WRAPUP 2-Canadian oil firms make cautious spending cuts

(Adds comment and closing share prices. In U.S. dollars unless noted.)

By Scott Haggett

CALGARY, Alberta, Dec 11 (Reuters) - EnCana Corp (ECA.TO) and Petro-Canada (PCA.TO) moved to cut 2009 capital spending on Thursday to cope with falling commodity prices and market turmoil, but they left themselves enough room to change plans quickly in case the economy swings to the better, or worse.

After years of boosting budgets to increase production from far-flung reserves and the expensive oil sands, Canada's big oil companies are retrenching to cope with crude prices that have fallen by close to $100 a barrel from July peaks.

"They've been fairly cautious," said Chris Feltin, an analyst at Tristone Capital. "Companies are managing their activities in 2009 to live within their cash flow ... They are coming out with conservative spending outlooks in light of relatively weak oil and natural gas prices."

Instead of looking to expand output at any cost, the producers are taking a more cautious approach, waiting to see which way the economic winds will blow.

"The business environment is too volatile to count on with any degree of certainty," Petro-Canada Chief Executive Ron Brenneman said on a conference call. Brenneman said his company "will stay as flexible as possible until the situation becomes a little clearer for both the commodity and financial markets."

Petro-Canada, the country's No. 4 oil exploration and refining firm, said it will cut its 2009 capital budget by 36 percent to C$3.96 billion from the C$6.16 billion it plans to spend this year.

The company last month delayed an investment decision for its Fort Hills oil sands mine by a year to late 2009 and deferred an upgrader to cut the project's C$21 billion price tag.