Encana Announces Joint Venture to Develop Duvernay Lands

Encana Announces Joint Venture to Develop Duvernay Lands 
CALGARY, ALBERTA -- (Marketwire) -- 12/13/12 -- Encana Corporation
(TSX:ECA) (NYSE:ECA) (Encana) has entered into a joint venture
arrangement with Phoenix Duvernay Gas (Phoenix), a wholly owned
subsidiary of PetroChina, to explore and develop Encana's extensive
undeveloped Duvernay land holdings in west-central Alberta. Under the
terms of the agreement, Phoenix will gain a non-controlling 49.9%
interest in Encana's approximately 445,000 acres in the Duvernay play
for total consideration of C$2.18 billion. 
At closing C$1.18 billion was paid to Encana and C$1.0 billion is
payable over the next four years in the form of a carry of half of
Encana's share of development capital. During this period, the joint
venture partners plan to invest a total of C$4.0 billion in new
drilling, completion and processing facilities. Encana estimates that
the Duvernay joint venture lands contain about 9 billion barrels of
oil equivalent petroleum initially-in-place. Encana remains the
operator of the joint venture with its 50.1% working interest. 
"Phoenix's investment demonstrates the tremendous value that Encana
has created in this early life liquids rich play, and enables us to
accelerate the pace at which the full production potential of our
Duvernay lands can be achieved," says Randy Eresman, Encana President
& CEO. "A transaction of this magnitude keeps us on track to create a
more diversified commodity portfolio and maintain our balance sheet
strength. It is a strong endorsement of Encana's position as a
reliable long term partner." 
Encana has drilled nine wells into the Duvernay, has five producing
wells and currently has two rigs actively drilling additional wells.
With the formation of this joint venture, Encana expects to more than
double its planned pace of development in the Duvernay play beginning
early in 2013. 
"The Duvernay project will combine Phoenix's integrated upstream and
downstream capabilities and financial resources with Encana's proven
resource play hub expertise. This joint venture will build a
foundation for the successful development of the Duvernay play and
help to diversify our business portfolio. Encana is our ideal long
term partner for the development of our future natural gas business,"
says Mr. Zhiming Li, Phoenix's President & Chief Executive Officer. 
Having entered into several joint venture transactions in 2012, these
types of arrangements have become an important part of Encana's
business model. Joint ventures help the Company to achieve a highly
efficient deployment of capital throughout its vast exploration and
development asset base as Encana transitions to a more diversified
portfolio of commodities. 
These relationships have the potential to increase natural gas demand
as a number of Encana's partners are actively exploring opportunities
to export liquefied natural gas (LNG), while some are industrial
consumers looking to transition to natural gas as fuel for their
operations. An example is a recent agreement with Nucor Energy
Holdings (Nucor) which is designed to support Nucor's increased use
of natural gas for its facilities, such as its direct reduced iron
facility currently under construction in Convent, Louisiana. 
For more information on Encana's recent joint venture agreements
visit www.encana.com/investors. 
Balance Sheet Strength 
Including the proceeds from the transaction with Phoenix, Encana
expects to end the year with cash balances in excess of US$3.0
billion, well ahead of the targeted US$2.5 billion the Company
projected in June 2012. In addition, confirmed carry capital
committed to Encana from joint ventures and other third party
agreements for 2013 is now approximately US$750 million, and covers
about half of Encana's projected costs in those areas. 
To date, Encana has increased its hedge position for 2013 to
approximately 1.5 billion cubic feet per day (Bcf/d) at an average
price of US$4.39 per million cubic feet (Mcf). 
"Our enhanced risk management position combined with our significant
expected cash balance for the end of the year puts us in a solid
position to execute on our plans for 2013. We expect these joint
venture arrangements will help us achieve higher capital efficiencies
which will enable us to reduce the amount of capital that we
initially projected to spend next year," adds Eresman. 
Financial and Legal Advisors 
RBC Capital Markets acted as financial advisor and Burnet, Duckworth
& Palmer LLP acted as legal advisor to Encana for this transaction. 
Encana Corporation 
Encana is a leading North American energy producer that is focused on
growing its strong portfolio of diverse resource plays producing
natural gas, oil and natural gas liquids. By partnering with
employees, community organizations and other businesses, Encana
contributes to the strength and sustainability of the communities
where it operates. Encana common shares trade on the Toronto and New
York stock exchanges under the symbol ECA. 
providing Encana Corporation ("Encana" or the "Company") shareholders
and potential investors with information regarding Encana, including
management's assessment of Encana's and its subsidiaries' future
plans and operations, certain statements contained in this news
release are forward-looking statements or information within the
meaning of applicable securities legislation, collectively referred
to herein as "forward-looking statements." Forward-looking statements
in this news release include, but are not limited to: expected amount
of carried capital to be paid to Encana over the next four years
under the joint venture; projected amount of investments in new
drilling, completion and processing facilities by the joint venture
partners; estimated petroleum initially-in-place in Duvernay lands;
expectation for the transaction to help Encana create a more
diversified commodity portfolio and maintain balance sheet strength;
projection to double pace of development in the Duvernay play in
2013; expectation for Encana's joint ventures to help maintain a
highly efficient capital deployment throughout the Company's
exploration and development portfolio and increase for natural gas
demand including opportunities for the export of LNG; expected cash
and cash equivalents at year-end 2012 and estimated amount of
confirmed carry capital committed from joint venture and other
third-party agreements for 2013; anticipated capital investment for
2013; and expectation to be in a solid position to execute on the
Company's plans for 2013. 
Readers are cautioned not to place undue reliance on forward-looking
statements, as there can be no assurance that the plans, intentions
or expectations upon which they are based will occur. By their
nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties, both general and specific,
that contribute to the possibility that the predictions, forecasts,
projections and other forward-looking statements will not occur,
which may cause the Company's actual performance and financial
results in future periods to differ materially from any estimates or
projections of future performance or results expressed or implied by
such forward-looking statements. These assumptions, risks and
uncertainties include, among other things: volatility of, and
assumptions regarding natural gas and liquids prices, including
substantial or extended decline of the same and their adverse effect
on the Company'
s operations and financial condition and the value and
amount of its reserves; assumptions based upon the Company's current
guidance; fluctuations in currency and interest rates; risk that the
Company may not conclude divestitures of certain assets or other
transactions (including third-party capital investments, farm-outs or
partnerships, which Encana may refer to from time to time as
"partnerships" or "joint ventures", regardless of the legal form) as
a result of various conditions not being met; product supply and
demand; market competition; risks inherent in the Company's and its
subsidiaries' marketing operations, including credit risks;
imprecision of reserves estimates and estimates of recoverable
quantities of natural gas and liquids from resource plays and other
sources not currently classified as proved, probable or possible
reserves or economic contingent resources, including future net
revenue estimates; marketing margins; potential disruption or
unexpected technical difficulties in developing new facilities;
unexpected cost increases or technical difficulties in constructing
or modifying processing facilities; risks associated with technology;
the Company's ability to acquire or find additional reserves; hedging
activities resulting in realized and unrealized losses; business
interruption and casualty losses; risk of the Company not operating
all of its properties and assets; counterparty risk; risk of
downgrade in credit rating and its adverse effects; liability for
indemnification obligations to third parties; variability of
dividends to be paid; its ability to generate sufficient cash flow
from operations to meet its current and future obligations; its
ability to access external sources of debt and equity capital; the
timing and the costs of well and pipeline construction; the Company's
ability to secure adequate product transportation; changes in
royalty, tax, environmental, greenhouse gas, carbon, accounting and
other laws or regulations or the interpretations of such laws or
regulations; political and economic conditions in the countries in
which the Company operates; terrorist threats; risks associated with
existing and potential future lawsuits and regulatory actions made
against the Company; risk arising from price basis differential; risk
arising from inability to enter into attractive hedges to protect the
Company's capital program; and other risks and uncertainties
described from time to time in the reports and filings made with
securities regulatory authorities by Encana. Although Encana believes
that the expectations represented by such forward-looking statements
are reasonable, there can be no assurance that such expectations will
prove to be correct. Readers are cautioned that the foregoing list of
important factors is not exhaustive. In addition, assumptions
relating to such forward-looking statements generally include
Encana's current expectations and projections made in light of, and
generally consistent with, its historical experience and its
perception of historical trends, including the conversion of
resources into reserves and production as well as expectations
regarding rates of advancement and innovation, generally consistent
with and informed by its past experience, all of which are subject to
the risk factors identified elsewhere in this news release. 
Furthermore, the forward-looking statements contained in this news
release are made as of the date hereof and, except as required by
law, Encana undertakes no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. The forward-looking statements contained
in this news release are expressly qualified by this cautionary
("NI") 51-101 of the Canadian Securities Administrators imposes oil
and gas disclosure standards for Canadian public companies such as
Encana engaged in oil and gas activities. Encana complies with the NI
51-101 annual disclosure requirements in its annual information form,
most recently dated February 23, 2012 ("AIF"). The Canadian protocol
disclosure is contained in Appendix A and under "Narrative
Description of the Business" in the AIF. Encana has obtained an
exemption dated January 4, 2011 from certain requirements of NI
51-101 to permit it to provide certain disclosure prepared in
accordance with U.S. disclosure requirements, in addition to the
Canadian protocol disclosure. That disclosure is primarily set forth
in Appendix D of the AIF. 
Encana uses the terms resource play and total petroleum
initially-in-place. Resource play is a term used by Encana to
describe an accumulation of hydrocarbons known to exist over a large
areal expanse and/or thick vertical section, which when compared to a
conventional play, typically has a lower geological and/or commercial
development risk and lower average decline rate. Total petroleum
initially-in-place ("PIIP") is defined by the Society of Petroleum
Engineers - Petroleum Resources Management System ("SPE-PRMS") and in
the Canadian Oil & Gas Evaluation Handbook ("COGEH") as that quantity
of petroleum that is estimated to exist originally in naturally
occurring accumulations. It includes that quantity of petroleum that
is estimated, as of a given date, to be contained in known
accumulations prior to production plus those estimated quantities in
accumulations yet to be discovered (equivalent to "total resources"). 
Due to the early life nature of the Duvernay play, PIIP is the most
relevant specific assignable category of estimated resources.
Estimates by engineering and geo-technical practitioners may vary and
the differences may be significant. There is no certainty that it
will be commercially viable to produce any portion of the estimated
In this news release, certain natural gas volumes have been converted
to barrel of oil equivalent (BOE) on the basis of six thousand cubic
feet (Mcf) to one barrel (bbl). BOE may be misleading, particularly
if used in isolation. A conversion ratio of six Mcf to one bbl is
based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent value equivalency at the
well head. Given that the value ratio based on the current price of
natural gas as compared to oil is significantly different from the
energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may
be misleading as an indication of value.
Encana Corporation - Investor contact:
Ryder McRitchie
Vice-President, Investor Relations
(403) 645-2007 
Encana Corporation - Investor contact:
Lorna Klose
Manager, Investor Relations
(403) 645-6977 
Encana Corporation - Media contact:
Jay Averill
Media Relations
(403) 645-4747