EnCana generates first quarter cash flow of US$1.8 billion, or $2.25 per share - up 15 percent



    CALGARY, April 25 /CNW/ - EnCana Corporation's (TSX & NYSE:   ECA) first
quarter 2007 cash flow per share diluted increased 15 percent to US$2.25, or
about $1.8 billion, compared to the first quarter of 2006. Operating earnings
per share increased 38 percent to $1.10, or $858 million. Strong growth in
cash flow and operating earnings were due to higher natural gas production,
improved heavy oil differentials, strong refinery margins and gains from
EnCana's hedging program, which more than offset significantly lower benchmark
WTI oil and NYMEX natural gas prices.
    "Our first quarter results illustrate, for the first time, the recently
completed transformation of EnCana into its unique position as an integrated
North American resource play company focused on developing unconventional
natural gas and in-situ oilsands. We have assembled a portfolio of high-
quality assets and an extensive land base where our company can apply its
expertise in unconventional resource development to deliver sustainable
results and returns for our shareholders. Cash flow and gas production are on
track with our 2007 forecasts while production from our integrated oilsands
business is ramping up," said Randy Eresman, President & Chief Executive
Officer.
    One year ago, EnCana's 100 percent interest in Foster Creek and Christina
Lake in-situ oilsands projects generated less than 1 percent of the company's
total operating cash flow. In the first quarter of this year, EnCana's
integrated oilsands business, which are composed of a 50 percent interest in
each of Foster Creek, Christina Lake, and the refineries at Borger and Wood
River, generated $161 million, or more than 9 percent of total operating cash
flow. This increased significance to EnCana's financial performance is a
result of steady production growth and the addition of the company's
participation in the refining business.

    First Quarter 2007 Highlights
    -----------------------------
    (all year-over-year comparisons are to the first quarter of 2006)

    Financial

    -   Cash flow per share diluted increased 15 percent to $2.25, or
        $1.8 billion
    -   Operating earnings per share diluted up 38 percent to $1.10, or
        $858 million
    -   Net earnings of 64 cents per share, or $497 million, were negatively
        impacted by a $423 million unrealized after-tax loss due to
        mark-to-market accounting of commodity price hedges
    -   Generated $269 million in free cash flow (as defined in Note 1 on
        page 7)
    -   Achieved a return on capital employed of 21 percent
    -   Purchased 23.3 million EnCana shares at an average share price of
        $46.90 under the Normal Course Issuer Bid, representing 3 percent of
        shares outstanding at December 31, 2006
    -   In February, EnCana doubled its quarterly dividend to 20 cents per
        share, representing an annual yield of approximately 1.5 percent at
        April 24, 2007

    Operating (after establishing integrated oilsands business)

    -   Natural gas production of 3.4 billion cubic feet per day (Bcf/d),
        slightly ahead of budget and in line with guidance
    -   Oil and NGLs production of 131,000 bbls/d, which is marginally behind
        budget, primarily due to a slower than expected ramp up of production
        at EnCana's oilsands projects. Consequently, full-year liquids
        production guidance has been adjusted and posted on the company's
        website at www.encana.com.
    -   Operating and administrative costs of $1.20 per thousand cubic feet
        equivalent (Mcfe), in line with budget and guidance
     -  Core capital investment in continuing operations of $1.48 billion,
        which is tracking below budget and guidance due to fewer wells
        drilled than planned and lower than expected costs

    Strategic events

    -   Created an integrated oilsands business with ConocoPhillips composed
        of two 50/50 businesses - one upstream and one downstream - which
        became effective January 2, 2007
    -   Completed sale of Chad assets for about $203 million, resulting in a
        $59 million gain

    Natural gas production on track with 2007 forecast, capital inflation
    lower

    "Natural gas production rose steadily in the first quarter due to strong
additions in coalbed methane (CBM), Bighorn, Jonah, Cutbank Ridge and East
Texas. Current gas production is about 3.48 billion cubic feet per day -
slightly ahead of our 2007 budget and solidly positioning us to achieve our
full-year guidance of 3.46 Bcf/d. Our 2007 capital program is also on track to
meet guidance. We are starting to see capital inflation lower than forecast in
some areas," Eresman said.

    Integrated oilsands business generating strong cash flow, upstream
    production up 11 percent in past year

    EnCana's new integrated oilsands business generated first quarter
operating cash flow of $161 million, on track with the company's full-year
operating cash flow guidance of between $550 million and $650 million. In the
downstream business, the first quarter U.S. Gulf Coast 3-2-1 crack spread of
more than $10 per barrel is up 21 percent in the past year, and compares
favourably to a long-term average of between $5 to $6 per barrel. At the
Borger refinery in Texas, the addition of 20,000 barrels per day of upgrading
capacity is on schedule for completion this summer. In the upstream business,
first quarter total production from the Foster Creek and Christina Lake in-
situ oilsands projects increased about 11 percent in the past year, to about
46,500 bbls/d (about 23,250 bbls/d net to EnCana). The ramp up of production
has been slower than expected due to operational upsets in the water treatment
facilities at Foster Creek and a delayed start up of two wells at Christina
Lake. However, these impediments have been resolved and upstream production is
ramping up from both Foster Creek and Christina Lake with current levels of
about 55,000 bbls/d (about 27,500 bbls/d net to EnCana).

    IMPORTANT NOTE:
    ---------------
    EnCana reports in U.S. dollars unless otherwise noted and follows U.S.
protocols, which report production, sales and reserves on an after-royalties
basis. The company has reported its Ecuador operations and its natural gas
storage business as discontinued because EnCana sold them in 2006. Total
results, which include results from Ecuador and natural gas storage, are
reported in the company's financial statements included in this news release
and in supplementary documents posted on its website - www.encana.com. The
company's financial statements are prepared in accordance with Canadian
generally accepted accounting principles (GAAP).

    
    -------------------------------------------------------------------------
                   Financial Summary - Total Consolidated
    -------------------------------------------------------------------------
    (for the three months ended March 31)
    ($ millions, except per share amounts)            Q1        Q1       %
                                                    2007      2006     Change
    -------------------------------------------------------------------------
    Cash flow                                      1,752     1,691      +  4
      Per share diluted                             2.25      1.96      + 15
    -------------------------------------------------------------------------
    Net earnings                                     497     1,474       n/a
      Per share diluted                             0.64      1.70       n/a
    -------------------------------------------------------------------------
    Operating earnings(1)                            858       694      + 24
      Per share diluted                             1.10      0.80      + 38
    -------------------------------------------------------------------------
    Core capital investment from continuing
     operations                                    1,483     1,946      - 24
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
            Earnings Reconciliation Summary - Total Consolidated
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings from continuing operations          497     1,472       n/a
    Net earnings from discontinued operations          -         2       n/a
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings (loss)                              497     1,474
    (Add back losses & deduct gains)
    Unrealized mark-to-market hedging gain (loss),
     after-tax                                      (423)      830

    Unrealized foreign exchange gain (loss) on
     translation of U.S. dollar Notes issued
     from Canada, after-tax                            3        (3)

    Gain (loss) on discontinuance                     59       (47)
    -------------------------------------------------------------------------
    Operating earnings(1)                            858       694      + 24
    Per share diluted                               1.10      0.80      + 38
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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 discontinuance, 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 Notes issued from Canada and the
    effect of the reduction in income tax rates.


    -------------------------------------------------------------------------
                        Production & Drilling Summary
    -------------------------------------------------------------------------
                             Total Consolidated
    -------------------------------------------------------------------------
    (for the three months ended March 31)             Q1        Q1       %
    (After royalties)                               2007    2006(1)    Change
    -------------------------------------------------------------------------
    Natural Gas (MMcf/d)                           3,400     3,343       + 2
    -------------------------------------------------------------------------
      Natural gas production per 1,000 shares
       (Mcf)                                         398       355      + 12
    -------------------------------------------------------------------------
    Oil and NGLs (Mbbls/d)                           131       194      - 32
    -------------------------------------------------------------------------
      Oil and NGLs production per 1,000 shares
       (Mcfe)                                         92       123      - 25
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total Production (MMcfe/d)                     4,184     4,505       - 7
    -------------------------------------------------------------------------
      Total per 1,000 shares (Mcfe)                  490       478       + 3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net wells drilled                              1,264     1,285       - 2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) First quarter 2006 information has been adjusted on a pro forma basis
    to reflect the integrated oilsands transaction and includes Ecuador
    production, which was sold in the first quarter 2006.


    Key resource play natural gas production up 9 percent in first quarter

    First quarter 2007 natural gas production from key North American
resource plays increased 9 percent compared to the first quarter of 2006. This
was driven mainly by increases in gas production from Cutbank Ridge in
northeast British Columbia, Bighorn in west central Alberta, CBM in central
and southern Alberta, the Barnett Shale play in the Fort Worth basin and Jonah
in Wyoming.

                Growth from key North American resource plays
    -------------------------------------------------------------------------
                                             Daily Production
                            -------------------------------------------------
    Resource Play             2007                  2006                2005
                            -------------------------------------------------
    (After royalties)                Full                               Full
                                Q1   Year     Q4     Q3     Q2     Q1   Year
    -------------------------------------------------------------------------
    Natural Gas (MMcf/d)
      Jonah                    504    464    487    455    450    461    435
      Piceance                 334    326    335    331    324    316    307
      East Texas               103     99     95    106     93     99     90
      Fort Worth               106    101     99    104    108     93     70
      Greater Sierra           186    213    212    209    224    208    219
      Cutbank Ridge            210    170    199    167    173    140     92
      Bighorn                  104     91     99     97     95     72     55
      CBM                      251    194    211    209    179    177    112
      Shallow Gas(1)           735    739    737    734    730    756    765
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total natural gas
     (MMcf/d)                2,533  2,397  2,474  2,412  2,376  2,322  2,145
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil (Mbbls/d)
      Foster Creek(2)           20     18     21     19     16     18     14
      Christina Lake(2)          3      3      3      3      3      3      3
      Pelican Lake              23     24     20     23     22     29     26
    -------------------------------------------------------------------------
    Total oil (Mbbls/d)         46     45     44     45     41     50     43
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total (MMcfe/d)          2,811  2,667  2,736  2,680  2,624  2,624  2,403
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    % change from Q1 2006      7.1
    -------------------------------------------------------------------------
    % change from prior
     period                    5.4   11.0    2.1    2.1      -      -    2.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Shallow Gas volumes and net wells drilled have been restated to
    report commingled volumes from multiple zones within the same geographic
    area based upon regulatory approval.
    (2) Foster Creek and Christina Lake production volumes in 2006 and 2005
    have been restated on a pro forma basis to reflect the integrated
    oilsands transaction.


           Drilling activity in key North American resource plays
    -------------------------------------------------------------------------
                                               Net Wells Drilled
                            -------------------------------------------------
    Resource Play             2007                  2006                2005
                            -------------------------------------------------
                                     Full                               Full
                                Q1   year     Q4     Q3     Q2     Q1   Year
    -------------------------------------------------------------------------
    Natural Gas
      Jonah                     39    163     41     48     48     26    104
      Piceance                  65    220     50     48     59     63    266
      East Texas                 7     59     11     12     17     19     84
      Fort Worth                14     97     19     22     27     29     59
      Greater Sierra            23    115      5     16     34     60    164
      Cutbank Ridge             27    116     19     35     36     26    135
      Bighorn                   28     52      7      7     18     20     51
      CBM                      408    729    157    156     35    381  1,245
      Shallow Gas(1)           416  1,310    389    475    217    229  1,389
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil
      Foster Creek(2)            8      3      -      -      -      3     20
      Christina Lake(2)          -      1      -      -      -      1      -
      Pelican Lake               -      -      -      -      -      -     52
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total                    1,035  2,865    698    819    491    857  3,568
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Shallow Gas volumes and net wells drilled have been restated to
    report commingled volumes from multiple zones within the same geographic
    area based upon regulatory approval.
    (2) Foster Creek and Christina Lake net wells in 2006 and 2005 have been
    restated on a pro forma basis to reflect the integrated oilsands
    transaction.


    -------------------------------------------------------------------------
                First quarter 2007 natural gas and oil prices
    -------------------------------------------------------------------------
    Natural gas                                       Q1        Q1        %
    ($/Mcf, realized prices include hedging)        2007      2006     Change
    -------------------------------------------------------------------------
    NYMEX                                           6.77      8.98      - 25
    EnCana Realized Gas Price                       7.24      7.15       + 1
    -------------------------------------------------------------------------
    Oil and NGLs
    ($/bbl, realized prices include hedging)
    -------------------------------------------------------------------------
    WTI                                            58.23     63.48       - 8
    Western Canadian Select (WCS)                  41.77     34.72      + 20
    Differential WTI/WCS                           16.46     28.76      - 43
    EnCana Realized Liquids Price                  42.59     30.75      + 39
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    U.S. Gulf Coast 3-2-1 Crack Spread             10.06      8.28      + 21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Price risk management

    Detailed risk management positions at March 31, 2007 are presented in
Note 18 to the unaudited Interim Consolidated Financial Statements. In the
first quarter of 2007, EnCana's commodity price risk management measures
resulted in realized gains of approximately $208 million after-tax, composed
of a $187 million gain on gas hedges, a $20 million gain on oil hedges and a
$1 million gain on other hedges.

    More than 50 percent of expected natural gas and liquids production
    during the last nine months of 2007 has downside price protection

    For the last nine months of 2007, EnCana has about 1.77 Bcf/d of expected
gas production with downside price protection, composed of 1.53 Bcf/d under
fixed price contracts at an average NYMEX equivalent price of $8.47 per Mcf
and 240 million cubic feet per day with put options at a NYMEX equivalent
strike price of $6.00 per Mcf. EnCana also 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.
    North American natural gas prices are impacted by volatile pricing
disconnects caused primarily by transportation constraints between producing
regions and consuming regions. These price discounts are called basis
differentials. For 2007 EnCana has hedged 100 percent of its U.S. Rockies
basis exposure using a combination of downstream transportation and basis
hedges at NYMEX less $0.67 per Mcf. During the first quarter of 2007 the U.S.
Rockies-NYMEX natural gas price differential averaged NYMEX less $1.23 per
Mcf. In Canada for 2007, EnCana has hedged 33 percent of its AECO basis
differential at NYMEX less $0.72 per Mcf and has an additional 33 percent
subject to transport and aggregator contracts. In the first quarter of 2007,
the AECO basis differential averaged NYMEX less $0.40 per Mcf. During the
first quarter, EnCana's basis hedging resulted in a gain of about $38 million.

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

    Quarterly dividend increased 100 percent to 20 cents per share

    In February, EnCana doubled its first quarter 2007 dividend to 20 cents
per share. On April 24, EnCana's board of directors declared a quarterly
dividend of 20 cents per share, which is payable on June 29, 2007 to common
shareholders of record as of June 15, 2007.

    EnCana Normal Course Issuer Bid purchases

    In the first quarter of 2007. EnCana purchased 23.3 million EnCana shares
at an average share price of US$46.90 under the company's Normal Course Issuer
Bid. This represents about 3 percent of shares outstanding as at December 31,
2006. As at March 31, 2007, there were approximately 761 million common shares
issued and outstanding in total. During 2007, EnCana expects to purchase about
5 percent of the shares outstanding. The company plans to fund Normal Course
Issuer Bid purchases with cash flow and proceeds from divestitures.

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

    EnCana maintains a strong balance sheet, targeting a net debt-to-
capitalization ratio between 30 and 40 percent. At March 31, 2007, the
company's net debt-to-capitalization ratio was 31:69. EnCana's net debt-to-
adjusted-EBITDA multiple, on a trailing 12-month basis, was 0.9 times at the
end of the first quarter. The company expects its net debt-to-capitalization
ratio to remain at the lower end of the targeted range.
    In the first quarter of 2007, EnCana invested $1,483 million of capital
in continuing operations. Net divestitures were $274 million, resulting in net
capital investment in continuing operations of $1,209 million.

    -------------------------------------------------------------------------
                            CONFERENCE CALL TODAY
                  10 a.m. Mountain Time (Noon Eastern Time)

    EnCana Corporation will host a conference call today, Wednesday April 25,
    2007 starting at 10:00 a.m. MT (12:00 p.m. ET). To participate, please
    dial (888) 802-2279 (toll-free in North America) or (913) 312-1265
    approximately 10 minutes prior to the conference call. An archived
    recording of the call will be available from approximately 3:00 p.m. MT
    on April 25 until midnight April 29, 2007 by dialling (888) 203-1112 or
    (719) 457-0820 and entering access code 2755584.

    A live audio webcast of the conference call will also be available via
    EnCana's website, www.encana.com, under Investor Relations. The webcast
    will be archived for approximately 90 days.
    -------------------------------------------------------------------------

    NOTE 1: Non-GAAP measures

    This news release contains references to cash flow, total operating
earnings and free cash flow.

    -   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 on the Consolidated Statement of Cash Flows.
    -   Total operating earnings is a non-GAAP measure that shows net
        earnings excluding non-operating items such as the after-tax impacts
        of a gain on discontinuance, the after-tax gain/loss of unrealized
        mark-to-market accounting for derivative instruments, the after-tax
        gain/loss on translation of U.S. dollar denominated Notes issued in
        Canada and the effect of the reduction in income tax rates.
        Management believes that these excluded items reduce the
        comparability of the company's underlying financial performance
        between periods. The majority of the unrealized gains/losses that
        relate to U.S. dollar debt issued in Canada are for debt with
        maturity dates in excess of five years.
    -   Free cash flow is a non-GAAP measure that EnCana defines as cash flow
        in excess of core capital investment.
    These measures have been described and presented in this news release in
order to provide shareholders and potential investors with additional
information regarding EnCana's liquidity and its ability to generate funds to
finance its operations.

    EnCana Corporation

    With an enterprise value of approximately US$48 billion, EnCana is a
leading North American unconventional natural gas and integrated oilsands
company. 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.

    ADVISORY REGARDING RESERVES DATA AND OTHER OIL AND GAS INFORMATION -
EnCana's disclosure of reserves data and other oil and gas information is made
in reliance on an exemption granted to EnCana by Canadian securities
regulatory authorities which permits it to provide such disclosure in
accordance with U.S. disclosure requirements. The information provided by
EnCana may differ from the corresponding information prepared in accordance
with Canadian disclosure standards under National Instrument 51-101 (NI 51-
101). EnCana's reserves quantities represent net proved reserves calculated
using the standards contained in Regulation S-X of the U.S. Securities and
Exchange Commission. Further information about the differences between the
U.S. requirements and the NI 51-101 requirements is set forth under the
heading "Note Regarding Reserves Data and Other Oil and Gas Information" in
EnCana's Annual Information Form.
    In this news release, certain crude oil and NGLs volumes have been
converted to cubic feet equivalent (cfe) on the basis of one barrel (bbl) to
six thousand cubic feet (Mcf). Also, certain natural gas volumes have been
converted to barrels of oil equivalent (BOE) on the same basis. BOE and cfe
may be misleading, particularly if used in isolation. A conversion ratio of
one bbl to six Mcf is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent value
equivalency at the well head.

    Unbooked resource potential

    EnCana defines unbooked resource potential as quantities of oil and
natural gas on existing landholdings that are not yet classified as proved
reserves, but which EnCana believes may be moved into the proved reserves
category and produced in the future. EnCana employs a probability-weighted
approach in the calculation of these quantities, including statistical
distributions of resource play performance and areal extent. Consequently,
EnCana's unbooked resource potential necessarily includes quantities of
probable and possible reserves and contingent resources, as these terms are
defined in the Canadian Oil and Gas Evaluation Handbook.

    ADVISORY REGARDING FORWARD-LOOKING STATEMENTS - In the interests of
providing EnCana shareholders and potential investors with information
regarding EnCana, including management's assessment of EnCana's and its
subsidiaries' future plans and operations, certain statements contained in
this news release are forward-looking statements or information within the
meaning of applicable securities legislation, collectively referred to herein
as "forward-looking statements." Forward-looking statements in this news
release include, but are not limited to: future economic and operating
performance (including per share growth, net debt-to-capitalization ratio,
cash flow and increase in net asset value); anticipated ability to meet the
company's guidance forecasts; anticipated life of proved reserves; anticipated
unbooked resource potential; anticipated conversion of unbooked resource
potential to proved reserves; anticipated growth and success of resource plays
and the expected characteristics of resource plays; the expected proceeds from
planned divestitures; planned expansion of in-situ oilsands production;
anticipated crude oil and natural gas prices; anticipated expansion and
production at Foster Creek and Christina Lake; anticipated increased capacity
for the two U.S. refineries; anticipated drilling inventory; expected
proportion of total production and cash flows contributed by natural gas;
anticipated success of EnCana's market risk mitigation strategy and EnCana's
ability to reduce uncertainty in cash flow during periods of commodity price
volatility and provide downside price protection; anticipated purchases
pursuant to the Normal Course Issuer Bid and the source of funding therefor;
potential demand for natural gas; anticipated bitumen production in 2007 and
beyond; anticipated drilling; potential capital expenditures and investment;
potential oil, natural gas and NGLs production in 2007 and beyond; anticipated
costs and inflationary pressures; potential risks associated with drilling and
references to potential exploration. Readers are cautioned not to place undue
reliance on forward-looking statements, as there can be no assurance that the
plans, intentions or expectations upon which they are based will occur. By
their nature, forward-looking statements involve numerous assumptions, known
and unknown risks and uncertainties, both general and specific, that
contribute to the possibility that the predictions, forecasts, projections and
other forward-looking statements will not occur, which may cause the company's
actual performance and financial results in future periods to differ
materially from any estimates or projections of future performance or results
expressed or implied by such forward-looking statements. These risks and
uncertainties include, among other things: volatility of and assumptions
regarding oil and gas prices; assumptions based upon the company's current
guidance; fluctuations in currency and interest rates; product supply and
demand; market competition; risks inherent in the company's marketing
operations, including credit risks; imprecision of reserves estimates and
estimates of recoverable quantities of oil, natural gas and liquids from
resource plays and other sources not currently classified as proved reserves;
the ability of the company and ConocoPhillips to successfully manage and
operate the integrated North American heavy oil business and the ability of
the parties to obtain necessary regulatory approvals; refining and marketing
margins; potential disruption or unexpected technical difficulties in
developing new products and manufacturing processes; potential failure of new
products to achieve acceptance in the market; unexpected cost increases or
technical difficulties in constructing or modifying manufacturing or refining
facilities; unexpected difficulties in manufacturing, transporting or refining
synthetic crude oil; risks associated with technology; the company's ability
to replace and expand oil and gas reserves; its ability to generate sufficient
cash flow from operations to meet its current and future obligations; its
ability to access external sources of debt and equity capital; the timing and
the costs of well and pipeline construction; the company's ability to secure
adequate product transportation; changes in environmental and other
regulations or the interpretations of such regulations; political and economic
conditions in the countries in which the company operates; the risk of war,
hostilities, civil insurrection and instability affecting countries in which
the company operates and terrorist threats; risks associated with existing and
potential future lawsuits and regulatory actions made against the company; and
other risks and uncertainties described from time to time in the reports and
filings made with securities regulatory authorities by EnCana. Although EnCana
believes that the expectations represented by such forward-looking statements
are reasonable, there can be no assurance that such expectations will prove to
be correct. Readers are cautioned that the foregoing list of important factors
is not exhaustive.
    Furthermore, the forward-looking statements contained in this news
release are made as of the date of this news release, and, except as required
by law, EnCana does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise. The forward-looking statements
contained in this news release are expressly qualified by this cautionary
statement.



    
    Interim Consolidated Financial Statements
    (unaudited)
    For the period ended March 31, 2007

    EnCana Corporation

    U.S. DOLLARS



    First quarter report
    for the period ended March 31, 2007

    CONSOLIDATED STATEMENT OF EARNINGS (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
    ($ millions, except per share amounts)                2007          2006
    -------------------------------------------------------------------------

    REVENUES, NET OF ROYALTIES           (Note 5)
      Upstream                                    $      2,739  $      2,604
      Integrated Oilsands                                1,556           189
      Market Optimization                                  756           716
      Corporate - Unrealized gain (loss)
       on risk management                                 (615)        1,263
    -------------------------------------------------------------------------
                                                         4,436         4,772

    EXPENSES                             (Note 5)
      Production and mineral taxes                          92           139
      Transportation and selling                           278           254
      Operating                                            551           412
      Purchased product                                  1,851           689
      Depreciation, depletion and
       amortization                                        843           765
      Administrative                                        95            58
      Interest, net                      (Note 8)          101            88
      Accretion of asset retirement
       obligation                       (Note 14)           14            12
      Foreign exchange (gain) loss, net  (Note 9)          (12)           44
      (Gain) on divestitures             (Note 7)          (59)           (9)
    -------------------------------------------------------------------------
                                                         3,754         2,452
    -------------------------------------------------------------------------
    NET EARNINGS BEFORE INCOME TAX                         682         2,320
      Income tax expense                (Note 10)          185           848
    -------------------------------------------------------------------------
    NET EARNINGS FROM CONTINUING
     OPERATIONS                                            497         1,472
    NET EARNINGS FROM DISCONTINUED
     OPERATIONS                          (Note 6)            -             2
    -------------------------------------------------------------------------
    NET EARNINGS                                  $        497  $      1,474
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NET EARNINGS FROM CONTINUING
     OPERATIONS PER COMMON SHARE        (Note 17)
      Basic                                       $       0.65  $       1.74
      Diluted                                     $       0.64  $       1.70
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NET EARNINGS PER COMMON SHARE       (Note 17)
      Basic                                       $       0.65  $       1.74
      Diluted                                     $       0.64  $       1.70
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to Consolidated Financial Statements.



    CONSOLIDATED STATEMENT OF RETAINED EARNINGS  (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
    ($ millions)                                          2007          2006
    -------------------------------------------------------------------------

    RETAINED EARNINGS, BEGINNING OF YEAR          $     11,344  $      9,481
    Net Earnings                                           497         1,474
    Dividends on Common Shares                            (153)          (64)
    Charges for Normal Course
     Issuer Bid                         (Note 15)         (816)         (801)
    -------------------------------------------------------------------------
    RETAINED EARNINGS, END OF PERIOD              $     10,872  $     10,090
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
    ($ millions)                                          2007          2006
    -------------------------------------------------------------------------

    NET EARNINGS                                  $        497  $      1,474
    OTHER COMPREHENSIVE INCOME, NET OF TAX
    Foreign Currency Translation Adjustment                111            94
    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME                          $        608  $      1,568
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENT OF ACCUMULATED OTHER COMPREHENSIVE INCOME
    (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
    ($ millions)                                          2007          2006
    -------------------------------------------------------------------------

    ACCUMULATED OTHER COMPREHENSIVE INCOME,
     BEGINNING OF YEAR                            $      1,375  $      1,262
    Foreign Currency Translation Adjustment                111            94
    -------------------------------------------------------------------------
    ACCUMULATED OTHER COMPREHENSIVE INCOME,
     END OF PERIOD                                $      1,486  $      1,356
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    As at March 31, 2007, the accumulated other comprehensive income consists
    of foreign currency translation adjustments of $1,486 million
    (December 31, 2006 - $1,375 million; March 31, 2006 - $1,356 million).

    See accompanying Notes to Consolidated Financial Statements.


    CONSOLIDATED BALANCE SHEET  (unaudited)

                                                         As at         As at
                                                      March 31,  December 31,
    ($ millions)                                          2007          2006
    -------------------------------------------------------------------------

    ASSETS
      Current Assets
        Cash and cash equivalents                 $        337     $     402
        Accounts receivable and accrued
         revenues                                        2,014         1,721
        Current portion of partnership
         contribution receivable     (Note 4, 11)          357             -
        Risk management                 (Note 18)          899         1,403
        Inventories                     (Note 12)          567           176
    -------------------------------------------------------------------------
                                                         4,174         3,702
      Property, Plant and
       Equipment, net                    (Note 5)       28,806        28,213
      Investments and Other Assets                         512           533
      Partnership Contribution
       Receivable                    (Note 4, 11)        3,299             -
      Risk Management                   (Note 18)           55           133
      Goodwill                                           2,547         2,525
    -------------------------------------------------------------------------
                                         (Note 5) $     39,393  $     35,106
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
      Current Liabilities
        Accounts payable and accrued
         liabilities                              $      3,210  $      2,494
        Income tax payable                                 934           926
        Current portion of
         partnership
         contribution payable        (Note 4, 11)          345             -
        Risk management                 (Note 18)           60            14
        Current portion of
         long-term debt                 (Note 13)          260           257
    -------------------------------------------------------------------------
                                                         4,809         3,691
      Long-Term Debt                    (Note 13)        6,977         6,577
      Other Liabilities                                    151            79
      Partnership Contribution
       Payable                       (Note 4, 11)        3,311             -
      Risk Management                   (Note 18)           17             2
      Asset Retirement Obligation       (Note 14)        1,085         1,051
      Future Income Taxes                                6,131         6,240
    -------------------------------------------------------------------------
                                                        22,481        17,640
    -------------------------------------------------------------------------
      Shareholders' Equity
        Share capital                   (Note 15)        4,493         4,587
        Paid in surplus                                     61           160
        Retained earnings                               10,872        11,344
        Accumulated other comprehensive income           1,486         1,375
    -------------------------------------------------------------------------
      Total Shareholders' Equity                        16,912        17,466
    -------------------------------------------------------------------------
                                                  $     39,393  $     35,106
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to Consolidated Financial Statements.



    CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
    ($ millions)                                          2007          2006
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
      Net earnings from continuing
       operations                                 $        497  $      1,472
      Depreciation, depletion and
       amortization                                        843           765
      Future income taxes               (Note 10)         (190)          517
      Unrealized (gain) loss on
       risk management                  (Note 18)          614        (1,261)
      Unrealized foreign exchange
       (gain) loss                                         (11)           60
      Accretion of asset retirement
       obligation                       (Note 14)           14            12
      (Gain) on divestitures             (Note 7)          (59)           (9)
      Other                                                 44            23
      Cash flow from discontinued
       operations                                            -           112
      Net change in other assets and
       liabilities                                          20           (11)
      Net change in non-cash working
       capital from continuing operations                  137         2,044
      Net change in non-cash working
       capital from discontinued
       operations                                            -        (1,427)
    -------------------------------------------------------------------------
      Cash From Operating Activities                     1,909         2,297
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Capital expenditures               (Note 5)       (1,490)       (1,961)
      Proceeds on disposal of assets     (Note 7)          281           255
      Net change in investments and other                   19            77
      Net change in non-cash working
       capital from continuing operations                  (58)          119
      Discontinued operations                                -         1,313
    -------------------------------------------------------------------------
      Cash (Used in) Investing Activities               (1,248)         (197)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
      Net issuance (repayment) of
       revolving long-term debt                              -          (881)
      Issuance of long-term debt                           434             -
      Issuance of common shares         (Note 15)           76            52
      Purchase of common shares         (Note 15)       (1,094)         (978)
      Dividends on common shares                          (153)          (64)
      Other                                                 11           (10)
    -------------------------------------------------------------------------
      Cash (Used in) Financing
       Activities                                         (726)       (1,881)
    -------------------------------------------------------------------------

    DEDUCT: FOREIGN EXCHANGE LOSS ON
     CASH AND CASH EQUIVALENTS HELD
     IN FOREIGN CURRENCY                                     -             -
    -------------------------------------------------------------------------

    INCREASE (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                      (65)          219
    CASH AND CASH EQUIVALENTS,
     BEGINNING OF YEAR                                     402           105
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS,
     END OF PERIOD                                $        337  $        324
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    See accompanying Notes to Consolidated Financial Statements.



    Notes to Consolidated Financial Statements (unaudited)
    (All amounts in $ millions unless otherwise specified)

    1.  BASIS OF PRESENTATION

    The interim Consolidated Financial Statements include the accounts of
    EnCana Corporation and its subsidiaries ("EnCana" or the "Company"), and
    are presented in accordance with Canadian generally accepted accounting
    principles. EnCana's continuing operations are in the business of
    exploration for, and production and marketing of, natural gas, crude oil
    and natural gas liquids, refining operations and power generation
    operations.

    The interim Consolidated Financial Statements have been prepared
    following the same accounting policies and methods of computation as the
    annual audited Consolidated Financial Statements for the year ended
    December 31, 2006, except as noted below. The disclosures provided below
    are incremental to those included with the annual audited Consolidated
    Financial Statements. The interim Consolidated Financial Statements
    should be read in conjunction with the annual audited Consolidated
    Financial Statements and the notes thereto for the year ended
    December 31, 2006.

    2.  CHANGES IN ACCOUNTING POLICIES AND PRACTICES

    As disclosed in the December 31, 2006 annual audited Consolidated
    Financial Statements, on January 1, 2007, the Company adopted the
    Canadian Institute of Chartered Accountants ("CICA") Handbook Section
    1530 "Comprehensive Income", Section 3251 "Equity", Section 3855
    "Financial Instruments - Recognition and Measurement", and Section 3865
    "Hedges". As required by the new standards, prior periods have not been
    restated, except to reclassify the foreign currency translation
    adjustment balance as described under Comprehensive Income.

    The adoption of these standards has had no material impact on the
    Company's net earnings or cash flows. The other effects of the
    implementation of the new standards are discussed below.

    Comprehensive Income
    The new standards introduce comprehensive income, which consists of net
    earnings and other comprehensive income ("OCI"). The Company's
    Consolidated Financial Statements now include a Statement of
    Comprehensive Income, which includes the components of comprehensive
    income. For EnCana, OCI is currently comprised of the changes in the
    foreign currency translation adjustment balance.

    The cumulative changes in OCI are included in accumulated other
    comprehensive income ("AOCI"), which is presented as a new category
    within shareholders' equity in the Consolidated Balance Sheet. The
    accumulated foreign currency translation adjustment, formerly presented
    as a separate category within shareholders' equity, is now included in
    AOCI. The Company's Consolidated Financial Statements now include a
    Statement of Accumulated Other Comprehensive Income, which provides the
    continuity of the AOCI balance.

    The adoption of comprehensive income has been made in accordance with the
    applicable transitional provisions. Accordingly, the March 31, 2007
    period end accumulated foreign currency translation adjustment balance of
    $1,486 million has been reclassified to AOCI (December 31, 2006 -
    $1,375 million; March 31, 2006 - $1,356 million). In addition, the change
    in the accumulated foreign currency translation adjustment balance for
    the three months ended March 31, 2007 of $111 million, is now included in
    OCI in the Statement of Comprehensive Income (three months ended
    March 31, 2006 - $94 million).

    Financial Instruments
    The financial instruments standard establishes the recognition and
    measurement criteria for financial assets, financial liabilities and
    derivatives. All financial instruments are required to be measured at
    fair value on initial recognition of the instrument, except for certain
    related party transactions. Measurement in subsequent periods depends on
    whether the financial instrument has been classified as
    "held-for-trading", "available-for-sale", "held-to-maturity",
    "loans and receivables", or "other financial liabilities" as defined by
    the standard.

    Financial assets and financial liabilities "held-for-trading" are
    measured at fair value with changes in those fair values recognized in
    net earnings. Financial assets "available-for-sale" are measured at fair
    value, with changes in those fair values recognized in OCI. Financial
    assets "held-to-maturity", "loans and receivables" and "other financial
    liabilities" are measured at amortized cost using the effective interest
    method of amortization. The methods used by the Company in determining
    fair value of financial instruments are unchanged as a result of
    implementing the new standard.

    Cash and cash equivalents are designated as "held-for-trading" and are
    measured at carrying value, which approximates fair value due to the
    short-term nature of these instruments. Accounts receivable and accrued
    revenues and the partnership contribution receivable are designated as
    "loans and receivables". Accounts payable and accrued liabilities, the
    partnership contribution payable and long-term debt are designated as
    "other liabilities".

    The adoption of the financial instruments standard has been made in
    accordance with its transitional provisions. Accordingly, at
    January 1, 2007, $52 million of other assets were reclassified to
    long-term debt to reflect the adopted policy of capitalizing long-term
    debt transaction costs, premiums and discounts within long-term debt. The
    costs capitalized within long-term debt will be amortized using the
    effective interest method. Previously, the Company deferred these costs
    within other assets and amortized them straight-line over the life of the
    related long-term debt. The adoption of the effective interest method of
    amortization had no effect on opening retained earnings.

    Risk management assets and liabilities are derivative financial
    instruments classified as "held-for-trading" unless designated for hedge
    accounting. Additional information on the Company's accounting treatment
    of derivative financial instruments is contained in Note 1 of the
    Company's annual audited Consolidated Financial Statements for the year
    ended December 31, 2006.

    3.  UPDATE TO ACCOUNTING POLICIES AND PRACTICES

    As a result of the new joint venture with ConocoPhillips, EnCana has
    updated the following significant accounting policies and practices to
    incorporate the refining business (see Note 4):

    Revenue Recognition
    Revenues associated with the sales of EnCana's natural gas, crude oil,
    NGLs and petroleum and chemical products are recognized when title passes
    from the Company to its customer. Natural gas and crude oil produced and
    sold by EnCana below or above its working interest share in the related
    resource properties results in production underliftings or overliftings.
    Underliftings are recorded as inventory and overliftings are recorded as
    deferred revenue. Realized gains and losses from the Company's natural
    gas and crude oil commodity price risk management activities are recorded
    in revenue when the product is sold.

    Market optimization revenues and purchased product are recorded on a
    gross basis when EnCana takes title to product and has risks and rewards
    of ownership. Purchases and sales of inventory with the same counterparty
    that are entered into in contemplation of each other are recorded on a
    net basis. Revenues associated with the services provided where EnCana
    acts as agent are recorded as the services are provided. Revenues
    associated with the sale of natural gas storage services are recognized
    when the services are provided. Sales of electric power are recognized
    when power is provided to the customer.

    Unrealized gains and losses from the Company's natural gas and crude oil
    commodity price risk management activities are recorded as revenue based
    on the related mark-to-market calculations at the end of the respective
    period.

    Inventory
    Product inventories, including petroleum and chemical products, are
    valued at the lower of average cost and net realizable value on a
    first-in, first-out basis. Materials and supplies are valued at cost.

    Property, Plant and Equipment
    Upstream
    EnCana accounts for natural gas and crude oil properties in accordance
    with the Canadian Institute of Chartered Accountants' guideline on full
    cost accounting in the oil and gas industry. Under this method, all
    costs, including internal costs and asset retirement costs, directly
    associated with the acquisition of, exploration for and the development
    of, natural gas and crude oil reserves, are capitalized on a
    country-by-country cost centre basis.

    Costs accumulated within each cost centre are depreciated, depleted and
    amortized using the unit-of-production method based on estimated proved
    reserves determined using estimated future prices and costs. For purposes
    of this calculation, oil is converted to gas on an energy equivalent
    basis. Capitalized costs subject to depletion include estimated future
    costs to be incurred in developing proved reserves. Proceeds from the
    divestiture of properties are normally deducted from the full cost pool
    without recognition of gain or loss unless that deduction would result in
    a change to the rate of depreciation, depletion and amortization of
    20 percent or greater, in which case a gain or loss is recorded. Costs of
    major development projects and costs of acquiring and evaluating
    significant unproved properties are excluded, on a cost centre basis,
    from the costs subject to depletion until it is determined whether or not
    proved reserves are attributable to the properties, or impairment has
    occurred. Costs that have been impaired are included in the costs subject
    to depreciation, depletion and amortization.

    An impairment loss is recognized in net earnings when the carrying amount
    of a cost centre is not recoverable and the carrying amount of the cost
    centre exceeds its fair value. The carrying amount of the cost centre is
    not recoverable if the carrying amount exceeds the sum of the
    undiscounted cash flows from proved reserves. If the sum of the cash
    flows is less than the carrying amount, the impairment loss is limited to
    the amount by which the carrying amount exceeds the sum of:

    i.  the fair value of proved and probable reserves; and
    ii. the costs of unproved properties that have been subject to a separate
        impairment test.

    Downstream Refining
    Refining facilities are carried at cost, including asset retirement
    costs, and depreciated on a straight-line basis over the estimated
    service lives of the assets, which are approximately 25 years.

    Midstream facilities
    Midstream facilities, including natural gas storage facilities, natural
    gas liquids extraction plant facilities and power generation facilities,
    are carried at cost and depreciated on a straight-line basis over the
    estimated service lives of the assets, which range from 20 to 25 years.
    Capital assets related to pipelines are carried at cost and depreciated
    or amortized using the straight-line method over their economic lives,
    which range from 20 to 35 years.

    Corporate
    Costs associated with office furniture, fixtures, leasehold improvements,
    information technology and aircraft are carried at cost and depreciated
    on a straightline basis over the estimated service lives of the assets,
    which range from 3 to 25 years. Assets under construction are not subject
    to depreciation. Land is carried at cost.

    Asset Retirement Obligation
    The fair value of estimated asset retirement obligations is recognized in
    the Consolidated Balance Sheet when identified and a reasonable estimate
    of fair value can be made.

    Asset retirement obligations include those legal obligations where the
    Company will be required to retire tangible long-lived assets such as
    producing well sites, offshore production platforms, natural gas
    processing plants, and refining facilities. These obligations also
    include items for which the Company has made promissory estoppel. The
    asset retirement cost, equal to the initially estimated fair value of the
    asset retirement obligation, is capitalized as part of the cost of the
    related long-lived asset. Changes in the estimated obligation resulting
    from revisions to estimated timing or amount of undiscounted cash flows
    are recognized as a change in the asset retirement obligation and the
    related asset retirement cost.

    Asset retirement costs for natural gas and crude oil assets are amortized
    using the unit-of-production method. Asset retirement costs for refining
    facilities are amortized on a straight-line basis over the useful life of
    the related asset. Amortization of asset retirement costs are included in
    depreciation, depletion and amortization in the Consolidated Statement of
    Earnings. Increases in the asset retirement obligation resulting from the
    passage of time are recorded as accretion of asset retirement obligation
    in the Consolidated Statement of Earnings.

    Actual expenditures incurred are charged against the accumulated
    obligation.

    4. JOINT VENTURE WITH CONOCOPHILLIPS

    On January 2, 2007, EnCana became a 50 percent partner in an integrated,
    North American heavy oil business with ConocoPhillips which consists of
    an upstream and a downstream entity. The upstream entity includes
    contributed assets from EnCana, primarily Foster Creek and Christina Lake
    oilsands properties, with a fair value of $7.5 billion and a note
    receivable from ConocoPhillips of an equal amount. For the downstream
    entity, ConocoPhillips contributed its Wood River and Borger refineries,
    located in Illinois and Texas respectively, for a fair value of
    $7.5 billion and EnCana contributed a note payable of $7.5 billion.
    Further information about these notes is included in Note 11.

    In accordance with Canadian generally accepted accounting principles,
    these entities have been accounted for using the proportionate
    consolidation method with the results of operations shown in a separate
    business segment, Integrated Oilsands.

    5.    SEGMENTED INFORMATION

    The Company has defined its continuing operations into the following
    segments:

    -   Canada, United States and Other includes the Company's upstream
        exploration for, and development and production of, natural gas,
        crude oil and natural gas liquids and other related activities. The
        majority of the Company's upstream operations are located in Canada
        and the United States. Offshore and international exploration is
        mainly focused on opportunities in Brazil, the Middle East, Greenland
        and France.

    -   Integrated Oilsands is focused on two lines of business: the
        exploration for, and development and production of heavy oil from
        oilsands in Canada using in-situ recovery methods; and the refining
        of crude oil into petroleum and chemical products located in the
        United States. This segment represents EnCana's 50 percent interest
        in the joint venture with ConocoPhillips.

    -   Market Optimization is conducted by the Midstream & Marketing
        division. The Marketing groups' primary responsibility is the sale of
        the Company's proprietary production. The results are included in the
        Canada, United States and Integrated Oilsands segments.
        Correspondingly, the Marketing groups also undertake market
        optimization activities which comprise third party purchases and
        sales of product that provide operational flexibility for
        transportation commitments, product type, delivery points and
        customer diversification. These activities are reflected in the
        Market Optimization segment.

    -   Corporate includes unrealized gains or losses recorded on derivative
        financial instruments. Once amounts are settled, the realized gains
        and losses are recorded in the operating segment to which the
        derivative instrument relates.

    Market Optimization markets substantially all of the Company's upstream
    production to third-party customers. Transactions between business
    segments are based on market values and eliminated on consolidation. The
    tables in this note present financial information on an after
    eliminations basis.

    Operations that have been discontinued are disclosed in Note 6.

    Results of Continuing Operations (For the three months ended March 31)

                                              Upstream
                        -----------------------------------------------------
                             Canada         United States         Other
    -------------------------------------------------------------------------
                           2007     2006     2007     2006     2007     2006
    -------------------------------------------------------------------------

    Revenues,
     Net of Royalties   $ 1,763  $ 1,749  $   885  $   779  $    91  $    76
    Expenses
      Production and
       mineral taxes         28       45       64       94        -        -
      Transportation
       and selling           80       68       66       66        -        -
      Operating             237      213       75       68       81       67
      Purchased product       -        -        -        -        -        -
      Depreciation,
       depletion and
       amortization         490      490      260      210        6        7
    -------------------------------------------------------------------------
    Segment Income      $   928  $   933  $   420  $   341  $     4  $     2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                              Integrated          Market
                          Total Upstream       Oilsands        Optimization
    -------------------------------------------------------------------------
                           2007     2006     2007     2006     2007     2006
    -------------------------------------------------------------------------

    Revenues,
     Net of Royalties   $ 2,739  $ 2,604  $ 1,556  $   189  $   756  $   716
    Expenses
      Production and
       mineral taxes         92      139        -        -        -        -
      Transportation
       and selling          146      134      124      117        8        3
      Operating             393      348      152       45        7       18
      Purchased product       -        -    1,119        -      732      689
      Depreciation,
       depletion and
       amortization         756      707       66       37        3        3
    -------------------------------------------------------------------------
    Segment Income
     (Loss)             $ 1,352  $ 1,276  $    95  $   (10) $     6  $     3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                               Corporate       Consolidated
    -------------------------------------------------------------------------
                                             2007     2006     2007     2006
    -------------------------------------------------------------------------

    Revenues, Net of Royalties            $  (615) $ 1,263  $ 4,436  $ 4,772
    Expenses
      Production and mineral taxes              -        -       92      139
      Transportation and selling                -        -      278      254
      Operating                                (1)       1      551      412
      Purchased product                         -        -    1,851      689
      Depreciation, depletion and
       amortization                            18       18      843      765
    -------------------------------------------------------------------------
    Segment Income (Loss)                 $  (632) $ 1,244      821    2,513
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Administrative                                             95       58
      Interest, net                                             101       88
      Accretion of asset retirement
       obligation                                                14       12
      Foreign exchange (gain) loss, net                         (12)      44
      (Gain) on divestitures                                    (59)      (9)
    -------------------------------------------------------------------------
                                                                139      193
    -------------------------------------------------------------------------
    Net Earnings Before Income Tax                              682    2,320
      Income tax expense                                        185      848
    -------------------------------------------------------------------------
    Net Earnings From Continuing
     Operations                                             $   497  $ 1,472
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Results of Continuing Operations (For the three months ended March 31)

    Geographic and Product Information (Continuing Operations)

                                             Produced Gas
    -------------------------------------------------------------------------
                              Canada         United States         Total
    -------------------------------------------------------------------------
                           2007     2006     2007     2006     2007     2006
    -------------------------------------------------------------------------

    Revenues,
     Net of Royalties   $ 1,388  $ 1,441  $   831  $   718  $ 2,219  $ 2,159
    Expenses
      Production and
       mineral taxes         20       36       58       89       78      125
      Transportation
       and selling           70       67       66       66      136      133
      Operating             177      153       75       68      252      221
    -------------------------------------------------------------------------
    Operating Cash Flow $ 1,121  $ 1,185  $   632  $   495  $ 1,753  $ 1,680
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                              Oil & NGLs
    -------------------------------------------------------------------------
                              Canada         United States         Total
    -------------------------------------------------------------------------
                           2007     2006     2007     2006     2007     2006
    -------------------------------------------------------------------------

    Revenues,
     Net of Royalties   $   375  $   308  $    54  $    61  $   429  $   369
    Expenses
      Production and
       mineral taxes          8        9        6        5       14       14
      Transportation
       and selling           10        1        -        -       10        1
      Operating              60       60        -        -       60       60
    -------------------------------------------------------------------------
    Operating Cash Flow $   297  $   238  $    48  $    56  $   345  $   294
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                          Integrated Oilsands
    -------------------------------------------------------------------------
                                              Downstream
                                Oil            Refining           Other
    -------------------------------------------------------------------------
                           2007     2006     2007     2006     2007     2006
    -------------------------------------------------------------------------

    Revenues,
     Net of Royalties   $   220  $   183  $ 1,343  $     -  $    (7) $     6
    Expenses
      Transportation
       and selling          124      117        -        -        -        -
      Operating              49       38      100        -        3        7
      Purchased product       -        -    1,134        -      (15)       -
    -------------------------------------------------------------------------
    Operating Cash Flow $    47  $    28  $   109  $     -  $     5  $    (1)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                                                Integrated
                                                                 Oilsands
    -------------------------------------------------------------------------
                                                                   Total
    -------------------------------------------------------------------------
                                                               2007     2006
    -------------------------------------------------------------------------

    Revenues, Net of Royalties                              $ 1,556  $   189
    Expenses
      Transportation and selling                                124      117
      Operating                                                 152       45
      Purchased product                                       1,119        -
    -------------------------------------------------------------------------
    Operating Cash Flow                                     $   161  $    27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Capital Expenditures (Continuing Operations)

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Core Capital
      Canada                                      $        871     $   1,129
      United States                                        439           537
      Other                                                  8            18
      Integrated Oilsands                                  115           220
      Market Optimization                                    1            29
      Corporate                                             49            13
    -------------------------------------------------------------------------
                                                         1,483         1,946
    -------------------------------------------------------------------------

    Acquisition Capital
      Canada                                                 7             8
      United States                                          -             7
    -------------------------------------------------------------------------
                                                             7            15
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Total                                         $      1,490  $      1,961
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Property, Plant and Equipment and Total Assets

                             Property, Plant
                              and Equipment                Total Assets
                      -------------------------------------------------------
                                 As at                        As at
                      -------------------------------------------------------
                          March 31,  December 31,     March 31,  December 31,
                              2007          2006          2007          2006
    -------------------------------------------------------------------------

    Canada            $     15,199  $     17,702  $     16,502  $     19,060
    United States            8,656         8,494         9,194         9,036
    Other                      118           263           138           300
    Integrated Oilsands      4,361         1,322         8,904         1,379
    Market Optimization        154           154           426           468
    Corporate                  318           278         4,229         4,863
    -------------------------------------------------------------------------
    Total             $     28,806  $     28,213  $     39,393  $     35,106
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    On February 9, 2007, EnCana announced that it had completed the next
    phase in the development of The Bow office project with the sale of
    project assets and has entered into a 25 year lease agreement with a
    third party developer. Corporate Property, Plant and Equipment includes
    EnCana's accrual to date of $57 million related to this office project as
    an asset under construction. A corresponding liability is included in
    Other Liabilities in the Consolidated Balance Sheet. There is no effect
    on the Company's net earnings or cash flows related to the capitalization
    of The Bow office project.


    6.  DISCONTINUED OPERATIONS

    All of the sales of discontinued operations were completed as of
    December 31, 2006.

    Midstream
    During 2006, EnCana completed, in two separate transactions with a single
    purchaser, the sale of its natural gas storage operations in Canada and
    the United States. Total proceeds received were approximately
    $1.5 billion and an after-tax gain on sale of $829 million was recorded.

    Ecuador
    On February 28, 2006, EnCana completed the sale of its Ecuador operations
    for proceeds of $1.4 billion before indemnifications. A loss of
    $279 million, including the impact of indemnifications, was recorded.
    Indemnifications are discussed further in this note.

    Amounts recorded as depreciation, depletion and amortization in 2006
    represent provisions which were recorded against the net book value of
    the Ecuador operations to recognize Management's best estimate of the
    difference between the selling price and the underlying accounting value
    of the related investments, as required by Canadian generally accepted
    accounting principles.

    Consolidated Statement of Earnings

    The following table presents the effect of the discontinued operations in
    the Consolidated Statement of Earnings:

                                 For the three months ended March 31,
                      -------------------------------------------------------
                                       United
                         Ecuador       Kingdom      Midstream       Total
                      -------------------------------------------------------
                       2007   2006   2007   2006   2007   2006   2007   2006
    -------------------------------------------------------------------------

    Revenues,
     Net of
     Royalties(*)     $   -  $ 200  $   -  $   -  $   -  $ 435  $   -  $ 635
    -------------------------------------------------------------------------

    Expenses
      Production and
       mineral taxes      -     23      -      -      -      -      -     23
      Transportation
       and selling        -     10      -      -      -      -      -     10
      Operating           -     25      -      -      -     19      -     44
      Purchased product   -      -      -      -      -    354      -    354
      Depreciation,
       depletion and
       amortization       -     84      -      -      -      -      -     84
      Interest, net       -     (2)     -      -      -      -      -     (2)
      Foreign exchange
       (gain) loss, net   -      1      -      1      -      -      -      2
      (Gain) loss on
       discontinuance     -     47      -      -      -      -      -     47
    -------------------------------------------------------------------------
                          -    188      -      1      -    373      -    562
    -------------------------------------------------------------------------
    Net Earnings (Loss)
     Before Income Tax    -     12      -     (1)     -     62      -     73
      Income tax
       expense            -     59      -      -      -     12      -     71
    -------------------------------------------------------------------------
    Net Earnings (Loss)
     From Discontinued
     Operations       $   -  $ (47) $   -  $  (1) $   -  $  50  $   -  $   2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (*) Revenues, net of royalties in Ecuador for 2006 include realized
    losses of $1 million related to derivative financial instruments.


    Contingencies

    EnCana agreed to indemnify the purchaser of its Ecuador interests against
    losses that may arise in certain circumstances which are defined in the
    share sale agreements. The obligation to indemnify will arise should
    losses exceed amounts specified in the sale agreements and is limited to
    maximum amounts which are set forth in the share sale agreements.

    During the second quarter of 2006, the Government of Ecuador seized the
    Block 15 assets, in relation to which EnCana previously held a 40 percent
    economic interest, from the operator which is an event requiring
    indemnification under the terms of EnCana's sale agreement with the
    purchaser. The purchaser requested payment and EnCana paid the maximum
    amount in the third quarter, calculated in accordance with the terms of
    the agreements, of approximately $265 million. EnCana does not expect
    that any further significant indemnification payments relating to any
    other business matters addressed in the share sale agreements will be
    required to be made to the purchaser.

    7.  DIVESTITURES

    Total proceeds received on sale of assets and investments was
    $281 million (2006 - $255 million) as described below:

    Canada and United States
    In 2007, the Company has completed the divestiture of mature conventional
    oil and natural gas assets for proceeds of $17 million
    (2006 - $11 million).

    Other
    In January 2007, the Company completed the sale of its interests in Chad,
    properties that are considered to be in the pre-production stage, for
    proceeds of $207 million which results in a gain on sale of $59 million.

    Market Optimization
    In February 2006, the Company sold its investment in Entrega Gas Pipeline
    LLC for approximately $244 million which resulted in a gain on sale of
    $17 million.

    Corporate
    In February 2007, the Company sold The Bow office project assets for
    proceeds of approximately $57 million, representing its investment at the
    date of sale. Refer to Note 5 for further discussion of The Bow office
    project assets.

    8.  INTEREST, NET
                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Interest Expense - Long-Term Debt             $        100  $         94
    Interest Expense - Other(*)                             63             5
    Interest Income(*)                                     (62)          (11)
    -------------------------------------------------------------------------
                                                  $        101  $         88
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (*) In 2007, Interest Expense - Other and Interest Income are primarily
    due to the Partnership Contribution Payable and Receivable, respectively.
    See Note 11.


    9.  FOREIGN EXCHANGE (GAIN) LOSS, NET
                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Unrealized Foreign Exchange (Gain) Loss on:
      Translation of U.S. dollar debt issued
       from Canada                                $        (41)  $         4
      Translation of U.S. dollar partnership
       contribution receivable issued from Canada           38             -
    Other Foreign Exchange (Gain) Loss                      (9)           40
    -------------------------------------------------------------------------
                                                  $        (12)  $        44
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    10. INCOME TAXES

    The provision for income taxes is as follows:

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Current
      Canada                                      $        282  $        308
      United States                                         92            23
      Other Countries                                        1             -
    -------------------------------------------------------------------------
    Total Current Tax                                      375           331
    -------------------------------------------------------------------------

    Future                                                (190)          517
    -------------------------------------------------------------------------
                                                  $        185  $        848
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    The following table reconciles income taxes calculated at the Canadian
    statutory rate with the actual income taxes:

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Net Earnings Before Income Tax                $        682  $      2,320
    Canadian Statutory Rate                              32.3%         35.9%
    -------------------------------------------------------------------------
    Expected Income Tax                                    220           833

    Effect on Taxes Resulting from:
      Non-deductible Canadian Crown payments                 -            31
      Canadian resource allowance                            -           (20)
      Statutory and other rate differences                   5           (16)
      Non-taxable downstream partnership income             (6)            -
      Non-taxable capital (gains) losses                   (20)           (1)
      Large corporations tax                                 -             1
      Other                                                (14)           20
    -------------------------------------------------------------------------
                                                  $        185  $        848
    -------------------------------------------------------------------------
    Effective Tax Rate                                   27.1%         36.6%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    11. PARTNERSHIP CONTRIBUTION RECEIVABLE/PAYABLE

    Partnership Contribution Receivable
    On January 2, 2007, upon the creation of the integrated oilsands joint
    venture, ConocoPhillips entered into a subscription agreement for a
    50 percent interest in FCCL Oil Sands Partnership, the upstream entity,
    in exchange for a promissory note of $7.5 billion. The note bears
    interest at a rate of 5.3 percent per annum. Equal payments of principal
    and interest are payable quarterly, with final payment due
    January 2, 2017. The current and long-term partnership contribution
    receivable shown in the Consolidated Balance Sheet represent EnCana's
    50 percent share of this promissory note.

    Partnership Contribution Payable
    On January 2, 2007, upon the creation of the integrated oilsands joint
    venture, EnCana issued a promissory note to WRB Refining LLC, the
    downstream entity, in the amount of $7.5 billion in exchange for a
    50 percent interest. The note bears interest at a rate of 6.0 percent per
    annum. Equal payments of principal and interest are payable quarterly,
    with final payment due January 2, 2017. The current and long-term
    partnership contribution payable amounts shown in the Consolidated
    Balance Sheet represent EnCana's 50 percent share of this promissory
    note.


    12. INVENTORIES
                                                         As at         As at
                                                      March 31,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------

    Product
      Canada                                      $         21  $         42
      Integrated Oilsands                                  465             8
      Market Optimization                                   81           126
    -------------------------------------------------------------------------
                                                  $        567  $        176
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    13. LONG-TERM DEBT
                                                         As at         As at
                                                      March 31,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------

    Canadian Dollar Denominated Debt
      Revolving credit and term loan borrowings   $      1,399  $      1,456
      Unsecured notes                                    1,236           793
    -------------------------------------------------------------------------
                                                         2,635         2,249
    -------------------------------------------------------------------------

    U.S. Dollar Denominated Debt
      Revolving credit and term loan borrowings            176           104
      Unsecured notes                                    4,421         4,421
    -------------------------------------------------------------------------
                                                         4,597         4,525
    -------------------------------------------------------------------------

    Increase in Value of Debt Acquired(*)                   59            60
    Debt Discounts and Financing Costs                     (54)            -
    Current Portion of Long-Term Debt                     (260)         (257)
    -------------------------------------------------------------------------
                                                  $      6,977  $      6,577
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Certain of the notes and debentures of EnCana were acquired in
    business combinations and were accounted for at their fair value at the
    dates of acquisition. The difference between the fair value and the
    principal amount of the debt is being amortized over the remaining life
    of the outstanding debt acquired, approximately 21 years.

    On March 12, 2007, EnCana completed a public offering in Canada of senior
    unsecured medium term notes in the aggregate principal amount of
    C$500 million. The notes have a coupon rate of 4.3 percent and mature on
    March 12, 2012.


    14. ASSET RETIREMENT OBLIGATION

    The following table presents the reconciliation of the beginning and
    ending aggregate carrying amount of the obligation associated with the
    retirement of oil and gas assets and refining facilities:

                                                         As at         As at
                                                      March 31,  December 31,
                                                          2007          2006
    -------------------------------------------------------------------------

    Asset Retirement Obligation,
     Beginning of Year                            $      1,051  $        816
    Liabilities Incurred                                    27            68
    Liabilities Settled                                    (15)          (51)
    Change in Estimated Future Cash Flows                    2           172
    Accretion Expense                                       14            50
    Other                                                    6            (4)
    -------------------------------------------------------------------------
    Asset Retirement Obligation, End of Period    $      1,085  $      1,051
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    15. SHARE CAPITAL

                               March 31, 2007             December 31, 2006
    (millions)              Number        Amount        Number        Amount
    -------------------------------------------------------------------------

    Common Shares
     Outstanding,
     Beginning of Year       777.9  $      4,587         854.9  $      5,131
    Common Shares Issued
     under Option Plans        3.8            76           8.6           179
    Stock-based Compensation     -             2             -            11
    Common Shares Purchased  (20.4)         (172)        (85.6)         (734)
    -------------------------------------------------------------------------
    Common Shares
     Outstanding,
     End of Period           761.3  $      4,493         777.9  $      4,587
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Normal Course Issuer Bid
    In 2007, the Company purchased 23.3 million Common Shares for total
    consideration of approximately $1,094 million. Of the amount paid,
    $196 million was charged to Share capital and $898 million was charged to
    Retained earnings. Included in the Common Shares Purchased in 2007 are
    2.9 million Common Shares distributed, valued at $24 million, from the
    EnCana Employee Benefit Plan Trust that vested under EnCana's Performance
    Share Unit Plan (see Note 16). For these Common Shares distributed, there
    was an $82 million adjustment to Retained earnings with a reduction to
    Paid in surplus of $106 million.

    EnCana has received regulatory approval each year under Canadian
    securities laws to purchase Common Shares under five consecutive Normal
    Course Issuer Bids ("Bids"). EnCana is entitled to purchase, for
    cancellation, up to approximately 80.2 million Common Shares under the
    renewed Bid which commenced on November 6, 2006 and terminates on
    November 5, 2007.

    Stock Options
    EnCana has stock-based compensation plans that allow employees and
    directors to purchase Common Shares of the Company. Option exercise
    prices approximate the market price for the Common Shares on the date the
    options were issued. Options granted under the plans are generally fully
    exercisable after three years and expire five years after the date
    granted. Options granted under predecessor and/or related company
    replacement plans expire up to 10 years from the date the options were
    granted.

    The following tables summarize the information about options to purchase
    Common Shares that do not have Tandem Share Appreciation Rights ("TSARs")
    attached to them at March 31, 2007. Information related to TSARs is
    included in Note 16.


                                                                    Weighted
                                                                     Average
                                                 Stock Options      Exercise
                                                     (millions)    Price (C$)
    -------------------------------------------------------------------------

    Outstanding, Beginning of Year                        11.8         23.17
    Exercised                                             (3.8)        23.73
    Forfeited                                                -             -
    -------------------------------------------------------------------------
    Outstanding, End of Period                             8.0         22.92
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable, End of Period                             8.0         22.92
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                             Outstanding Options        Exercisable Options
                -------------------------------------------------------------
                                 Weighted
                  Number of       Average   Weighted    Number of   Weighted
    Range of        Options     Remaining    Average      Options    Average
    Exercise    Outstanding   Contractual   Exercise  Outstanding   Exercise
     Price (C$)   (millions)  Life (years) Price (C$)   (millions) Price (C$)
    -------------------------------------------------------------------------

    11.00 to 16.99      0.7           2.5      11.59          0.7      11.59
    17.00 to 22.99      0.2           0.8      22.41          0.2      22.41
    23.00 to 23.99      4.8           1.1      23.86          4.8      23.86
    24.00 to 24.99      2.1           0.2      24.21          2.1      24.21
    25.00 to 25.99      0.2           1.5      25.58          0.2      25.58
    -------------------------------------------------------------------------
                        8.0           1.0      22.92          8.0      22.92
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    At March 31, 2007, the balance in Paid in surplus relates to stock-based
    compensation programs.

    16. COMPENSATION PLANS

    The tables below outline certain information related to EnCana's
    compensation plans at March 31, 2007. Additional information is contained
    in Note 15 of the Company's annual audited Consolidated Financial
    Statements for the year ended December 31, 2006.

    A) Pensions

    The following table summarizes the net benefit plan expense:


                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Current Service Cost                          $          4  $          3
    Interest Cost                                            4             4
    Expected Return on Plan Assets                          (4)           (4)
    Expected Actuarial Loss on Accrued Benefit
     Obligation                                              1             1
    Expected Amortization of Past Service Costs              -             1
    Expense for Defined Contribution Plan                    7             5
    -------------------------------------------------------------------------
    Net Benefit Plan Expense                      $         12  $         10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2007, no additional contributions have
    been made to the defined benefit pension plans (2006 - nil).

    B) Share Appreciation Rights ("SARs")

    The following table summarizes the information about SARs at March 31,
    2007:

                                                                    Weighted
                                                                     Average
                                                   Outstanding      Exercise
                                                          SARs         Price
    -------------------------------------------------------------------------

    U.S. Dollar Denominated (US$)
    Outstanding, Beginning of Year                       2,088         14.21
    Exercised                                                -             -
    -------------------------------------------------------------------------
    Outstanding, End of Period                           2,088         14.21
    -------------------------------------------------------------------------
    Exercisable, End of Period                           2,088         14.21
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the period ended March 31, 2007, EnCana recorded no compensation
    costs related to the outstanding SARs (2006 - costs of $4 million).

    C) Tandem Share Appreciation Rights ("TSARs")

    The following table summarizes the information about TSARs at March 31,
    2007:

                                                                    Weighted
                                                                     Average
                                                   Outstanding      Exercise
                                                         TSARs         Price
    -------------------------------------------------------------------------

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                  17,276,191         44.99
    Granted                                          3,801,988         55.21
    Exercised - SARs                                  (573,100)        41.34
    Exercised - Options                                 (2,340)        35.95
    Forfeited                                         (336,374)        46.51
    -------------------------------------------------------------------------
    Outstanding, End of Period                      20,166,365         45.23
    -------------------------------------------------------------------------
    Exercisable, End of Period                       5,915,858         42.54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    For the period ended March 31, 2007, EnCana recorded compensation costs
    of $58 million related to the outstanding TSARs (2006 - $28 million).

    D) Performance-based Tandem Share Appreciation Rights ("Performance
    TSARs")

    In 2007, EnCana introduced a program whereby employees may be granted
    Performance TSARs under which the employee has the right to receive a
    cash payment equal to the excess of the market price of EnCana Common
    Shares at the time of exercise over the grant price. Performance TSARs
    vest and expire under the same terms and service conditions as the
    underlying option, and vesting is subject to the Company attaining
    prescribed performance as measured by the annual recycle ratio.
    Performance TSARs vest proportionately for a recycle ratio of greater
    than one; the maximum number of Performance TSARs vest if the recycle
    ratio is three or greater.

    The following table summarizes the information about Performance TSARs at
    March 31, 2007.

                                                                    Weighted
                                                                     Average
                                                   Outstanding      Exercise
                                                         TSARs         Price
    -------------------------------------------------------------------------

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                           -             -
    Granted                                          7,275,575         56.09
    Forfeited                                          (97,800)        56.09
    -------------------------------------------------------------------------
    Outstanding, End of Period                       7,177,775         56.09
    -------------------------------------------------------------------------
    Exercisable, End of Period                               -             -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2007, EnCana recorded compensation costs
    of $2 million related to the outstanding Performance TSARs.

    E) Deferred Share Units ("DSUs")

    The following table summarizes the information about DSUs at March 31,
    2007:

                                                                     Average
                                                   Outstanding         Share
                                                          DSUs         Price
    -------------------------------------------------------------------------

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                     866,577         29.56
    Granted, Directors                                  66,140         56.48
    Exercised                                         (294,922)        29.56
    Units, in Lieu of Dividends                          3,419         58.40
    -------------------------------------------------------------------------
    Outstanding, End of Period                         641,214         32.49
    -------------------------------------------------------------------------
    Exercisable, End of Period                         641,214         32.49
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2007, EnCana recorded compensation costs
    of $8 million related to the outstanding DSUs (2006 - $6 million).

    F) Performance Share Units ("PSUs")

    The following table summarizes the information about PSUs at March 31,
    2007:

                                                                     Average
                                                   Outstanding         Share
                                                          PSUs         Price
    -------------------------------------------------------------------------

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                   4,766,329         27.48
    Granted                                              6,937         58.40
    Distributed                                     (2,937,491)        24.05
    Forfeited                                         (106,323)        33.72
    -------------------------------------------------------------------------
    Outstanding, End of Period                       1,729,452         33.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2007, EnCana recorded compensation costs
    of $10 million related to the outstanding PSUs (2006 - reduction to
    compensation costs of $16 million).

    At March 31, 2007, EnCana has approximately 2.6 million Common Shares
    held in trust for issuance upon vesting of the PSUs (2006 - 5.5 million).

    17. PER SHARE AMOUNTS

    The following table summarizes the Common Shares used in calculating Net
    Earnings per Common Share:

                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
    (millions)                                            2007          2006
    -------------------------------------------------------------------------

    Weighted Average Common Shares Outstanding
     - Basic                                             768.4         847.9
    Effect of Dilutive Securities                         11.2          16.9
    -------------------------------------------------------------------------
    Weighted Average Common Shares Outstanding
     - Diluted                                           779.6         864.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

    As a means of managing commodity price volatility, EnCana entered into
    various financial instrument agreements and physical contracts. The
    following information presents all positions for financial instruments.

    Realized and Unrealized Gain (Loss) on Risk Management Activities

    The following tables summarize the gains and losses on risk management
    activities:

                                                      Realized Gain (Loss)
                                                      --------------------
                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Revenues, Net of Royalties                    $        315  $       (206)
    Operating Expenses and Other                             1             1
    -------------------------------------------------------------------------
    Gain (Loss) on Risk Management -
     Continuing Operations                                 316          (205)
    Gain (Loss) on Risk Management -
     Discontinued Operations                                 -             1
    -------------------------------------------------------------------------
                                                  $        316  $       (204)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                     Unrealized Gain (Loss)
                                                     ----------------------
                                                       Three Months Ended
                                                            March 31,
                                                  ---------------------------
                                                          2007          2006
    -------------------------------------------------------------------------

    Revenues, Net of Royalties                    $       (615) $      1,263
    Operating Expenses and Other                             1            (2)
    -------------------------------------------------------------------------
    Gain (Loss) on Risk Management -
     Continuing Operations                                (614)        1,261
    Gain (Loss) on Risk Management -
     Discontinued Operations                                 -            23
    -------------------------------------------------------------------------
                                                  $       (614) $      1,284
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Amounts Recognized on Transition

    Upon initial adoption of the current accounting policy for risk
    management instruments on January 1, 2004, the fair value of all
    outstanding financial instruments that were not considered accounting
    hedges was recorded in the Consolidated Balance Sheet with an offsetting
    net deferred loss amount (the "transition amount"). The transition amount
    is recognized into net earnings over the life of the related contracts.
    Changes in fair value after that time are recorded in the Consolidated
    Balance Sheet with an associated unrealized gain or loss recorded in net
    earnings.

    Fair Value of Outstanding Risk Management Positions

    The following table presents a reconciliation of the change in the
    unrealized amounts from January 1, 2007 to March 31, 2007:

                                                                       Total
                                                   Fair Market    Unrealized
                                                         Value    Gain (Loss)
    -------------------------------------------------------------------------

    Fair Value of Contracts, Beginning of Year    $      1,416  $          -
    Change in Fair Value of Contracts in Place
     at Beginning of Year and Contracts Entered
     into During 2007                                     (301)         (301)
    Fair Value of Contracts in Place at
     Transition that Expired During 2007                     -             3
    Fair Value of Contracts Realized During 2007          (316)         (316)
    -------------------------------------------------------------------------
    Fair Value of Contracts Outstanding           $        799  $       (614)
    Paid Premiums on Unexpired Options                      78
    -------------------------------------------------------------------------
    Fair Value of Contracts and Premiums Paid,
     End of Period                                $        877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    At March 31, 2007, the risk management amounts are recorded in the
    Consolidated Balance Sheet as follows:

                                                                       As at
                                                              March 31, 2007
    -------------------------------------------------------------------------

    Risk Management
      Current asset                                             $        899
      Long-term asset                                                     55
      Current liability                                                   60
      Long-term liability                                                 17
    -------------------------------------------------------------------------
    Net Risk Management Asset                                   $        877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    A summary of all unrealized estimated fair value financial positions is
    as follows:

                                                                       As at
                                                              March 31, 2007
    -------------------------------------------------------------------------

    Commodity Price Risk
      Natural gas                                               $        868
      Crude oil                                                           (7)
      Power                                                               14
    Interest Rate Risk                                                     4
    Credit Derivatives                                                    (2)
    -------------------------------------------------------------------------
    Total Fair Value Positions                                  $        877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Information with respect to credit derivatives and interest rate risk
    contracts in place at December 31, 2006 is disclosed in Note 16 to the
    Company's annual audited Consolidated Financial Statements. No new power
    contracts have been entered into at March 31, 2007.

    Natural Gas
    At March 31, 2007, the Company's gas risk management activities from
    financial contracts had an unrealized gain of $852 million and a fair
    market value position of $868 million. The contracts were as follows:

                           Notional                                     Fair
                            Volumes                                   Market
                            (MMcf/d)  Term          Average Price      Value
    -------------------------------------------------------------------------

    Sales Contracts
    Fixed Price Contracts

      NYMEX Fixed Price       1,501   2007           8.54 US$/Mcf  $     129
      Other                       8   2007           8.97 US$/Mcf          2

    NYMEX Fixed Price           321   2008           8.24 US$/Mcf        (43)

    Options
      Purchased NYMEX
       Put Options              240   2007           6.00 US$/Mcf        (10)

    Basis Contracts
      Fixed NYMEX to
       AECO Basis               754   2007         (0.72) US$/Mcf         60
      Fixed NYMEX to
       Rockies Basis            533   2007         (0.65) US$/Mcf        348
      Fixed NYMEX to
       CIG Basis                390   2007         (0.76) US$/Mcf        239

      Fixed NYMEX to
       AECO Basis               191   2008         (0.78) US$/Mcf          8
      Fixed NYMEX to
       Rockies Basis            162   2008         (0.59) US$/Mcf         59
      Fixed NYMEX to
       CIG Basis                 60   2008         (0.67) US$/Mcf         20
      Fixed NYMEX to Rockies
       Basis (NYMEX Adjusted)   329   2008   17% of NYMEX US$/Mcf         31
      Fixed NYMEX to Mid-
       Continent Basis
       (NYMEX Adjusted)         120   2008   12% of NYMEX US$/Mcf          1

      Fixed NYMEX to
       CIG Basis                 20   2009         (0.71) US$/Mcf          2
      Fixed NYMEX to
       AECO Basis                41   2010         (0.40) US$/Mcf          2

    Purchase Contracts
    Fixed Price Contracts
      Other                       8   2007           7.84 US$/Mcf          -
    -------------------------------------------------------------------------
                                                                         848
    Other Financial Positions(*)                                           4
    -------------------------------------------------------------------------
    Total Unrealized Gain on Financial Contracts                         852
    Paid Premiums on Unexpired Options                                    16
    -------------------------------------------------------------------------
    Total Fair Value Positions                                     $     868
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Other financial positions are part of the ongoing operations of the
    Company's proprietary production management.


    Crude Oil
    At March 31, 2007, the Company's oil risk management activities from
    financial contracts had an unrealized loss of $69 million and a fair
    market value position of $(7) million. The contracts were as follows:

                           Notional                                     Fair
                            Volumes                                   Market
                            (bbls/d)  Term          Average Price      Value
    -------------------------------------------------------------------------

    Fixed WTI NYMEX Price    34,500   2007          64.40 US$/bbl  $     (41)
    Purchased WTI NYMEX
     Put Options             91,500   2007          55.34 US$/bbl        (25)
    -------------------------------------------------------------------------
                                                                         (66)
    Other Financial
     Positions(*)                                                         (3)
    -------------------------------------------------------------------------
    Total Unrealized Loss on
     Financial Contracts                                                 (69)
    Paid Premiums on
     Unexpired Options                                                    62
    -------------------------------------------------------------------------
    Total Fair Value Positions                                     $      (7)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Other financial positions are part of the ongoing operations of the
    Company's proprietary production management.


    Power
    The Company has in place two derivative contracts, commencing January 1,
    2007 for a period of 11 years, to manage its electricity consumption
    costs. At March 31, 2007, these contracts had an unrealized gain of
    $14 million.

    19. CONTINGENCIES

    Legal Proceedings

    The Company is involved in various legal claims associated with the
    normal course of operations. The Company believes it has made adequate
    provision for such legal claims.

    Discontinued Merchant Energy Operations

    During the period between 2003 and 2005, EnCana and its indirect wholly
    owned U.S. marketing subsidiary, WD Energy Services Inc. ("WD"), along
    with other energy companies, were named as defendants in several
    lawsuits, some of which were class action lawsuits, relating to sales of
    natural gas from 1999 to 2002. The lawsuits allege that the defendants
    engaged in a conspiracy with unnamed competitors in the natural gas
    markets in California in violation of U.S. and California anti-trust and
    unfair competition laws.

    Without admitting any liability in the lawsuits, WD agreed to settle all
    of the class action lawsuits in both state and federal court, for
    payment, of $20.5 million and $2.4 million, respectively. Court approval
    of the federal court class action settlement of $2.4 million is pending,
    court approval having been granted in the state court action. Also, as
    previously disclosed, without admitting any liability whatsoever, WD
    concluded settlements with the U.S. Commodity Futures Trading Commission
    ("CFTC") for $20 million and of a previously disclosed consolidated class
    action lawsuit in the United States District Court in New York for
    $8.2 million.

    The remaining lawsuits were commenced by individual plaintiffs, one of
    which is E. & J. Gallo Winery ("Gallo"). The Gallo lawsuit claims damages
    in excess of $30 million. The other remaining lawsuits do not specify the
    precise amount of damages claimed. California law allows for the
    possibility that the amount of damages assessed could be tripled.

    The Company and WD intend to vigorously defend against the outstanding
    claims; however, the Company cannot predict the outcome of these
    proceedings or any future proceedings against the Company, whether these
    proceedings would lead to monetary damages which could have a material
    adverse effect on the Company's financial position, or whether there will
    be other proceedings arising out of these allegations.

    20. RECLASSIFICATION

    Certain information provided for prior periods has been reclassified to
    conform to the presentation adopted in 2007.
    





For further information:

For further information: on EnCana Corporation is available on the 
company's website, www.encana.com, or by contacting: Investor contact: EnCana 
Corporate Communications, Paul Gagne, Vice-President, Investor Relations, 
(403) 645-4737; Ryder McRitchie, Manager, Investor Relations, (403) 645-2007; 
Susan Grey, Manager, Investor Relations, (403) 645-4751; Media contact: Alan 
Boras, Manager, Media Relations, (403) 645-4747

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Encana Corporation

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