 2% higher than originally predicted, and pumped up its 2004 capital budget by $850 million. The new forecast only takes into account organic growth, but with its recent Tom Brown Inc. acquisition, EnCana expects 2004 sales to reach 725,000-765,000 boe/d, a 15% midpoint increase from 650,200 boe/d in 2003 sales.

EnCana is forecasting 2005 sales to average 810,000-860,000 boe/d, another 12% increase, at midpoint, from the new 2004 forecast. The increase comes both from organic North American growth and its acquisition of the Denver-based Tom Brown, which has production operations focused in the Rocky Mountains (see Daily GPI, April 16).

“Our resource play strategy is delivering strong sustainable production growth,” said COO Randy Eresman. “Natural gas production in the U.S. Rockies is up more than 25% in the past year, before the inclusion of Tom Brown production. In Western Canada, gas production is gaining momentum, up about 14% in the past year. Our in-situ oil sands production continues to grow, up about 35% in the past year. We have had such strong performance from our resource plays that sales growth this year and next are expected to outpace our long-term average annual production growth forecast of about 10% per share.”

EnCana’s current daily production is about 775,000 boe, up about 25% from the average sales in the second quarter of 2003, comprised of about 3.1 Bcf of gas and about 260,000 bbl of oil and natural gas liquids. The daily production includes net acquisitions of approximately 260 MMcf/d and net dispositions of about 4,000 bbl/d of liquids, for total net acquisitions of about 40,000 boe/d to date. The announced sale of some of EnCana’s Canadian properties, which produce about 35,000 boe/d, will have a neutral overall impact on 2004 production.

“EnCana continues its high level of field activity, drilling more than 2,200 net wells so far this year,” said Eresman. “Our highly coordinated, manufacturing-style operations capture economies of scale and cost-saving efficiencies as drilling levels rise. Following extreme weather in the first quarter, operating costs are trending down. And as production volumes rise, costs on a per unit basis are moving lower.”

The acquisition of Tom Brown, cooperative weather and the divestitures “have set the stage for accelerated development and investment in the company’s huge resource play drilling inventory. As a result, the proportion of the company’s North American production sourced from long-life, low-decline resource plays is expected to climb from 60-75% during 2004.”

Of the $850 million added to the capital budget this year, EnCana plans to spend about a third of it, or $270 million, toward developing the Tom Brown assets. EnCana expects to drill about 5,500 net wells this year. The company plans to invest most of the rest of the money on its core North American regions, split about evenly between Canadian Plains, Canadian Foothills and frontier and the U.S. Rockies.

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