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 
FOR: Encana Corporation 
MAY 7, 2014 
Encana Continues Bold Change With US$3.1 Billion Oil-Rich Eagle Ford
CALGARY, ALBERTA--(Marketwired - May 7, 2014) - 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
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 
Acres                                  45,500 net acres                     
Location                               Primarily Karnes County, Texas       
First Quarter 2014 production          Approximately 40,000 bbls/d oil; 6    
Mbbls/d of natural gas liquids; 44    
MMcf/d natural gas                   
First Quarter 2014 Operating Cash      US$327 million                       
Number of Producing Wells              355 gross                            
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
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. 
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. 
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
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 
Investor contact: Encana Corporation
Brian Dutton
Director, Investor Relations
(403) 645-2285
Encana Corporation
Patti Posadowski
Sr. Advisor, Investor Relations
(403) 645-2252
Media contact: Encana Corporation
Jay Averill
Media Relations
(403) 645-4747 
INDUSTRY:  Energy and Utilities - Oil and Gas  
-0- May/07/2014 10:00 GMT
Press spacebar to pause and continue. Press esc to stop.