Encana Corporation is looking to boost its total liquids production by 30 per cent next year as 75 per cent of its planned US$2.4 billion to $2.5 billion capital program for 2014 will focus on five liquids-rich plays, including accelerating the development of the Duvernay.

During a conference call this morning, president and chief executive officer Doug Suttles said the company expects oil and natural gas liquid (NGL) output to increase to 70,000 to 75,000 bbls per day while natural gas production will decrease slightly to 2.6 to 2.8 bcf per day. Natural gas would still account for about 80 per cent of overall production next year.

"We are looking towards achieving a balanced liquids and natural gas portfolio, growth from a limited number of very high-quality plays and industry-leading efficiencies," Suttles told analysts.

Encana projects its full-year 2014 upstream operating cash flow, including hedging, to be between $3 billion and $3.2 billion. Total cash flow is expected to range between $2.4 and $2.5 billion.

In its quest to achieve a more balanced commodity portfolio and reach its goal of deriving approximately 75 per cent of its cash flow from oil and NGLs by 2017, Encana will focus three quarters of its planned 2014 spend on the Montney and Duvernay in Alberta, Colorado's DJ Basin, New Mexico's San Juan Basin and the Tuscaloosa Marine Shale (TMS) in Mississippi.

These five assets are expected to make up about 25 per cent of total production in 2014 while generating approximately 45 per cent of total upstream operating cash flow before the impact of commodity price hedging.

"Longer term we continue to focus on capital allocation on our growth plays, be disciplined with our investment yet retain gas optionality from assets that can be quite profitable and competitive if gas prices recover in the future," Suttles said.

"The investments are focused on high netback, high return projects."

He noted that Encana does not expect its forecasted production levels to change year-over-year, even though its planned 2014 capital investment is down about 10 per cent from this year.

Last month, the company announced it would cut about 20 per cent of its workforce, slash its dividend and spin off its Alberta freehold lands into a separate company (DOB, Nov. 5, 2013).

Suttles said the staff cuts are now complete. In the fourth quarter of 2013, Encana expects to take an approximate $65 million after-tax charge as a result of the restructuring.

"We have completed the most difficult part of our transition and I want to thank all of our staff for their professionalism and continued dedication to the company through what was a tough time for everyone at Encana," Suttles said.

"With the announcement of our 2014 plans, we are solely focused on building an exciting and successful future for Encana."

Suttles added that going forward through to 2017, "We will measure success by our performance on three key indicators: our transition to a balanced commodity portfolio, operational excellence and the integrity of our balance sheet."

He said the company will maintain its balance sheet integrity by aligning its capital expenditures with cash flow and reiterated that an initial public offering of its Clearwater royalty business will be forthcoming. The company also plans to repay from cash a US$1-billion, 5.8 per cent note maturity due May 1, 2014.

"The goal of all our deliverables for 2014 is targeted at creating sustainable shareholder value for next year and beyond," Suttles said. "The work we completed in 2013 has positioned us very well for a strong start in 2014, a start well aligned with our new strategy."

Montney

Encana plans to accelerate its development of the oil and liquids-rich areas of the Montney, specifically the Gordondale, Pipestone and Tower areas, while continuing to improve capital efficiency across the play.

"In the Montney, it's about accelerating our liquids growth while continuing to focus on capital efficiencies on this very successful play," Suttles said.

The company will invest between $800 million to $900 million in the play next year. Total investment in the play for 2014, including carry capital from the Cutbank Ridge partnership with Mitsubishi, will reach $1.7 billion to $1.8 billion. The company plans to run a six- to eight-rig program to drill 80 to 85 net wells in 2014.

Duvernay

Suttles said that Encana will move into full resource play hub development mode with pad drilling in the northern Kaybob area of the Duvernay, and complete its evaluation of the southern Willesden Green area. The company will also work to finalize a midstream infrastructure solution to support future development.

"We'll move to pad-based drilling in the northern portion of the Kaybob area and expect to reach a decision on commerciality for the Willesden Green and the southern portion of the Duvernay during the year," Suttles said.

Encana plans to invest between $250 million and $300 million of its capital in this play, running a six-to-eight drilling rig program with plans to drill 15 to 20 net wells in 2014. Total investment in the Duvernay, including the carry capital contributed as part of Encana's joint venture agreement with PetroChina, will be in the range of $1 billion to $1.2 billion for the year.

President of the Encana's Canadian division, Mike McAllister, noted that the company continues to be pleased with initial results from its Duvernay program.

"Our primary focus is going to be up in the Kaybob area where we've got better than commercial type curve performance. Of the 30 to 40 gross wells we'll be drilling, the majority will be up in Kaybob," he said.

"In the south Duvernay ... we have been seeing some encouraging results down there, basically on type curve-type performance, so we're encouraged with those results, as well."

DJ Basin

Encana's focus in this oil and liquids-rich play will be to continuously improve capital efficiency with a goal to reach approximately 70 per cent year-over-year growth in production in the play. The company plans to invest $250 million to $300 million and run a four- to six-rig program to drill 40 to 50 net wells in 2014.

San Juan Basin

In the San Juan Basin, Encana will continue to advance its pace of development and work to further reduce well costs through the optimization of its completions process.

Work will also continue to further delineate the company's acreage. Encana intends to work with the Bureau of Land Management to find ways to streamline the permitting process. The company plans to invest between $300 million and $350 million while running a two- to four-rig program to drill 45 to 50 net wells in 2014.

TMS

In 2014 Encana will complete its assessment of the TMS with plans to invest $125 million to $150 million to operate one to three drilling rigs and complete nine to 12 net wells.