UPDATE 3-EnCana profit hit by lower gas prices, production

* Q3 operating EPS $1.03 vs $1.92 a year ago

* Revenue drops 64.2 pct to $3.88 bln

* Shares down 2.7 percent at C$59.06 on TSX (Recasts to add details, comments; changes dateline from Toronto; in U.S. dollars unless noted)

By Scott Haggett and Euan Rocha

CALGARY/TORONTO, Nov 12 (Reuters) - EnCana Corp (ECA.TO), said on Thursday its third-quarter profit fell 46 percent as Canada's biggest natural gas producer weathered lower prices and production levels, but said cutting costs and focusing on new shale plays will sustain profits even if prices stay low.

The company, which is poised to split into separate oil and natural gas businesses at the end of the month, said it expects to be profitable even if new reserve-rich shale-gas developments in the United States and Canada continue to boost supplies of the fuel.

"Natural gas is going to be in abundance for a very long period of time," Randy Eresman, EnCana's chief executive, said on a conference call. "EnCana is well positioned with a very low cost structure and exposure to significant development opportunities within many of the lowest-cost plays in North America."

EnCana's operating earnings for the three months ended Sept. 30 fell to $775 million, or $1.03 a share, from a year-ago profit of $1.44 billion, or $1.92 a share, lagging analysts' average profit estimate of $1.17 a share, according to Thomson Reuters I/B/E/S.

Most of Canada's oil and gas producers have reported sharp drops in third-quarter profit as commodity prices plunged from their year-before peaks.

During the quarter, benchmark oil prices averaged $68.24 a barrel, down 42 percent from a year earlier. Natural gas averaged $3.44 per million British thermal units on the New York Mercantile Exchange, down 62 percent, as production rose while the recession bit into demand.

To help mitigate the price slide, EnCana shut in about 500 million cubic feet of gas per day that it considered too unprofitable to produce. But with prices expected to improve this winter, the company will return that production to market.

"They will be brought back on stream over the course of the winter," Eresman said. "Our expectation is that there will be some form of correction in prices next year but the prices we are currently seeing above the $5 range (in the futures market) next year are adequate."

2010 FORECAST

EnCana expects to produce between 3.2 billion and 3.3 billion cubic feet equivalent of natural gas a day in 2010.

The company will keep most of its natural gas production after the split, should shareholders approve the move later this month, focusing much of its capital spending on shale gas plays like the Montney and Horn River regions of British Columbia, and the Haynesville shales in Texas and Louisiana.

"In 2010, we plan to invest between $3.6 (billion) and $3.9 billion in capital and target natural gas production growth of about 10 percent," said Eresman.