Encana's Strong First-Quarter 2014 Results Demonstrate Swift Progress of Company Strategy

Encana's Strong First-Quarter 2014 Results Demonstrate Swift Progress of 
Company Strategy 
FOR: Encana Corporation 
MAY 13, 2014 
Encana's Strong First-Quarter 2014 Results Demonstrate Swift Progress of
Company Strategy 
CALGARY, ALBERTA--(Marketwired - May 13, 2014) - Encana Corporation
Encana reported a successful first quarter of 2014 highlighted by solid
operational performance and strong financial results, demonstrating that the
company is hitting its stride with the execution of its new strategy. During
the quarter, Encana generated cash flow of approximately $1.1 billion or $1.48
per share, an 87 percent increase on a per share basis compared to the first
quarter of 2013; net earnings of $116 million or $0.16 per share compared to a
loss of $431 million for the same period last year; and operating earnings of
$515 million or $0.70 per share, a 192 percent year-over-year increase on a per
share basis.  
"Our strong first-quarter financial and operational results demonstrate
that we are making very good progress executing on our strategy and our teams
are delivering on virtually all of the targets that we have set to date,"
says Doug Suttles, Encana President & CEO. "Through our focused
capital investment, we continue to build momentum in our core growth areas and
we're accelerating the transition to a more balanced portfolio through the
recent transactions that we've announced." 
Encana's increased capital focus was evident as approximately 80 percent
of first-quarter capital spending was deployed to the five core growth plays
prioritized by the company in last November's strategy launch. Strong
first-quarter operational performance was highlighted by liquids volumes of
67.9 thousand barrels per day (Mbbls/d), a 56 percent year-over-year increase.
Natural gas production for the quarter was 2.8 billion cubic feet per day
(Bcf/d), down 2 percent year-over-year. 
The company also realized total cost savings of approximately $40 million in
the first three months of 2014 due to organizational realignment and operating
efficiencies achieved in both core and base production assets. Encana ended the
quarter with approximately $2.2 billion in cash and cash equivalents on its
balance sheet. The strong cash position includes a significant principal debt
reduction in March following a cash tender offer conducted in the quarter. 
"The strength of our balance sheet and our more agile organizational
structure give us a competitive advantage by allowing us to be proactive and
capture high-value opportunities when they emerge," says Suttles.
"This was apparent with our recent agreement to acquire a position in the
prolific Eagle Ford resource play, where we were able to quickly and
confidently execute a major transaction which we plan to close and fund with
cash on hand. This financial flexibility, along with the strength of our base
business, has us well positioned to capitalize on opportunities to enhance our
While first-quarter financial results were bolstered by improved NYMEX natural
gas prices that were up 37 percent compared to the fourth quarter of 2013, the
company also benefited from higher wellhead realizations relative to local
benchmark prices. In addition, volumes from the Deep Panuke platform offshore
Nova Scotia received strong seasonal pricing in the U.S. northeast market where
the first-quarter average realized price was approximately $19 per thousand
cubic feet (Mcf). 
It has been an active year to date for Encana as the company embarked upon the
bold new strategy that was launched in November of 2013. Since the beginning of
2014, the company has: 
--  completed the sale of certain natural gas properties in Wyoming's Jonah 
field to an affiliate of TPG Capital for a purchase price of 
approximately $1.8 billion, before closing adjustments 
--  entered into an agreement to sell certain East Texas natural gas 
properties for approximately $530 million; this transaction is expected 
to close in the second quarter 
--  divested a majority of the U.S.-based assets of Encana Natural Gas Inc. 
--  sold its entire interest in the Elmworth, Alberta liquefied natural gas 
production facility to Ferus Natural Gas Fuels, Inc. 
--  filed the amended and restated preliminary prospectus for the initial 
public offering of PrairieSky Royalty Ltd. 
--  completed a consent tender for the company's $1.0 billion 5.80 percent 
notes with a maturity date of May 1, 2014 and redeemed the portion not 
previously tendered to the company  
--  announced the $3.1-billion purchase of approximately 45,500 net acres in 
the heart of the oil-rich Eagle Ford resource play, which will replace 
the natural gas-weighted production from the Jonah and East Texas assets 
with higher-margin oil and natural gas liquids production; this 
transaction is expected to close in the second quarter  
Encana's updated 2014 guidance can be downloaded from
Operational highlights 
--  DJ Basin: A sixth rig was added in the play during the first quarter of 
2014. Operating efficiencies have seen drilling costs down across the 
play by 5 percent to 15 percent, in particular long laterals which are 
averaging $340,000 per 1,000 feet versus $410,000 per 1,000 feet. Well 
performance continues to be more than 20 percent above expectations with 
current 30-day initial oil production rates in the range of 330 barrels 
per day (bbls/d). 
--  Montney: Implemented a new well design in the Cutbank Ridge area with a 
more intense stimulation which has increased initial production rates by 
75 percent. In the Pipestone area of the play, operating efficiencies 
have seen drilling costs trending downward by approximately 15 percent. 
Also in the Pipestone, liquid yields from the 12 most recent wells are 
approximately 20 percent higher than initially forecast. Encana 
currently runs eight rigs in the Montney. 
--  San Juan: Well costs are trending downward in the play to less than $5 
million on the last four wells drilled with spud to rig release cycle 
times of 11.5 days compared to 14 days in 2013. The company currently 
has one rig running in the play and plans to have four running by the 
end of the third quarter. 
--  Duvernay: Two eight-well pads were spud during the quarter. The Duvernay 
team has stockpiled equipment and supplies to enable the running of five 
rigs and continued facility construction through spring breakup. 
Midstream solutions for the play were advanced during the first quarter 
with a five-year commitment from Encana and joint venture partner 
Phoenix Duvernay for transportation on the Alliance Pipeline and a five-    year rich gas sale of up to 195 million cubic feet per day (MMcf/d) to 
Aux Sable. Six wells have been completed with different versions of 
Encana's high-intensity stimulation with five of the six on or above 
type curve (100 percent to 130 percent of type curve with a range of 14 
to 350 days of history). Liquid yields continue to be very strong with 
three of the wells over 300 barrels per million cubic feet (bbl/MMcf). 
--  Tuscaloosa Marine Shale: Encana successfully restarted its drilling 
program with the last three wells (one Encana-operated and two outside-    operated) brought on production meeting or exceeding type curve 
expectations. The company also entered into an agreement with a third 
party in the first quarter to help accelerate evaluation of the play. 
Encana operates two rigs in the play.  
Encana Added to its Risk Management Program in the Quarter  
At March 31, 2014, Encana has hedged approximately 2,138 MMcf/d of expected
April to December 2014 natural gas production at an average NYMEX price of
$4.18 per thousand cubic feet (Mcf) and approximately 825 MMcf/d of expected
2015 natural gas production at an average NYMEX price of $4.37 per Mcf. In
addition, Encana has hedged approximately 15.0 Mbbls/d of expected April to
December 2014 oil production using WTI fixed price contracts at an average
price of $95.82 per bbl. 
Dividend Declared 
On May 12, 2014, the Board of Directors declared a dividend of $0.07 per share
payable on June 30, 2014 to common shareholders of record as of June 13, 2014. 
First Quarter Highlights 
Financial Summary                              
(for the period ended March 31)                                             
($ millions, except per share amounts)                   Q1 2014    Q1 2013 
Cash flow(1)                                               1,094        579 
  Per share diluted                                         1.48       0.79 
Operating earnings(1)                                        515        179 
  Per share diluted                                         0.70       0.24 
Earnings Reconciliation Summary                       
Net earnings (loss)                                          116       (431)
After tax (addition) deduction:                                             
  Unrealized hedging gain (loss)                            (203)      (266)
  Non-operating foreign exchange gain (loss)                (194)      (101)
  Income tax adjustments                                       8       (243)
  Restructuring charges                                      (10)         - 
Operating earnings(1)                                        515        179 
  Per share diluted                                         0.70       0.24 
(1) Cash flow and operating earnings are non-GAAP measures as defined in    
Note 1.                                                                      
Production Summary                             
(for the period ended March 31)                                             
(after royalties)                                Q1 2014   Q1 2013  % Change
Natural gas (MMcf/d)                               2,809     2,877       -2%
Liquids (Mbbls/d)                                   67.9      43.5       56%
First Quarter Natural Gas and Liquids Prices                
Q1 2014   Q1 2013
Natural gas                                                                 
NYMEX ($/MMBtu)                                               4.94      3.34
Encana realized gas price(1)($/Mcf)                           5.82      3.86
Oil and NGLs($/bbl)                                                         
WTI                                                          98.68     94.36
Encana realized liquids price(1)                             69.19     69.45
(1) Realized prices include the impact of financial hedging.                 
A conference call and webcast, including slides, to discuss the first quarter
results will be held for the investment community today at 7 a.m. MT (9 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 10 a.m. MT
on May 13 until midnight May 20, 2014 by dialing (855) 859-2056 or (416)
849-0833 and entering passcode 12107119. 
Encana's Annual Meeting of Shareholders is being held today (Tuesday, May
13) in the Palomino Room at the BMO Centre, Stampede Park, 20 Roundup Way S.E.,
Calgary, Alberta, beginning at 10 a.m. MT (12 p.m. ET). Live audio webcasts of
the conference call and the Annual Meeting of Shareholders, as well as
presentation slides from the Annual Meeting, will also be available on
Encana's website, www.encana.com, under Investors/Presentations &
Events. The webcasts will be archived for approximately 90 days. 
Follow Encana on Twitter @encana for updates during the company's 2014
first-quarter conference call.  
Encana Corporation 
Encana is a leading North American energy producer that is focused on
developing its strong portfolio of resource plays, held directly and indirectly
through its subsidiaries, producing natural gas, oil and natural gas liquids
(NGLs). 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. The
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, restructuring charges, 
foreign exchange gains/losses, income taxes related to divestitures and 
adjustments to normalize the effect of income taxes calculated using the 
estimated annual effective income 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. 
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: achieving the company's
focus of developing its strong portfolio of resource plays producing natural
gas, oil and NGLs; the company's plan to continue to focus investment on a
limited number of oil and liquids-rich plays; the expected success of the
company's new strategy; the accelerated transition to a more oil and
liquids-based asset portfolio through recently announced transactions; the
company's expectation to be well-positioned to capitalize on high-value
opportunities to enhance its portfolio; the expected closing dates of the East
Texas and Eagle Ford transactions and the expectation that any closing
conditions will be satisfied and regulatory approvals will be obtained; the
expectation to fund the Eagle Ford transaction with cash and anticipated
sources of funds; the company's commitment to joint venture partners and
third parties and the expectation to fulfil those commitments (including in the
Duvernay); anticipated drilling and number of rigs and the success thereof and
anticipated production from wells; anticipated well costs; anticipated cash
flow; anticipated cost reductions; anticipated oil, natural gas and NGLs
prices; anticipated dividends; and the expectation of meeting the targets in
the company's 2014 corporate guidance. 
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 2.45 Bcf/d and 2.65 Bcf/d of natural gas and 68,000 bbls/d to 73,000
bbls/d of liquids, commodity prices for natural gas and liquids based on NYMEX
$4.50 per MMBtu and WTI of $98 per bbl, an estimated U.S./Canadian dollar
foreign exchange rate of $0.90 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. 
SOURCE: Encana Corporation 
Encana Corporation
Brian Dutton
Director, Investor Relations
(403) 645-2285
Encana Corporation
Patti Posadowski
Senior Advisor, Investor Relations
(403) 645-2252
Encana Corporation
Jay Averill
Director, Media Relations
(403) 645-4747 
INDUSTRY:  Energy and Utilities - Oil and Gas  
-0- May/13/2014 10:00 GMT
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