Encana (NYSE: ECA) released its third-quarter earnings this week. Amid some good and bad news, the energy company revealed an important plan for future growth.

The good
Encana generated cash flow of $1.2 billion in the third quarter, good for earnings of $0.23 a share before currency losses. The company also grew natural-gas liquids production by 6% per share. NGL is increasingly important in the industry because it is more lucrative than regular methane. Encana aims to more than triple its NGL production by 2015.

The bad
Volatile movement in both the U.S. and Canadian dollar resulted in a $325 million loss for Encana, a big disparity from the $136 million gain during the same quarter last year. Earnings were down to $120 million from $606 million last year, as the Canadian dollar declined 7.8% against the U.S. dollar.

The analysts
Encana's revenue of $1.99 billion and adjusted earnings of $0.23 a share outpaced analysts' expectations of $0.11 and $1.86 billion. Even with strong cash flows, at least one analyst recommended more joint ventures and asset sales next year to avoid taking on more debt.

Encana hasn't always been successful taking on joint ventures. PetroChina (NYSE: PTR) dealt Encana a blow this summer when it walked away with its $5.4 billion after the two companies couldn't work out an agreement for operations in British Columbia and Alberta.

Future growth
Encana's LNG export facility joint venture with Apache (NYSE: APA) and EOG Resources (NYSE: EOG) needs only one more approval from the Canadian government before construction can get under way. However, the project now faces competition from Royal Dutch Shell (NYSE: RDS-A) and its joint venture partners Korea Gas, China National Petroleum, and Mitsubishi. Shell is planning an LNG export facility at the same Kitimat site in British Columbia.

Encana has also struck a deal with Pembina Pipeline to expand the NGL extraction and processing capacity of its plant in western Alberta. Encana expects to triple its NGL production in the surrounding region and improve the extraction capacity to eight times the current rate. Again, because NGLs are more valuable than methane, this is a smart move going forward.

Foolish bottom line
Increasing its NGL production capacity Encana's is a solid move on the company's part and may prove to be an excellent safety net if competition from Shell negatively affects the value of LNG exports.

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