Encana Continues Bold Change With US$3.1 Billion Oil-Rich Eagle Ford Acquisition

Encana Continues Bold Change With US$3.1 Billion Oil-Rich Eagle Ford Acquisition 
CALGARY, ALBERTA -- (Marketwired) -- 05/07/14 --   In a bold
strategic move, Encana (TSX: ECA)(NYSE: ECA) will significantly
accelerate its plan to transition its portfolio and grow shareholder
value through an agreement reached with Freeport-McMoRan for Encana's
wholly owned subsidiary, Encana Oil & Gas (USA) Inc., to acquire
approximately 45,500 net acres in Karnes, Wilson and Atascosa
counties of south Texas for about US$3.1 billion. The acreage
produced approximately 53,000 barrels of oil equivalent per day
(boe/d) in the first quarter of 2014 and has an estimated drilling
inventory of more than 400 locations. The area is widely known as
being in the heart of the oil-rich Eagle Ford resource play. The
deal, which Encana anticipates will be accretive to 2014 cash flow,
will approximately double the Company's current oil production and
significantly enhance its continuing efforts to reposition to a more
balanced commodity portfolio. 
"Gaining a position in a world class, oil-rich resource play like the
Eagle Ford accelerates the transition of our portfolio and
underscores our investment focus on high margin assets," says Doug
Suttles, Encana President & CEO. "With this transaction, combined
with our announced divestments of Jonah and properties in East Texas,
we're replacing natural gas production with high margin oil and
liquids production." 
This transaction directly aligns with Encana's strategy by adding a
sixth core growth asset in an established oil production basin that
provides immediate impact on company-wide returns. The Eagle Ford is
recognized as being among the most prolific and profitable resource
plays in North America. In the first quarter of 2014 production from
the acreage to be acquired by Encana included approximately 46,000
barrels per day (bbls/d) of total liquids production and 44 million
cubic feet per day (MMcf/d) of natural gas, generating operating cash
flow of US$327 million, with about 75 percent of the total production
volumes for the period being oil.  
The Eagle Ford assets offer a large contiguous land position in the
core of the play, fitting well with Encana's technical expertise in
developing resource plays. The Company expects the assets to be free
cash flow positive in 2014, allowing Encana to execute its existing
capital plan for 2014 without redirecting capital from its other five
core growth plays. Through the second half of this year, Encana plans
to start ramping up its activity in the play and exit 2014 with at
least four drilling rigs running. 
"In addition to the near term growth potential of this asset, we
believe there are many opportunities to enhance the value of this
world class position by applying our proven resource play expertise."
adds Suttles. "Overall, this acquisition fully aligns with our
strategy announced last November; it will significantly boost our oil
and liquids output, improve our ability to generate cash flow and
enhance our portfolio of world class resource plays." 
With cash on hand combined with anticipated proceeds from previously
announced transactions, Encana is well positioned to fund this
acquisition. 
The transaction is subject to satisfaction of normal closing
conditions, as well as regulatory approvals, and is expected to close
by the end of the second quarter 2014 with an effective date of April
1, 2014. Scotia Waterous advised Encana on this transaction. 
Eagle Ford Asset Key Metrics 


 
 
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Acres                                  45,500 net acres                     
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Location                               Primarily Karnes County, Texas       
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First Quarter 2014 production          Approximately 40,000 bbls/d oil; 6   
                                       Mbbls/d of natural gas liquids; 44   
                                       MMcf/d natural gas                   
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First Quarter 2014 Operating Cash      US$327 million                       
Flow                                                                        
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Number of Producing Wells              355 gross                            
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Estimated Future Well Inventory        Over 400 gross                       
----------------------------------------------------------------------------

Conference Call and Webcast 
Encana is hosting a conference call with analysts to discuss the
Eagle Ford acquisition. Presentation slides will be available to
download from the Invest in Us/Presentations & Events section of
www.encana.com prior to the start of the call. 
The webcast conference call for the investment community will start
at 6 a.m. MT (8 a.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 9 a.m. MT (11 a.m. ET) on
May 7 to until 11:59 p.m. MT (1:59 a.m. ET) on May 14, 2014, by
dialing (855) 859-2056 or (416) 849-0833 and entering passcode
43058049. 
A live audio webcast of the conference call, as well as presentation
slides, will be available via Encana's website, www.encana.com, under
Invest in Us/Presentations & Events. The webcast will be archived for
approximately 90 days. 
Follow Encana on Twitter @encana for updates during the conference
call. 
Encana Corporation 
Encana is a leading North American energy producer that is focused on
growing its strong portfolio of diverse resource plays, held directly
and indirectly through its subsidiaries, 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. 
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. 
Initial production and short-term rates are not necessarily
indicative of long-term performance or of ultimate recovery. 
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 price and timing of the closing
of the Eagle Ford acquisition transaction and the satisfaction of
closing conditions and obtaining of regulatory approvals; expected
effects of the transaction, including being accretive to 2014 cash
flow and creating a more balanced commodity portfolio; anticipated
oil and gas production for the Eagle Ford area; the anticipated
prolific and profitable nature of the Eagle Ford area; anticipated
cash flow from the Eagle Ford assets in 2014 (including free cash
flow); anticipated impact of the transaction on Encana's 2014 capital
plans; anticipated drilling and number of wells and the timing
thereof; anticipated sources of funds for the transaction; the
expected impact of the transaction on Encana's 2014 oil production;
anticipated replacement of gas production by oil and liquids
production and the resulting expected increase in margins. 
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 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. 
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 2014 cash flow for
Encana is based upon, among other things, achieving average
production for 2014 of between 2.6 Bcf/d and 2.8 Bcf/d of natural gas
and 70,000 bbls/d to 75,000 bbls/d of liquids, commodity prices for
natural gas and liquids based on NYMEX $3.75 per MMBtu and WTI of $95
per bbl, an estimated U.S./Canadian dollar foreign exchange rate of
$0.95 and a weighted average number of outstanding shares for Encana
of approximately 741 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. 
Further information on Encana Corporation is available on the
company's website, www.encana.com. 
SOURCE: Encana Corporation 
Contacts:
Investor contact: Encana Corporation
Brian Dutton
Director, Investor Relations
(4
03) 645-2285 
Encana Corporation
Patti Posadowski
Sr. Advisor, Investor Relations
(403) 645-2252 
Media contact: Encana Corporation
Jay Averill
Media Relations
(403) 645-4747
www.encana.com
 
 
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