"We plan to complete the purchase of 10 percent of our outstanding shares by year-end 2006, up from the 7.1 percent purchased to date, and to target additional share purchases in 2007 with proceeds from our planned divestitures. In addition, with a significant hedging program in place, we expect substantial free cash flow would be generated that could be used for additional share purchases, debt reduction or increased dividends," said Randy Eresman, EnCana's President & Chief Executive Officer.
For 2007, more than half of EnCana's expected gas and oil sales hedged with downside price protection.
EnCana has about 1.71 billion cubic feet per day (Bcf/d) of expected 2007 gas sales with downside price protection, comprised of 1.47 Bcf/d under fixed price contracts at an average price of $8.46 per thousand cubic feet (Mcf) and 240 million cubic feet per day with put options at a strike price of $6.00 per Mcf. In oil, EnCana has about 126,000 barrels per day (bbls/d) of expected 2007 oil sales with downside price protection, comprised of 34,500 bbls/d under fixed price contracts at an average price of $64.40 per barrel, plus put options on 48,500 bbls/d at $65.00 per barrel and 43,000 bbls/d at an average price of $44.44 a barrel. This price hedging strategy helps assure that cash flow is adequate to fund EnCana's capital programs.
Purchases under the renewed NCIB may commence on November 6, 2006 and may be made until November 5, 2007. Purchases will be made on the open market through the facilities of the TSX in accordance with its policies, and may also be made through the facilities of the New York Stock Exchange (NYSE) in accordance with its rules. Approval of the bid is not required from the NYSE. The price to be paid will be the market price at the time of acquisition. EnCana believes that the purchase of its common shares will help create value for the company's shareholders.
With an enterprise value of approximately US$45 billion, EnCana is a leading North American natural gas producer and a technical and cost leader in the in-situ recovery of oilsands bitumen. 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.
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