​Encana slowing Montney growth in favour of new U.S. position

Encana’s Montney growth plans have taken a backseat following its acquisition of U.S.-focused Newfield Exploration.

The company is now highlighting its ability to “flex” its capital program in the Montney play to adjust to changing commodity prices.

Encana’s reduced 2019 Montney spending plans represent a significant reduction to growth targets, GMP FirstEnergy analyst Michael Dunn wrote in a research note on Friday.

The company’s recently closed Newfield buy gave it entry into the Anadarko Basin and its SCOOP/STACK plays in Oklahoma.

Anadarko is now one Encana’s three core plays along with the Permian Basin and the Montney, along with smaller operations including the Eagle Ford, Williston Basin and Duvernay.

The company expects to bring its cube development drilling strategy to the Anadarko Basin starting in Q2/2019.

Encana’s planned 2019 capital program of US$2.7 billion to US$2.9 billion is up compared to US$1.975 billion in 2018, but a reduction from the US$3.5 billion the two companies spent together last year.

For 2019, the Montney play will receive $350 million to $400 million, compared to $516 million in 2018. Encana has allocated $925 million to $975 million to the Permian Basin and $800 million to $850 million to the Anadarko Basin, Dunn noted.

“Speaking with the company…we learned that Encana’s macro view of the fragility of the regional market for natural gas, and condensate for that matter, in Western Canada has influenced management’s decision to put the brakes on driving growth out of the Montney in 2019, electing to maintain natural gas production levels near hedge-protected differential levels, and curbing their condensate growth ambitions,” he wrote.

“Encana sees the Anadarko Basin as a much more differential-resilient region in which to grow production.”