Encana Corp. (NYSE, TSE: ECA) announced Dec. 16 plans to increase spending next year, even as it lowered its forecast for oil prices and cash flow.
Capital investment for 2015 will be $2.7 billion to $2.9 billion, up from this year’s $2.5 billion to $2.6 billion. Encana said it’s assuming West Texas Intermediate (WTI) crude oil prices would average $70 a barrel next year, down from a $95 forecast issued last month.
Other oil producers are cutting back spending as prices reach five-year lows. ConocoPhillips Co. (NYSE: COP) said this month it would cut spending 20% next year. WTI fell below $55 a barrel on Dec. 16, as prices were set for the biggest annual drop since 2008.
About 80% of Encana’s spending will go to four areas—the Montney, Duvernay, Eagle Ford and Permian, the Calgary-based company said in a statement on Dec. 16. Those assets are able to deliver returns when prices are low because costs average the equivalent of $35 to $55 a barrel of oil.
Total cash flow is expected to drop to $2.5 billion to $2.7 billion next year from a forecast of $3.2 billion to $3.3 billion in 2014, the company said.
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