* Says "significant changes" needed to operations
* Says has more dry gas assets than it can manage "optimally"
* Looks to refocus portfolio of producing properties
* Shares rise 4.6 pct
By Scott Haggett and Sayantani Ghosh
Sept 12 (Reuters) - Encana Corp, Canada's largest gas producer, on Thursday signaled a potential sale of dry natural gas assets as it focuses on more-lucrative oil and gas liquids and cutting the number of properties it owns.
Doug Suttles, the former BP Plc executive appointed as Encana's chief executive in June and charged with righting the company after a series of strategic missteps, said the company will push to cut producing properties and revamp its organization as it looks to weather natural gas prices he expects to remain low for years.
"Our existing organization, both its structure and its size, is aligned with the past and not the future," Suttles said at a New York investment conference. "It's built around a bigger capital program and higher cash flow than we have today. We need to get that realigned.
Encana has been hurt by low natural gas prices for much of last year, leading the company to write down the value of its gas assets by about $2.89 billion.
It has also had to weather constant changes in strategy under former Chief Executive Randy Eresman, who left the company in January.
Now Suttles is determined to change strategy again, saying the company will look to narrow its focus from its current portfolio of 28 properties, or plays, while maintaining an investment-grade balance sheet.
"Our production comes from a wide range of locations," he said. "The top performers in our peer group have the majority of their production from a very limited number of plays ... We all understand that focus and discipline in capital allocation is a real key to performance and it's one of the things we have to make radical change in if we're to be successful going forward."
An internal assessment, initiated by Suttles in July, found that Encana was good at developing large scale and complex resource reservoirs but it needed to align its organizational structure with its new strategy.
Encana shares, which have fallen 20 percent over the past 12 months, jumped following Suttles comments, rising 4.6 percent to C$18.76 by midafternoon on the Toronto Stock Exchange.
"I think he's telling the market what they want to hear and I mean that in a good way," said Michael Dunn, an analyst at FirstEnergy Capital. "A significant change in the portfolio is on the horizon."
The company was criticized for spinning off its oil operations in 2009 at a time when oil prices were strengthening and stepping up natural gas production even as shale-gas supplies flooded the market and pushed prices down.
Encana shares are worth $28.01 as measured by Thomson Reuters StarMine's intrinsic value model, well above Wednesday's close of $17.93.
The model is a measure of a stock's current value when considering analysts' growth estimates for five years, and then modeling the growth trajectory over a longer period of time.
"We believe that Encana has some of the best real estate on the block when it comes to natural gas resources and possesses solid execution capability," RBC analysts said in a note.
"The missing element in the equation has largely revolved around strategic direction," RBC said, adding that it expects the new management to put the company back on the right track.