The Calgary oil and gas company, which reports in U.S. dollars, says the cut will bring its capital budget down to between $2 billion and $2.2 billion.
"In recognition of current prices, we are acting decisively and prudently," Encana CEO Doug Suttles told analysts during a conference call Wednesday.
Encana is basing its new guidance on estimates of US$50 a barrel for the benchmark West Texas Intermediate crude, about the level where prices have held after dropping from above US$100 a barrel last summer. Its previous guidance in December had been based on a US$70 oil price.
Suttles said the revision should not come as a surprise as the oil and gas company prepares for a lower priced environment.
"We said if market conditions change, which they were doing quite rapidly at that point, we would make appropriate adjustments," he said.
"(But) if anyone can prosper through this part of the commodity cycle, I'm convinced it will be Encana."
The revised spending plan was announced as the company reported that it earned $198 million or 27 cents per share for the fourth quarter ended Dec. 31, compared with a loss of $251 million or 34 cents per share a year ago.
However, Encana said its operating earnings, which excludes certain one-time items, amounted to $35 million or five cents per share, down from $226 million or 31 cents per share a year ago. The earnings came in below analyst expectations of 24 cents per share, according to Thomson Reuters.
Revenue net of royalties totalled $2.25 billion, up from $1.42 billion.
Encana will continue focus 80 per cent of its capital investment this year on four main assets: Permian Basin and Eagle Ford in Texas, Montney in B.C. and Duvernay in Alta.
Suttles said the company doesn't have any plans to sell more assets but is open to the idea.
"The low points in the commodity cycle are easily the most exciting times," he said. "I can tell you we're prepared to respond if the right opportunities come along."
The company expects its total cash flow for 2015 to be between $1.4 billion and $1.6 billion, as it benefits from net proceeds of around $800 million from previously announced divestitures.
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Note to readers: This is a corrected story: A previous version inaccurately referred to Encana as Canada's largest natural gas producer