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 
CALGARY, ALBERTA -- (Marketwired) -- 07/24/14 --   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 year-over-year  
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
"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
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.                

Aconference 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
NOTE 1: Non-GAAP measures  
This news release contains references to non-GAAP measures as

--  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. 
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. 
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: 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 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 2.40 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
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
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