Rapid Portfolio Transition, Robust Liquids Growth Among Highlights of Encana's Strong Second Quarter

Rapid Portfolio Transition, Robust Liquids Growth Among Highlights of Encana's 
Strong Second Quarter 
FOR: Encana Corporation 
JULY 24, 2014 
Rapid Portfolio Transition, Robust Liquids Growth Among Highlights of
Encana's Strong Second Quarter 
CALGARY, ALBERTA--(Marketwired - July 24, 2014) - Encana's
(TSX:ECA)(NYSE:ECA) strong second quarter of 2014 saw the company continue to
make faster than expected progress in the execution of its strategy, with the
reporting period highlighted by the acquisition of Eagle Ford assets for a
sixth growth area, the highly successful initial public offering (IPO) of
PrairieSky Royalty Ltd. (PrairieSky) and impressive liquids production growth.  
"We had a strong second quarter off of the back of a very good first
quarter, and we're meeting or exceeding our targets in every area of our
business since announcing our new strategy eight months ago," says Doug
Suttles, Encana's President & CEO. "The divestitures that we
executed over the past three months have unlocked value from our asset base and
simplified our business model, allowing us to stay focused on our highest-value
opportunities. This was complemented by strong operating performance that saw
our teams deliver on liquids growth targets and achieve significant
The company achieved strong second quarter liquids growth from the five growth
areas identified in last November's strategy launch. Oil production of
34,200 barrels per day (bbls/d) represented a 49 percent year-over-year
increase, while 34,000 bbls/d of natural gas liquids production represented 38
percent growth. Year-to-date, the growth areas have received approximately 80
percent of Encana's total capital investment and recorded a 50 percent
increase in net wells drilled. 
"We have been growing our liquids production more quickly than
expected," says Suttles. "We are making excellent progress in our
growth areas while at the same time delivering stronger than expected results
from our base assets. Our operational performance and continued attention to
cost efficiencies are helping to drive us towards higher margins and more
profitable growth." 
The transaction to acquire a sixth growth area in the Eagle Ford play closed on
June 20, accelerating Encana's liquids production growth as the south
Texas-based play is projected to double the company's current oil
production. Natural gas production for the second quarter, meanwhile, was
slightly over 2.5 billion cubic feet per day (Bcf/d), down eight percent on a
year-over-year basis primarily due to recent divestitures of large natural
gas-producing properties. 
Encana generated cash flow of approximately $656 million or $0.89 per share in
the second quarter of 2014; operating earnings of $171 million or $0.23 per
share; and net earnings attributable to common shareholders of $271 million or
$0.37 per share. Year-to-date, the company has reported cash flow of
approximately $1.8 billion for a 41 percent rise year-over-year, while $686
million in operating earnings and $387 million in net earnings attributable to
common shareholders are increases of 61 percent and 29 percent, respectively,
from 2013 levels. 
Encana continued to enhance its financial strength through a quarter of rapid
portfolio transition. Proceeds received from the IPO and divestitures
transactions, along with year-to-date free cash flow of approximately $679
million, contributed to a strong period-end balance of approximately $2.7
billion in cash and cash equivalents. As a result of the strong results
achieved thus far in 2014, the company has increased its cash flow guidance
from $2.9-$3.0 billion to $3.4-$3.6 billion. Encana has also increased its
upstream capital investment guidance to $2.6-$2.7 billion, up from $2.3-$2.4
billion, largely attributable to the planned capital expenditures in the newly
acquired Eagle Ford position.  
The company also now expects 2014 total liquids production of 86,000 to 91,000
bbls/d, up from previous guidance projections of 68,000 to 73,000 bbls/d. 
"We continue to successfully execute on our strategy and meet our key
benchmarks," says Suttles. "We are transitioning our portfolio while
delivering strong operating performance and maintaining the balance sheet
strength necessary for us to be opportunistic. Our second quarter results have
us well positioned for further success in the second half of the year." 
The updated 2014 guidance can be downloaded from
Activities in the quarter 
--  Completed the acquisition of certain properties in the Eagle Ford play 
in south Texas for approximately $2.9 billion, after closing 
--  Entered into an agreement with Jupiter Resources Inc. to sell Encana's 
Bighorn assets in west-central Alberta for approximately $1.8 billion, 
before closing adjustments. This transaction is expected to close by the 
end of the third quarter of 2014. 
--  Closed the sale of natural gas properties in Wyoming's Jonah field for 
proceeds of approximately $1.6 billion, after closing adjustments. 
--  Closed the majority of the sale of East Texas properties for proceeds of 
approximately $427 million of the total anticipated purchase price of 
approximately $530 million. It is expected the balance of the 
transaction will close in the third quarter of 2014. 
--  Entered into an agreement to sell Encana's Cavalier power plant near 
Strathmore, Alberta, as well as the company's 50 percent interest in a 
power plant in Balzac, Alberta. 
--  Divested a majority of the U.S.-based assets of Encana Natural Gas Inc., 
an indirect, wholly owned subsidiary. 
--  Sold interest, including liquefied natural gas (LNG) equipment, in the 
Elmworth, Alberta LNG production facility. 
--  Completed the IPO of 52.0 million common shares of PrairieSky on May 29, 
2014, at an offering price of C$28.00 per common share. On June 3, 2014, 
Encana announced that the over-allotment option granted to the 
underwriters to purchase up to an additional 7.8 million common shares 
at a price of C$28.00 per common share was exercised in full. The 
aggregate proceeds from the IPO were approximately C$1.67 billion. 
Subsequent to the IPO, Encana owns 70.2 million common shares of 
PrairieSky, representing a 54 percent ownership interest.  
Operational highlights 
--  DJ Basin: Drilling cycle times are averaging three days below the 2013 
average of 14 days. During the second quarter, Encana successfully 
drilled three 10,000-foot laterals as the company continued to optimize 
well design. 
--  Montney: Seven wells brought on stream in the second quarter are 
exceeding expectations with initial production rates of 12 to 14 million 
cubic feet per day (MMcf/d). The company is currently drilling on three 
pad sites in the Pipestone area and achieving drilling costs of about $3 
million per well, a nine percent improvement compared to the first 
quarter of 2014. 
--  San Juan: Encana continues to advance commercial development with second 
and third rigs added into the play during the second quarter. Well 
performance has consistently been at or above expectations with initial 
production rates between 400 to 500 bbls/d of oil. Encana continues to 
work with the Bureau of Land Management to streamline the well 
permitting process. 
--  Duvernay: Encana is currently drilling on three eight-well pads in the 
Simonette area of the play. Ten high-intensity completion horizontal 
wells in Simonette are meeting or exceeding expectations, with initial 
production averaging about 1,300 barrels of oil equivalent per day 
(boe/d) per well. Spud to rig release times have improved by an average 
of 17 days since the first quarter, resulting in cost savings of 
approximately $1.5 million per well. Five rigs are currently running in 
the play. 
--  Tuscaloosa Marine Shale: All wells drilled in the play so far in 2014 
are generally meeting expectations. Six net wells have been drilled 
year-to date and two rigs will run through to year-end. 
--  Eagle Ford: Encana completed the acquisition of its Eagle Ford position 
on June 20. Three rigs are currently operating in the area and one 
additional rig is scheduled by year-end.  
Encana added to its risk management program in the quarter 
At June 30, 2014, Encana has hedged approximately 2,138 MMcf/d of expected July
to December 2014 natural gas production at an average price of $4.17 per
thousand cubic feet (Mcf) and approximately 825 MMcf/d of expected 2015 natural
gas production at an average price of $4.37 per Mcf. In addition, Encana has
hedged approximately 30.4 thousand barrels per day (Mbbls/d) of expected July
to December 2014 oil production using WTI fixed price contracts at an average
price of $97.34 per bbl. 
Dividend declared 
On July 23, 2014, the Board declared a dividend of $0.07 per share payable on
September 30, 2014, to common shareholders of record as of September 15, 2014. 
Second Quarter Highlights                         
Financial Summary                             
(for the period ended June 30)                                  Q2        Q2
($ millions, except per share amounts)                        2014      2013
Cash flow(1)                                                   656       665
 Per share diluted                                            0.89      0.90
Operating earnings(1)                                          171       247
 Per share diluted                                            0.23      0.34
Earnings Reconciliation Summary                                
Net earnings attributable to common shareholders               271       730
 After tax (addition) deduction:                                            
 Unrealized hedging gain (loss)                                  8       332
 Restructuring charges                                         (5)         -
 Non-operating foreign exchange gain (loss)                    156     (162)
 Gain (loss) on divestiture                                    135         -
 Income tax adjustments                                      (194)       313
Operating earnings(1)                                          171       247
 Per share diluted                                            0.23      0.34
(1) Cash flow and operating earnings are non-GAAP measures as defined in    
Note 1 on page 4.                                                            
Production Summary                       
(for the period ended June 30)             Q2        Q2          
(After royalties)                        2014      2013  % Change
Natural gas (MMcf/d)                    2,541     2,766        -8
Liquids (Mbbls/d)                        68.2      47.6       +43
Second Quarter Natural Gas and Liquids Prices      
Q2        Q2 
2014      2013
Natural gas                                               
NYMEX ($/MMBtu)                             4.67      4.09
Encana realized gas price(1)($/Mcf)         4.08      4.17
Oil and NGLs ($/bbl)                                      
WTI                                       102.99     94.17
Encana realized liquids price(1)           69.53     68.25
(1) Realized prices include the impact of financial hedging.                 
A conference call and webcast to discuss the second quarter 2014 results will
be held for the investment community today at 7 a.m. MT (9 a.m. ET). To
participate, please dial (877) 223-4471 (toll-free in North America) or (647)
788-4922 approximately 10 minutes prior to the conference call. An archived
recording of the call will be available from approximately 10 a.m. MT on July
24 until 11:59 p.m. MT on July 31, 2014 by dialing (800) 585-8367 or (416)
621-4642 and entering passcode 70785283. A live audio webcast of the conference
call, including slides, 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 second
quarter 2014 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. Free 
cash flow is a non-GAAP measure defined as cash flow in excess of 
capital investment, excluding net acquisitions and divestitures, and is 
used to determine the funds available for other investing and/or 
financing activities. 
--  Operating earnings is a non-GAAP measure defined as net earnings 
attributable to common shareholders 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, 
gains/losses on divestitures, 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. 
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 company's expectation to
meet or exceed the targets in every area of the business; maintaining
operational excellence, balance sheet strength and a balanced commodity
portfolio; the company's expectation to be well positioned for further
success in the second half of the year; the accelerated transition to a more
oil and liquids-based asset portfolio through recently announced transactions;
the expectation that the Eagle Ford play will double the company's current
oil production; the company's expectation to continue to successfully
execute on its strategy and meet key benchmarks; the expected closing dates of
the Bighorn and East Texas transactions and the expectation that any closing
conditions will be satisfied and regulatory approvals will be obtained; the
anticipated purchase price for the East Texas properties; anticipated drilling
and number of rigs and the success thereof and anticipated production from
wells (including in the DJ Basin, Montney, San Juan, Duvernay and Tuscaloosa
Marine Shale growth areas); anticipated well costs; anticipated capital
expenditures for 2014; anticipated cash flow for 2014; 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 2.40 Bcf/d and 2.50 Bcf/d of natural gas and 86,000 bbls/d to 91,000
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. 
Further information on Encana Corporation is available on the company's
website, www.encana.com. 
SOURCE: Encana Corporation 
Encana Corporation
Investor contact:
Brian Dutton
Director, Investor Relations
(403) 645-2285
Encana Corporation
Investor contact:
Patti Posadowski
Sr. Advisor, Investor Relations
(403) 645-2252
Encana Corporation
Media contact:
Jay Averill
Director, Media Relations
(403) 645-4747
Encana Corporation
Media contact:
Doug McIntyre
Advisor, Media Relations
(403) 645-6553 
INDUSTRY:  Energy and Utilities - Oil and Gas  
-0- Jul/24/2014 10:00 GMT
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