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UPDATE 1-Encana to increase natural gas liquids production by 30 pct

Wednesday, 11 Dec 2013 | 7:27 AM ET

Dec 11 (Reuters) - Encana Corp, Canada's largest natural gas producer, said it would boost liquids production by 30 percent in 2014 as part of new Chief Executive Doug Suttles' plan to focus spending on regions rich in gas liquids and oil.

The company will focus three-quarters of its planned 2014 capital spending of $2.4 billion to $2.5 billion on five shale regions in western Canada and the U.S. south and southwest.

Encana said these regions - Montney in British Columbia, Duvernay in Alberta, the DJ Basin in Colorado, the San Juan Basin in U.S. southwest and the Tuscaloosa Marine Shale in U.S. south - will account for about 25 percent of production in 2014.

They will also generate about 45 percent of the company's total upstream operating cash flow, excluding the impact of hedging, Encana said.

Encana has been hurt by low natural gas prices for much of last year, leading the company to write down the value of its gas assets by $2.89 billion.

Suttles, a former BP Plc executive, was appointed chief executive in June. He said in September that Encana would cut dry gas production and restructure to boost cash flow.

Encana said last month it would cut about 20 percent of its workforce by year-end, slash its dividend and spin off of its historic Alberta freehold lands into a separate company.

The company said on Wednesday it had completed its restructuring program and would take a related charge of about $65 million in the current quarter.

Encana said it expected total liquids production in 2014 to average between 70,000 and 75,000 barrels per day, and natural gas production to average between 2.6 billion and 2.8 billion cubic feet per day.

The increase in liquids production will likely offset a small decline in gas production in 2014, Encana said.

Encana said it expected a 10 percent rise in netbacks in 2014 as a result of increased production of higher-margin liquids.

Encana shares, which have risen 8 percent since Suttles was named CEO in June, closed at C$20.38 on Tuesday on the Toronto Stock Exchange.

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