EnCana Generates Strong Increase in 3Q Cash Flow

EnCana generated strong increases in cash flow and operating earnings in the third quarter of 2008 as a result of solid production growth and higher commodity prices compared to the same period in 2007. Third quarter natural gas and oil production increased 6 percent, led by a 16 percent rise in production from key natural gas resource plays.

"These strong financial results in the third quarter are a reflection of the company's focus on operating excellence and capital discipline. EnCana's prudent financial approach and low-risk business model allow us to capture the upside during times of higher commodity prices as well as sustain us through a volatile natural gas and oil pricing environment," said Randy Eresman, EnCana's President & Chief Executive Officer.

"In this period of economic uncertainty, our resource play strategy maintains a steadfast focus on low-cost production. As part of our ongoing efforts to maintain financial resilience and flexibility, we will continue to take steps to reduce pricing risk through our natural gas price hedging program. The company also maintains financial strength with a conservative and prudent approach that mitigates risks associated with borrowing. About 78 percent of EnCana's outstanding debt is comprised of long-term, fixed-rate debt with an average remaining term of more than 14 years," Eresman said.

EnCana Increases Gas Price Hedges

Over the next year, EnCana has a substantial portion of expected future production hedged at strong prices. About 80 percent of EnCana's total current production is natural gas. For the 2009 gas year, which runs from
November 2008 through October 2009, EnCana has about 2.5 billion cubic feet per day (Bcf/d) - about 60 percent of current production - hedged at an average price of $9.15 per thousand cubic feet (Mcf).

EnCana's net earnings in the third quarter increased to $3.55 billion. Approximately $2.0 billion of this increase was an after-tax unrealized gain due to mark-to-market accounting for hedging contracts. This large gain in net
earnings resulted from a large decrease in commodity prices during the third quarter. The gain essentially reversed unrealized mark-to-market losses that were included in net earnings earlier in the year when natural gas prices were rising. It is because of these dramatic mark-to-market accounting swings in net earnings that EnCana focuses on operating earnings as a better measure of quarter-over-quarter earnings performance. Operating earnings in the third quarter, which do not include mark-to-market accounting for unrealized gains
and losses, were up about 40 percent, which reflects the stronger realized prices - up about 31 percent - in the third quarter of 2008 compared to 2007, plus EnCana's 6 percent increase in daily production.

Based on the company's natural gas production and commodity price expectations for the remainder of the year, EnCana is narrowing its 2008 guidance for total cash flow to a range of $10 billion to $10.4 billion, or
between $13.30 and $13.85 per share. Operating cash flow has been revised to between $11.9 billion and $12.7 billion. Capital investment, including acquisitions, was ahead of expectations at the end of the third quarter mostly due to additional unconventional natural gas land acquisitions in Haynesville in Louisiana and Montney in British Columbia. EnCana had expected to complete a number of divestitures in the fourth quarter to offset these acquisitions.

However, as a result of the current economic climate, some of those transactions may not be completed prior to year end. Based on current expectations, net acquisition and divestiture capital investment guidance has
increased $900 million. In total, capital expenditures for the year, including acquisitions and divestitures, are expected to be about $7.4 billion, compared to $6.5 billion provided in previous guidance. Total natural gas, oil and NGLs production is on track to meet full-year guidance of 4.64 MMcfe/d.


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