EnCana Ups Cash Flow, Doubles Dividend

EnCana Corp. on Thursday reported a 3 percent increase in 2006 cash flow per share diluted to US$8.56, or $7.2 billion. Total operating earnings per share diluted in 2006 increased 7 percent to $3.91, or $3.27 billion. Net earnings per share diluted were $6.76, or $5.65 billion, which includes after-tax gains of $2.38 billion due to unrealized mark-to-market accounting for commodity price hedges, gains on sales of discontinued operations and tax rate changes.

Natural gas and oil reserves added through drilling replaced 197 percent of EnCana's 2006 production in continuing operations and increased North American proved reserves by 9 percent to 19.2 trillion cubic feet of gas equivalent (Tcfe). Finding and development costs in total operations were $1.99 per thousand cubic feet equivalent (Mcfe).

Strong financials, resource play production grows 12 percent

"EnCana achieved strong financial results and solid operating performance in 2006. We continued to fortify our future by adding close to double the proved reserves that we produced in 2006, at a competitive cost of about $2 per thousand cubic feet equivalent. Our natural gas production was up 4 percent, while our key resource play production grew 12 percent year- over- year. We achieved all this in a tough operating environment for the industry marked by record breaking activity levels," said Randy Eresman, EnCana's President & Chief Executive Officer.

Transformation to unconventional gas and oil complete

"The year also marked the completion of EnCana's transformation into essentially a pure North American producer focused on unconventional natural gas and integrated oilsands - a strategic position that we believe will create sustainable profitable growth for our company. All of EnCana's production and reserves are now onshore North America," Eresman said.

Dividend doubled

"As a reflection of our increased confidence in the sustainable nature of our North American unconventional business model, the board of directors has doubled our quarterly dividend to 20 cents per share," Eresman said.

    2006 Highlights
    ---------------

    Financial
      -   Cash flow per share diluted increased 3 percent to $8.56
      -   Operating earnings per share diluted up 7 percent to $3.91
      -   Net earnings per share diluted up 76 percent to $6.76
      -   Generated $892 million in free cash flow (as defined in Note 1 on
          page 8)
      -   Net divestitures of $3.0 billion, resulting in net capital
          investment of $3.3 billion
      -   Purchased 85.6 million EnCana shares at an average share price of
          $49.26 under the Normal Course Issuer Bid for a total cost of
          $4.2 billion
      -   Reduced shares outstanding at year end by 9 percent, net of share
          option exercises
      -   At year end, net debt-to-adjusted-EBITDA was 0.6 times and net
          debt-to-capitalization was 27 percent

    Operating
      -   Key resource play production up 12 percent
      -   Natural gas production of 3.37 billion cubic feet per day (Bcf/d),
          up 4 percent
      -   Oil and natural gas liquids (NGLs) production of about
          167,100 barrels per day (bbls/d), down 26 percent, primarily due to
          the sale of Ecuador oil assets, which produced an average of
          12,366 bbls/d in 2006
      -   Operating costs of 86 cents per thousand cubic feet equivalent
          (Mcfe) for continuing operations, up 21 percent due to inflation, a
          stronger Canadian dollar and higher electricity costs
      -   Upstream capital investment in continuing operations of
          $6.2 billion

    Reserves
      -   Added 3.1 Tcfe of proved reserves with drill bit additions and
          revisions in continuing operations
      -   Added 2.3 Tcfe of proved reserves in total operations, taking into
          account the sale of about 822 billion cubic feet equivalent (Bcfe)
          of proved reserves largely as a result of the Ecuador divestiture
      -   Proved reserves additions included 160 million bbls (960 Bcfe) at
          the Foster Creek and Christina Lake oilsands key resource plays
      -   Proved reserves increased 9 percent in continuing operations and
          4 percent in total operations to 19.2 Tcfe
      -   Finding and development (F&D) costs averaged $1.99 per Mcfe for
          total operations
      -   Production replacement of 197 percent for continuing operations;
          144 percent for total operations, which includes the sale of
          Ecuador reserves
      -   Average three-year reserve replacement cost of $1.56 per Mcfe for
          continuing operations; $1.34 per Mcfe for total operations

    2006 strategic results
      -   Created an integrated heavy oil business with ConocoPhillips
          composed of two 50/50 entities - one upstream and one downstream -
          which became effective January 2, 2007. The integrated business
          intends to produce 400,000 barrels of Canadian bitumen and refine
          275,000 barrels of bitumen at two U.S. refineries by 2015.
      -   Completed sale of Ecuador assets for $1.1 billion and sale of
          interest in Brazil oil discovery for proceeds of $367 million
      -   Sold natural gas storage business for $1.5 billion
      -   Received environmental impact statement approval for Jonah gas
          field, which enables advancing toward full development of this key
          resource play


    -------------------------------------------------------------------------
                   Financial Summary - Total Consolidated
    -------------------------------------------------------------------------
     (for the period
      ended December 31)
     ($ millions, except    Q4       Q4      %                          %
      per share amounts)   2006     2005   change     2006     2005   change
    -------------------------------------------------------------------------
    Cash flow             1,761    2,510     - 30    7,161    7,426      - 4
      Per share diluted    2.18     2.88     - 24     8.56     8.35      + 3
    -------------------------------------------------------------------------
    Net earnings            663    2,366     - 72    5,652    3,426     + 65
      Per share diluted    0.82     2.71     - 70     6.76     3.85     + 76
    -------------------------------------------------------------------------
    Operating earnings(1)   675    1,271     - 47    3,271    3,241      + 1
      Per share diluted    0.84     1.46     - 42     3.91     3.64      + 7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
            Earnings Reconciliation Summary - Total Consolidated
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings from
     continuing
     operations             643    1,869     - 66    5,051    2,829     + 79
    Net earnings from
     discontinued
     operations              20      497     - 96      601      597      + 1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Earnings            663    2,366     - 72    5,652    3,426     + 65
    (Add back losses &
     deduct gains)
    Unrealized mark-to-
     market hedging gain
     (loss), after-tax       95      746             1,370     (277)

    Unrealized foreign
     exchange gain (loss)
     on translation of
     U.S. dollar debt
     issued in Canada,
     after-tax             (128)     (21)                -       92

    Future tax recovery
     due to Canada and
     Alberta tax rate
     reductions               -        -               457        -

    Gain on sale of
     discontinued
     operations,
     after-tax(2)            21      370               554      370
    -------------------------------------------------------------------------
    Operating earnings      675    1,271     - 47    3,271    3,241      + 1
      Per share diluted    0.84     1.46     - 42     3.91     3.64      + 7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Operating earnings is a non-GAAP measure that shows net earnings
        excluding non-operating items such as the after-tax impacts of the
        gain on the sale of discontinued operations, the after-tax gain/loss
        on unrealized mark-to-market accounting for derivative instruments,
        the after-tax gain/loss on translation of U.S. dollar denominated
        debt issued in Canada and the effect of the reduction in income tax
        rates.
    (2) In 2006, gain on sale of natural gas storage business and loss on
        sale of Ecuador assets


    -------------------------------------------------------------------------
    Cash flow information 2006
    (for the period ended December 31, $ millions)               Q4     2006
    -------------------------------------------------------------------------
    Cash from Operating Activities                            1,697    7,973
    Deduct (Add back):
      Net change in other assets and liabilities                 90      138
      Net change in non-cash working capital from
       continuing operations                                     39    3,343
      Net change in non-cash working capital from
       discontinued operations                                 (193)  (2,669)
    -------------------------------------------------------------------------
    Cash Flow(3)                                              1,761    7,161
    Cash flow from Discontinued Operations                       19      118
    -------------------------------------------------------------------------
    Cash flow from Continuing Operations                      1,742    7,043
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (3) 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 from continuing operations and net
        change in non-cash working capital from discontinued operations, all
        of which are defined in the Consolidated Statement of Cash Flows.



    -------------------------------------------------------------------------
                          Sales & Drilling Summary
    -------------------------------------------------------------------------
                             Total Consolidated
    -------------------------------------------------------------------------
    (for the period
     ended December 31)     Q4       Q4      %                          %
    (After royalties)      2006     2005   change     2006     2005   change
    -------------------------------------------------------------------------
    Natural Gas sales
     (MMcf/d)             3,406    3,326      + 2    3,367    3,227      + 4
    -------------------------------------------------------------------------
      Natural gas sales
       per 1,000 shares
       (Mcf)                395      358     + 10    1,499    1,357     + 10
    -------------------------------------------------------------------------
    Oil and NGLs sales
     (bbls/d)           152,154  229,232     - 34  167,070  227,065     - 26
    -------------------------------------------------------------------------
      Oil and NGLs sales
       per 1,000 shares
       (Mcfe)               106      148     - 28      446      573     - 22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total sales
     (MMcfe/d)            4,319    4,701      - 8    4,369    4,589      - 5
    -------------------------------------------------------------------------
      Total sales per
       1,000 shares (Mcfe)  501      506      - 1    1,945    1,929      + 1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net wells drilled       809    1,146     - 29    3,657    4,676     - 22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                            Continuing Operations
    -------------------------------------------------------------------------
    North America Natural
     Gas sales (MMcf/d)   3,406    3,326      + 2    3,367    3,227      + 4
    -------------------------------------------------------------------------
    North America Oil
     and NGLs (bbls/d)  152,154  159,289      - 4  154,704  156,000      - 1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total sales
     (MMcfe/d)            4,319    4,282      + 1    4,295    4,163      + 3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net wells drilled       809    1,138     - 29    3,650    4,658     - 22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    

Resource play growth
--------------------

Key resource play production grows 12 percent in 2006

EnCana's production growth continues to be led by its 12 key resource plays, which grew by about 12 percent in 2006 and comprise about 62 percent of total production. The strongest growth came from the company's coalbed methane (CBM) production in central and southern Alberta, Bighorn in west central Alberta, Cutbank Ridge in northeast British Columbia and Fort Worth in Texas. In-situ oilsands production from EnCana's Foster Creek steam- assisted gravity drainage project grew about 27 percent in 2006.


                Growth from key North American resource plays

    -------------------------------------------------------------------------
                                                   Daily Production
                                      ---------------------------------------
    Resource Play                                        2006
                                      ---------------------------------------
                                        Full
                                        Year      Q4      Q3      Q2      Q1
    -------------------------------------------------------------------------
    Natural Gas            (MMcf/d)
    Jonah                                464     487     455     450     461
    Piceance                             326     335     331     324     316
    East Texas                            99      95     106      93      99
    Fort Worth                           101      99     104     108      93
    Greater Sierra                       213     212     209     224     208
    Cutbank Ridge                        170     199     167     173     140
    Bighorn                               91      99      97      95      72
    CBM(1)                               194     211     209     179     177
    Shallow Gas                          600     601     593     590     615
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil                    (Mbbls/d)
    Foster Creek                          37      41      37      33      36
    Christina Lake                         6       6       6       6       6
    Pelican Lake                          24      20      23      22      29
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total                  (MMcfe/d)   2,656   2,740   2,668   2,601   2,609
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    % change from prior
     year's period                      12.3     6.7    12.1    12.5    18.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                   Daily Production
                                      ---------------------------------------
    Resource Play                                       2005
                                      ---------------------------------------
                                        Full
                                        Year      Q4      Q3      Q2      Q1
    -------------------------------------------------------------------------
    Natural Gas            (MMcf/d)
    Jonah                                435     454     440     416     431
    Piceance                             307     326     302     302     300
    East Texas                            90      98      94      85      82
    Fort Worth                            70      88      66      63      61
    Greater Sierra                       219     226     225     228     195
    Cutbank Ridge                         92     125     105      80      56
    Bighorn                               55      56      57      53      56
    CBM(1)                               112     165     117     104      59
    Shallow Gas                          625     625     616     633     625
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil                    (Mbbls/d)
    Foster Creek                          29      35      27      24      30
    Christina Lake                         5       5       6       7       4
    Pelican Lake                          26      28      27      27      21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total                  (MMcfe/d)   2,366   2,567   2,381   2,312   2,197
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    % change from prior
     year's period                      20.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) CBM 2005 volumes restated to report commingled gas volumes from the
        coal and sand intervals based on regulatory approval.


               Drilling activity in key North American resource plays

    -------------------------------------------------------------------------
                                                  Net Wells Drilled
                                      ---------------------------------------
    Resource Play                                        2006
                                      ---------------------------------------
                                        Full
                                        Year      Q4      Q3      Q2      Q1
    -------------------------------------------------------------------------
    Natural Gas
    Jonah                                163      41      48      48      26
    Piceance                             220      50      48      59      63
    East Texas                            59      11      12      17      19
    Fort Worth                            97      19      22      27      29
    Greater Sierra                       115       5      16      34      60
    Cutbank Ridge                        116      19      35      36      26
    Bighorn                               52       7       7      18      20
    CBM(1)                               729     157     156      35     381
    Shallow Gas                        1,164     326     442     199     197
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil
    Foster Creek                           6       -       -       -       6
    Christina Lake                         2       -       -       -       2
    Pelican Lake                           -       -       -       -       -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total net wells                    2,723     635     786     473     829
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                  Net Wells Drilled
                                      ---------------------------------------
    Resource Play                                       2005
                                      ---------------------------------------
                                        Full
                                        Year      Q4      Q3      Q2      Q1
    -------------------------------------------------------------------------
    Natural Gas
    Jonah                                104      21      25      30      28
    Piceance                             266      55      69      65      77
    East Texas                            84      20      21      22      21
    Fort Worth                            59      20      18      12       9
    Greater Sierra                       164      25      33      47      59
    Cutbank Ridge                        135      34      40      38      23
    Bighorn                               51      20      10      10      11
    CBM(1)                             1,245     344     314     242     345
    Shallow Gas                        1,267     288     341     365     273
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil
    Foster Creek                          39      13      14       2      10
    Christina Lake                         -       -       -       -       -
    Pelican Lake                          52       -       3      33      16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total net wells                    3,466     840     888     866     872
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) CBM 2005 wells restated to report commingled gas drilling from the
        coal and sand intervals based on regulatory approval.


Year-end 2006 proved reserves
-----------------------------

EnCana achieved 9 percent growth in proved reserves from continuing operations at a competitive finding and development cost of less than $2.00 per Mcfe

    Total natural gas and liquids proved reserves
      -   Proved reserves increased 4 percent to 19.2 Tcfe
      -   Proved reserves in North America (continuing operations) increased
          9 percent
      -   Proved reserves additions were 3.1 Tcfe in continuing operations,
          compared to production of 1.6 Tcfe
    Natural gas reserves
      -   Proved gas reserves increased 5 percent to 12.4 Tcf
      -   Proved gas additions were 1.9 Tcf, compared to production of
          1.2 Tcf
      -   Gas production replacement of 152 percent
    Oil and NGLs reserves
      -   Proved oil and NGLs reserves in continuing operations increased
          15 percent to 1.1 billion bbls
      -   Proved oil and NGLs additions in continuing operations were
          205 million bbls, compared to production of 57 million bbls
      -   Oil and NGLs production replacement of 357 percent in continuing
          operations
    Bitumen reserves (included in oil and NGLs)
      -   Bitumen reserves up 22 percent to 800 million bbls
      -   Proved bitumen additions were 160 million bbls compared to
          production of 17 million bbls
    Reserves additions costs
      -   Total three-year reserves replacement cost averaged $1.34 per Mcfe
      -   Total 2006 finding and development cost of $1.99 per Mcfe

All of EnCana's proved reserves are evaluated by independent qualified reserves evaluators.

------------------------------------------------------------------------- 2006 Proved Reserves Reconciliation ------------------------------------------------------------------------- Crude oil and Natural gas Natural Gas Liquids (Bcf) (MMbbls) ------------------------------------------------------------------------- Canada USA Total Canada Canada Canada Conv. Bitumen Total ------------------------------------------------------------------------- Start of 2006 6,517 5,267 11,784 275.1 657.4 932.5 Revisions & improved recovery 301 (88) 213 27.5 (66.5) (39.0) Extensions & discoveries 1,014 606 1,620 12.6 226.1 238.7 Acquisitions - 68 68 - - - Divestitures (6) (32) (38) (0.1) - (0.1) Production (798) (431) (1,229) (35.3) (17.4) (52.7) ------------------------------------------------------------------------- ------------------------------------------------------------------------- End of 2006 7,028 5,390 12,418 279.8 799.6 1,079.4 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Developed 4,718 2,964 7,682 215.3 101.6 316.9 ------------------------------------------------------------------------- Undeveloped 2,310 2,426 4,736 64.5 698.0 762.5 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total ------------------------------------------------------------------------- ------------------------------------------------------------------------- % Change(2) + 8 + 2 + 5 + 2 + 22 + 16 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Partnership contribution(3) - - - - (398.0) (398.0) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Effective Jan. 2, 2007 7,028 5,390 12,418 279.8 401.6 681.4 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ----------------------------------------------------------------- 2006 Proved Reserves Reconciliation ----------------------------------------------------------------- Crude oil and Natural Gas Liquids Gas Equivalent(1) (MMbbls) (Bcfe) ----------------------------------------------------------------- USA Ecuador Total Total Continuing Ops.(4) ----------------------------------------------------------------- Start of 2006 53.1 135.0 1,120.6 18,507 17,697 Revisions & improved recovery (1.1) - (40.1) (27) (27) Extensions & discoveries 6.4 - 245.1 3,091 3,091 Acquisitions 0.3 - 0.3 69 69 Divestitures - (130.6) (130.7) (822) (38) Production (4.7) (4.4) (61.8) (1,600) (1,574) ----------------------------------------------------------------- ----------------------------------------------------------------- End of 2006 54.0 - 1,133.4 19,218 19,218 ----------------------------------------------------------------- ----------------------------------------------------------------- Developed 33.5 - 350.4 9,784 9,784 ----------------------------------------------------------------- Undeveloped 20.5 - 783.0 9,434 9,434 ----------------------------------------------------------------- ----------------------------------------------------------------- Total 19,218 19,218 ----------------------------------------------------------------- ----------------------------------------------------------------- % Change(2) + 2 + 1 + 4 + 9 ----------------------------------------------------------------- ----------------------------------------------------------------- Partnership contribution(3) - - (398.0) (2,388) (2,388) ----------------------------------------------------------------- ----------------------------------------------------------------- Effective Jan. 2, 2007 54.0 - 735.4 16,830 16,830 ----------------------------------------------------------------- ----------------------------------------------------------------- (1) Gas equivalency has been calculated by EnCana. See the Advisory Regarding Reserves Data and Other Oil and Gas Information accompanying this release. (2) EnCana's growth in proved reserves in 2006 is expressed as the percentage change from the start to the end of the year. (3) Effective January 2, 2007, EnCana established a heavy oil integration arrangement with ConocoPhillips, resulting in ConocoPhillips acquiring a 50 percent interest in EnCana's Foster Creek and Christina Lake oilsands projects and EnCana acquiring a 50 percent interest in ConocoPhillips' Wood River and Borger refineries. (4) Continuing operations are composed of North American operations, and exclude the Ecuador assets, which were sold in 2006. ------------------------------------------------------------------------- Proved Reserves Costs ------------------------------------------------------------------------- Cumulative Capital investment ($ millions) 2006 2005 2004 2004-06 ------------------------------------------------------------------------- Finding and development 6,107 6,231 4,792 17,130 Acquisitions 368 472 3,469 4,309 Divestitures (1,639) (2,552) (3,827) (8,018) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net capital investment 4,836 4,151 4,434 13,421 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total reserve additions (Bcfe) 2,311 4,542 3,163 10,016 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 3-year ($/Mcfe) average ------------------------------------------------------------------------- ------------------------------------------------------------------------- Reserve replacement cost 2.09 0.91 1.40 1.34 ------------------------------------------------------------------------- Finding, development and acquisition cost 2.07 1.36 1.70 1.66 ------------------------------------------------------------------------- Finding and development cost 1.99 1.29 1.44 1.52 ------------------------------------------------------------------------- ------------------------------------------------------------------------- NOTE: This table excludes the impact of the bitumen reserves revisions of 2004 and bitumen reserves reinstatement in 2005. 2006 natural gas and oil prices ------------------------------- ------------------------------------------------------------------------- 2006 Natural Gas and Oil Prices (excludes financial hedging) ------------------------------------------------------------------------- Q4 Q4 % % Natural gas ($/Mcf) 2006 2005 change 2006 2005 change ------------------------------------------------------------------------- NYMEX Price 6.55 12.96 - 49 7.22 8.62 - 16 EnCana Realized Gas Price 5.79 10.29 - 44 6.25 7.46 - 16 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Oil and NGLs ($/bbl) ------------------------------------------------------------------------- WTI Price 60.17 60.05 + 1 66.25 56.70 + 17 Western Canada Select (WCS) 39.08 36.40 + 7 44.69 36.39 + 23 Differential WTI/WCS 21.09 23.65 - 11 21.56 20.31 + 6 EnCana Realized Liquids Price 38.69 37.16 + 4 43.71 36.17 + 21 ------------------------------------------------------------------------- -------------------------------------------------------------------------

Price risk management

Detailed risk management positions at December 31, 2006 are presented in Note 14 to the 2006 unaudited interim consolidated financial statements. In 2006, EnCana's financial price risk management measures resulted in realized gains of approximately $270 million after-tax, composed of a $386 million gain on gas hedges, a $126 million loss on oil hedges and a $10 million gain on other hedges.

More than 50 percent of expected 2007 natural gas and liquids production has downside price protection

In 2007 EnCana has about 1.76 Bcf/d of expected gas production with downside price protection, composed of 1.52 Bcf/d under fixed price contracts at an average NYMEX equivalent price of $8.49 per Mcf and 240 million cubic feet per day with put options at a NYMEX equivalent strike price of $6.00 per Mcf. In oil, EnCana has about 126,000 bbls/d of expected 2007 oil production with downside price protection, composed of 34,500 bbls/d under fixed price contracts at an average West Texas Intermediate (WTI) price of $64.40 per bbl, plus put options on 91,500 bbls/d at an average strike price of WTI $55.34 per bbl. This price hedging strategy helps reduce uncertainty in cash flow during periods of commodity price volatility.

2007 gas production forecast to increase 9 percent per share

In 2007, natural gas production, which represents more than 80 percent of EnCana's production, is expected to increase about 3 percent, or 9 percent per share based on expected share purchases, to about 3.46 Bcf/d. Oil production is expected to average about 138,000 bbls/d. Total production in 2007, prior to the allocation of oilsands volumes to ConocoPhillips as part of the heavy oil integration, was expected to be up 4 percent. With the creation of the integrated oilsands business, EnCana expects 2007 total production to be about 4.28 Bcfe/d, about the same as in 2006, or an increase of about 4 percent per share.

Corporate developments
----------------------

Quarterly dividend increased 100 percent to 20 cents per share

EnCana's board of directors declared a quarterly dividend of 20 cents per share, which is payable on March 30, 2007 to common shareholders of record as of March 15, 2007. This is double the amount of the previous quarterly dividend.

EnCana Normal Course Issuer Bid purchases

In 2006, EnCana purchased about 85.6 million common shares, representing approximately 10 percent of the company's outstanding shares on December 31, 2005, at an average price of approximately $49.26 per common share. As at December 31, 2006 there were approximately 778 million common shares issued and outstanding in total. EnCana plans to fund its continuing Normal Course Issuer Bid purchases with cash flow and proceeds from potential divestitures. To date in 2007, EnCana has purchased about 10.8 million shares at an average cost of $45.64 per share.

Financial strength
------------------

EnCana targets a net debt-to-capitalization ratio between 30 and 40 percent. EnCana's balance sheet strengthened during 2006. At December 31, 2006, the company's net debt-to-capitalization ratio was 27:73, down from 33:67 at the end of 2005. EnCana's net debt-to-adjusted-EBITDA multiple, on a trailing 12-month basis, was 0.6 times at the end of 2006, down from 1.1 times at the end of 2005.

With an enterprise value of approximately US$45 billion, EnCana is a leading North American unconventional natural gas and integrated oilsands company.

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