Encana's Second Quarter Results Show Company on Track to Meet 2013 Guidance, New Chairman of the Board Announced

Encana's Second Quarter Results Show Company on Track to Meet 2013 Guidance, 
New Chairman of the Board Announced 
CALGARY, ALBERTA -- (Marketwired) -- 07/24/13 -- Encana Corporation's
(TSX:ECA)(NYSE:ECA) solid operational performance in the second
quarter resulted in a 69 percent year-over-year increase in oil and
natural gas liquids (NGL) volumes with average production rising to
approximately 47,600 barrels per day (bbls/d). Natural gas production
volumes for the second quarter averaged approximately 2.8 billion
cubic feet per day (Bcf/d). 
The company reported net earnings of $730 million or $0.99 per share,
$665 million in cash flow or $0.90 per share and $247 million in
operating earnings or $0.34 per share during the second quarter of
2013. Year-to-date the company generated $299 million in net earnings
or $0.41 per share, $1.2 billion in cash flow or $1.69 per share and
$426 million in operating earnings or $0.58 per share. 
"Our results over the first half of the year have us well-positioned
to deliver on our guidance targets for 2013," said Doug Suttles,
Encana's President & CEO, whose appointment was announced in June.
"Our focus moving forward is to continue to exercise capital
discipline while working to achieve ever greater efficiencies in how
we run our business. We expect to see cost savings materialize
throughout the rest of the year as a result of those efforts."  
Encana is expecting full-year capital investment to be in the lower
part of its 2013 guidance range of $3.0 billion to $3.2 billion while
cash flow is expected to be in the middle to higher end of the
guidance range of $2.3 billion to $2.5 billion. The company
maintained its strong liquidity position during the quarter with a
period-end balance of about $2.9 billion in cash and cash
equivalents, primarily due to net divestiture proceeds. Encana does
not expect any significant changes to its capital spending plan for
2013. In addition, Encana increased its hedging position to 2,255
million cubic feet per day (MMcf/d) of expected July to December 2013
natural gas production at an average price of $4.37 per thousand
cubic feet (Mcf). This enhanced hedge position represents
approximately 75 percent of expected natural gas production for the
rest of the year. 
An internal strategy
 development team, composed of diverse skillsets
and a broad range of experience, has recently been tasked with
thoroughly evaluating the company's assets, identifying Encana's key
strengths and capabilities, and quantifying its current performance
and competitive positioning. This team reports directly to the
President & CEO. 
"My focus is on developing a strategy that will deliver sustainable
growth in shareholder value during a period of modest commodity
prices," said Suttles. "That means we need to take the time to do
this right and consider a range of alternatives. I fully expect this
work will be completed this year and that 2014 will be the first year
of implementing our new strategy."  
David P. O'Brien steps down as Board Chairman 
After serving with distinction for more than 10 years, David P.
O'Brien has stepped down as the Chairman of the Board of Directors
and will remain a Director of Encana. One of the founders of Encana,
Mr. O'Brien has held leadership roles with Encana or one of its
predecessor companies for more than 20 years. As Chairman since 1990
and Interim CEO of PanCanadian Energy Corporation from October 2001
to April 2002, he oversaw its merger with Alberta Energy Company Ltd.
to form Encana. He had previously served as Chairman, President & CEO
of Canadian Pacific Limited (energy, hotels and transportation) from
May 1996 to October 2001. 
During his distinguished career, Mr. O'Brien has brought his in-depth
acumen and expertise to a number of public company directorships
including Enerplus Corporation, Molson Coors Brewing Company, Royal
Bank of Canada and TransCanada Corporation. Among the numerous awards
recognizing his contributions, Mr. O'Brien was appointed an Officer
of the Order of Canada in 2008; named a Fellow of the Institute of
Corporate Directors in 2005; and entered the Canadian Business Hall
of Fame in 2004. 
Clayton H. Woitas has been appointed Board Chairman, as well as Chair
of the Nominating and Corporate Governance Committee and an
ex-officio member of all other Board Committees. Peter Dea has
assumed the role of Chair of the Corporate Responsibility,
Environment, Health & Safety Committee, of which Mr. Woitas was
previously the Chair. All members of Encana's Board Committees are
considered independent. 
"On behalf of the Board of Directors, I would like to extend my
sincere thanks to Mr. O'Brien for his many contributions to Encana,
including his pivotal role in the formation of our company back in
2002 through the merger of Alberta Energy Company Ltd. and
PanCanadian Energy Corporation," said Mr. Woitas. "Mr. O'Brien has
had an exemplary career marked by many accomplishments and dedicated
community service, and Encana has benefited greatly from his
expertise and leadership during his term as Chairman of the
corporation." 
Activities in the quarter 


 
--  The appointment of Doug Suttles as President & CEO was announced on June
    11. 
--  On June 13, Encana completed a transaction which added 67,000 net acres
    to its land position in the San Juan Basin. 
--  The divestiture of Encana's Jean Marie natural gas assets in
    northeastern British Columbia closed on June 27. This transaction
    unlocks value from a mature asset as the company continues to optimize
    its portfolio and diversify its production profile. 
--  As part of Encana's ongoing portfolio management process, a divestiture
    process is now underway for assets in Osage County, Oklahoma. These
    assets represent the remainder of Encana's land position in the
    Mississippian Lime; in the first quarter, Encana divested its Kansas
    land holdings in the play. 
--  The Deep Panuke project is in the final steps to achieving first gas.
    Final commissioning is taking place offshore. Gas will be introduced
    from the wells to the platform following final commissioning.  
--  Encana extended the maturities of its revolving bank credit facilities
    to June of 2018. In an effort to reduce costs and in light of the
    company's reduced capital expenditure programs over the last two years,
    Encana reduced the amount available under the Canadian facility from
    C$4.0 billion to C$3.5 billion. The amount available under the U.S.
    revolving credit facility remains unchanged at $1.0 billion. 
--  Encana released its 2012 Corporate Responsibility Report detailing the
    company's environmental, social and governance performance for the past
    calendar year. 
--  Encana announced a donation of $500,000 to assist with relief efforts in
    Calgary and throughout southern Alberta as a result of flooding that
    occurred in late June. Of the donation, $250,000 is allocated to the Red
    Cross to assist in immediate flood relief work in affected communities
    while the remaining $250,000 will be allocated to a number of Encana's
    community partners. 

 
Encana added to its risk management program in the quarter 
At June 30, 2013, Encana has hedged approximately 2,255 MMcf/d of
expected July to December 2013 natural gas production using NYMEX
fixed price contracts at an average price of $4.37 per Mcf,
approximately 1,538 MMcf/d of expected 2014 production at an average
price of $4.19 per Mcf and approximately 825 MMcf/d of expected 2015
prod
uction at an average price of $4.37 per Mcf. In addition, Encana
has hedged 15,000 bbls/d of expected July to December 2013 oil
production at a WTI equivalent price of $98.08 per barrel and
approximately 5,800 bbls/d of expected 2014 oil production at a WTI
equivalent price of $93.80 per barrel. 
Encana actively hedges its basis exposure using a combination of
physical transportation and financial basis hedges. Encana has
approximately 50 percent of its 2013 AECO basis exposure hedged, a
position that partially protects the company from the recent widening
of the AECO basis differential. 
Dividend declared 
On July 23, 2013, the Board declared a dividend of $0.20 per share
payable on September 30, 2013, to common shareholders of record as of
September 13, 2013. 
Second Quarter Highlights 


 
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                             Financial Summary                              
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(for the period ended June 30)                                Q2         Q2 
($ millions, except per share amounts)                      2013       2012 
----------------------------------------------------------------------------
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Cash flow(1)                                                 665        794 
  Per share diluted                                         0.90       1.08 
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Operating earnings(1)                                        247        198 
  Per share diluted                                         0.34       0.27 
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                      Earnings Reconciliation Summary                       
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Net earnings (loss)                                          730     (1,482)
                                                      ----------------------
After tax (addition) deduction:                                             
  Unrealized hedging gain (loss)                             332       (547)
  Impairments                                                  -     (1,695)
  Non-operating foreign exchange gain (loss)                (162)       (90)
  Income tax adjustments                                     313        652 
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Operating earnings(1)                                        247        198 
  Per share diluted                                         0.34       0.27 
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(1) Cash flow and operating earnings are non-GAAP measures as defined
in Note 1 on page 4. 


 
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                             Production Summary                             
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(for the period ended June 30)                        Q2        Q2          
(After royalties)                                   2013      2012  % change
----------------------------------------------------------------------------
Natural gas (MMcf/d)                               2,766     2,802        -1
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Liquids (Mbbls/d)                                   47.6      28.2       +69
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                Second Quarter Natural Gas and Liquids Prices               
----------------------------------------------------------------------------
                                                           Q2 2013   Q2 2012
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Natural gas                                                                 
----------------------------------------------------------------------------
NYMEX ($/MMBtu)                                               4.09      2.22
Encana realized gas price(1)($/Mcf)                           4.17      4.79
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Oil and NGLs($/bbl)                                                         
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WTI                                                          94.17     93.35
Encana realized liquids price (1)                            68.25     80.32
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(1) Realized prices include the impact of financial hedging. 
Encana will host a conference call today Wednesday, July 24, 2013
starting at 11:00 a.m. MT (1:00 p.m. ET). To participate, please dial
(888) 231-8191 (toll-free in North America) or (647) 427-7450
approximately 10 minutes prior to the conference call. An archived
recording of the call will be available from approximately 4:00 p.m.
ET on July 24, 2013 until midnight July 31, 2013 by dialing (855)
859-2056 or (416) 849-0833 and entering passcode 79738157. A live
audio webcast of the conference call will also be available at
www.encana.com, in the Invest in Us section under Presentations &
Events. The webcast will be archived for approximately 90 days. 
Media are invited to participate in the call in a listen only mode. 
The unaudited interim Condensed Consolidated Financial Statements for
the period ended June 30, 2013 are available at www.encana.com and
will be filed on SEDAR (www.sedar.com) and EDGAR (www.sec.gov). 
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. 
Important Information 
Encana reports in U.S. dollars unless otherwise noted. Production,
sales and reserves estimates are reported on an after-royalties
basis, unless otherwise noted. Per share amounts for cash flow and
earnings are on a diluted basis. T
he term liquids is used to
represent oil, NGLs and condensate. The term liquids-rich is used to
represent natural gas streams with associated liquids volumes. Unless
otherwise specified or the context otherwise requires, reference to
Encana or to the company includes reference to subsidiaries of and
partnership interests held by Encana Corporation and its
subsidiaries. 
NOTE 1: Non-GAAP measures  
This news release contains references to non-GAAP measures as
follows: 


 
--  Cash flow is a non-GAAP measure defined as cash from operating
    activities excluding net change in other assets and liabilities, net
    change in non-cash working capital and cash tax on sale of assets. 
--  Operating earnings is a non-GAAP measure defined as net earnings
    excluding non-recurring or non-cash items that management believes
    reduces the comparability of the company's financial performance between
    periods. These after-tax items may include, but are not limited to,
    unrealized hedging gains/losses, impairments, foreign exchange
    gains/losses, income taxes related to divestitures and adjustments to
    normalize the effect of income taxes calculated using the estimated
    annual effective tax rate. 

 
These measures have been described and presented in this news release
in order to provide shareholders and potential investors with
additional information regarding Encana's liquidity and its ability
to generate funds to finance its operations. 
ADVISORY REGARDING OIL AND GAS INFORMATION - Encana uses the term
resource play. 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. 
In this news release, certain oil and NGLs volumes have been
converted to cubic feet equivalent (cfe) on the basis of one barrel
(bbl) to six thousand cubic feet (Mcf). Cfe may be misleading,
particularly if used in isolation. A conversion ratio of one bbl to
six Mcf 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 oil as compared to natural gas 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.  
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS - In the interests of
providing Encana 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: anticipated capital investment; expected
adherence to the company's 2013 capital spending plan; expected
amounts of cash, cash equivalents and cash flow by year end;
achieving 2013 Corporate Guidance; anticipated cost savings and
improved operating efficiencies; anticipated natural gas prices over
the next few years; anticipated timing for the development and
implementation of the company's strategy; anticipated sustainable
growth in shareholder value; anticipated divestitures and the
proceeds therefrom, including with respect to assets in Oklahoma; and
anticipated first gas from Deep Panuke and the timing thereof. 
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 or receive amounts contemplated under the transaction
agreements (such transactions may include third-party capital
investments, farm-outs or partnerships, which Encana may refer to
from time to time as "partnerships" or "joint ventures" and the funds
received in respect thereof which Encana may refer to from time to
time as "proceeds", "deferred purchase price" and/or "carry capital",
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 inn
ovation,
generally consistent with and informed by its past experience, all of
which are subject to the risk factors identified elsewhere in this
news release.  
Assumptions with respect to forward-looking information regarding
expanding Encana's oil and NGLs production and extraction volumes are
based on existing expansion of natural gas processing facilities in
areas where Encana operates and the continued expansion and
development of oil and NGL production from existing properties within
its asset portfolio.  
Forward-looking information respecting anticipated 2013 cash flow for
Encana is based upon, among other things, achieving average
production for 2013 of between 2.8 Bcf/d and 3.0 Bcf/d of natural gas
and 50,000 bbls/d to 60,000 bbls/d of liquids, commodity prices for
natural gas and liquids based on NYMEX $3.75 per Mcf and WTI of $95
per bbl, an estimated U.S./Canadian dollar foreign exchange rate of
$1.00 and a weighted average number of outstanding shares for Encana
of approximately 736 million.  
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
statement.  
Follow Encana on Twitter @encana for updates during the company's
second-quarter 2013 conference call.  
Further information on Encana Corporation is available on the
company's website, www.encana.com. 
SOURCE: Encana Corporation
Contacts:
Investor contact:
Encana Corporation
Lorna Klose
Manager, Investor Relations
(403) 645-6977 
Encana Corporation
Patti Posadowski
Advisor, Investor Relations
(403) 645-2252 
Media contact:
Encana Corporation
Jay Averill
Team Lead, Media Relations
(403) 645-4747