EnCana Sells Conventional O&G Assets for US$395 million

EnCana has reached agreement to sell conventional oil and gas assets producing approximately 16,800 barrels of oil equivalent per day, after royalties, (19,500 barrels of oil equivalent per day before royalties) to Harvest Energy Trust for approximately US$395 million (C$526 million) before adjustments. The transaction, which is expected to close on or about September 1, 2004, includes properties in east central and southern Alberta producing predominantly medium and heavy oil. This sale is one in a series of planned divestitures of conventional oil and gas assets, following our acquisition of Tom Brown, Inc. The production from these mature assets is well suited to a trust, whereas our recently- acquired Tom Brown assets are primarily gas producing resource play properties at an early stage in their life. Currently, our organic production is growing at a rate of about 12 percent per year. Including Tom Brown and our other acquisitions and divestitures, we expect to grow production this year to between 725,000 and 765,000 barrels of oil equivalent per day, which at midpoint is a 15 percent increase from 2003 sales," said Randy Eresman, EnCana's Chief Operating Officer.

Recently, EnCana reached agreement to sell New Mexico assets, representing production of about 3,900 barrels of oil equivalent, after royalties, to Magnum Hunter Resources, Inc. for approximately US$243 million. In addition, EnCana reached agreement to sell Sauer Drilling Company of Casper, Wyoming to Unit Corporation for US$37 million. These assets, which were part of Tom Brown, were deemed to be non-core to EnCana. Both deals are expected to close by July 30, 2004.

Total proceeds from these three divestitures are anticipated to be about US$675 million.

When EnCana announced its acquisition of Tom Brown in April, it also announced that it planned to sell between 40,000 and 60,000 barrels of oil equivalent of daily production, which is expected to generate between US$1 billion and US$1.5 billion. The divestitures announced to date are part of a first tranche that includes additional sales currently under negotiation with prospective buyers. A second tranche of divestitures, representing another 15,000 to 35,000 barrels of oil equivalent of daily production, is being assembled and is expected to be marketed over the course of the next year.

The sale of assets to Harvest is subject to typical post-closing adjustments. Tristone Capital Inc. served as a financial advisor to EnCana on this transaction.