EnCana Budgets $6.9 Billion for 2008

EnCana plans capital expenditures of about U.S. $6.9 billion in 2008, up about 13% from 2007. It remains focused on growing its key resource plays, with increased investment aimed at production growth from U.S. natural gas and longer lead-time projects such as Canadian oilsands, expanded downstream refining capacity and the advancement of the Deep Panuke natural gas project offshore Nova Scotia.

Investments in Alberta natural gas projects and new oilsands delineation work have been reduced to reflect the recent erosion of economic returns.

EnCana expects to fund its capital investment with internally generated cash flow, which is underpinned by natural gas hedges, at an average price of about $8.20 per thousand cubic feet on about 47% of its forecasted gas production from January to the end of October 2008.

EnCana expects 2008 cash flow will exceed capital expenditures resulting in free cash flow of approximately $1.5 billion, which is about 18% of estimated cash flow.

EnCana also expects to generate an estimated $500 million from divestitures in 2008. With a continued focus on a moderate and sustainable pace of growth and capital discipline, EnCana plans to continue returning free cash flow to shareholders through an ongoing program of dividends and share purchases.

Consistent with the company's focus on shareholder value creation, EnCana plans to double its dividend in 2008. Board approval of the planned increase in 2008 would result in an annual dividend of $1.60 per share, increasing the yield to about 2.4% at the current share price.

EnCana also expects to purchase about 2% of its shares in 2008 under its Normal Course Issuer Bid program.

"In recent years, we have redesigned the company to focus on our core strength - North American unconventional resource development," said EnCana President and CEO Randy Eresman. "We capture large, early-life resource plays; we rigorously seek technical and commercial solutions to enhance their value; we use a manufacturing approach to development and target a sustainable level of production growth of about five percent a year."

EnCana expects to grow 2008 natural gas production by about 7%, while oil and natural gas liquids production is expected to decrease slightly, resulting in a total production increase of about 5% to about 4.6 billion cubic feet equivalent per day. On a per share basis, gas production is expected to increase about 8%, while total production is forecast to increase about 7% per share.


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