Encana Corporation (NYSE: ECA) has put a heavy focus in the Permian basin concentrating on pad development to reduce cost as well as updating the company’s completion design in the Eagle Ford. Looking ahead to 2017, Encana will strive for production growth starting mid-year in their “core four” – Montney, Duvernay, Permian, and Eagle Ford –funding the capital program themselves past 2017 with cash flow exceeding capital expenditures above $55 per barrel.
Source: Encana Investor Day
Permian Basin Focused on Pad Development
Encana has focused its capital in the Permian during the 2016 and will continue to focus in the Permian in 2017. During 2016 Encana allocated $650 million in capital to the basin and in 2017 that number is expected to grow to around $850 million to $1 billion. The company has planned to drill 75 to 85 new wells during the year with a focus on having longer laterals and more wells per pad to drive efficiency.
Energent Group’s Pad Trends Report shows that Encana steadily increased the average number of wells per pad from 2 wells to now 3 or more. This has allowed them to implement a water recycling program where they have seen a savings of up to 25,000 barrels of water per day from a three well pad. In a recent 14-well pad that Encana completed in Midland county they used an average of 6,000 tons of proppant and 17.5 million gallons of water per well in which the company showed savings of $1.2 million per well.
Source: Energent Group, Basin Pad Trends Report
The company looks to have a strong relationship with Baker Hughes in which they have used for 81% of the frac activity in 2016. The company has increased the amount of proppant per job from around 3,000 tons to most recently 5,000 tons with lateral lengths recently over 8,000 feet around the Midland Basin.
Source: Energent Group
New Eagle Ford Frac Design Shows Positive Results
In the Eagle Ford, Encana is expected to spend about $200 million this year and share $300 to $450 million for the 2017 year with the Duvernay program. Encana has a small inventory of uncompleted wells in the Eagle Ford with only 9 and plan to drill 25 to 30 well and complete 40 to 50 during 2016. The company is active in Karnes county where each frac has tighter clusters and more proppant per foot. The new completion design includes cluster spacing of less then 20 feet and proppant volumes greater then 2,000 pounds per lateral foot
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