Tickers in this Article: ECA, GDP, EOG, HK
Encana (NYSE:ECA) has revised the company's previous 2012 capital spending plan and will allocate an additional $600 million toward the development of crude oil and liquid plays across its portfolio. The company disclosed the extra spending along with other operational details at a recent analyst day held for the institutional investment community.

Expanded Drilling
Encana now plans on drilling from 115 to 120 wells in 10 crude oil plays in North America, up from the previous program of 40 to 45 wells. In 2013, Encana has budgeted between $4 billion to $5 billion and will drill 350 wells into these types of plays.

Encana estimates that crude oil and liquids production will reach 30,000 barrels per day in 2012, and between 60,000 and 70,000 barrels per day in 2013. Natural gas production is expected to remain at an average of 3 billion cubic feet per day throughout 2012 and 2013.

Encana plans to increase drilling into the Eaglebine formation and the San Juan Basin as a result of the new plan and will also initiate drilling in three oil plays that are new to the company.

SEE: A Guide To Investing In Oil Markets

New Oil Plays
Encana has 355,000 net acres prospective for the Tuscaloosa Marine Shale and plans to drill a total of 12 wells here in 2012. The company has reported initial production rates on recent wells here between 340 and 1,072 barrels of oil equivalent per day during the first 30 days of production.

Goodrich Petroleum (NYSE:GDP) is working to develop the Tuscaloosa Marine Shale and is involved in a joint venture with Encana and also operates its own acreage. The company has 132,000 net acres under lease here. EOG Resources (NYSE:EOG) also entered this play and recently received a permit to drill a well into the Tuscaloosa Marine Shale in Mississippi.

In the Mississippi Lime, Encana has 360,000 net acres under lease in Kansas and Oklahoma and plans to start drilling here, shortly, with two operated rigs. The company plans to drill 15 wells in 2012.

Encana has also established a position in Western Canada where the company plans to develop as many as nine oil bearing formations at the Clearwater project area. Encana has budgeted enough capital for 30 wells into these formations in 2012.

SEE: What Determines Oil Prices?

Capital Shift
Encana has spent the last few years transitioning the company's capital plan toward oil and liquids development and will soon accomplish this goal. The company plans to spend only 23% of its 2013 capital budget on dry gas development, down from 65% in 2011.

Another company pursuing oil and liquid plays is Halcon Resources (NYSE:HK), which recently added to the company's position in the Utica Shale with the acquisition of approximately 32,000 net acres for $194 million.

SEE: Oil And Gas Industry Primer

The Bottom Line
Encana's decision to boost spending on crude oil and liquids development in 2012 will mean an even faster transition away from the company's traditional dependence on natural gas. This may be what most investors are looking for in an energy stock in the current market.

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

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