EnCana 2008 capital investment targets U.S. natural gas growth, integrated oilsands expansion and free cash flow

    EnCana plans to double dividend in 2008

    North American natural gas production expected to grow 8 percent per

    CALGARY, Dec. 12 /CNW/ - EnCana Corporation (TSX & NYSE:   ECA) plans
capital expenditures of about US$6.9 billion in 2008, up about 13 percent from
2007. The company remains focused on growing its key resource plays, with
increased investment aimed at production growth from U.S. natural gas and
longer lead time projects such as Canadian oilsands, expanded downstream
refining capacity and the advancement of the Deep Panuke natural gas project
offshore Nova Scotia. Investments in Alberta natural gas projects and new
oilsands delineation work have been reduced to reflect the recent erosion of
economic returns.

    Free cash flow of about $1.5 billion, dividend to double in 2008

    EnCana expects to fund its capital investment with internally generated
cash flow, which is underpinned by natural gas hedges, at an average price of
about $8.20 per thousand cubic feet, on about 47 percent of its forecasted gas
production from January to the end of October 2008. The company expects 2008
cash flow will exceed capital expenditures resulting in free cash flow of
approximately $1.5 billion, which is about 18 percent of estimated cash flow
(based on the midpoint of cash flow guidance). EnCana also expects to generate
an estimated $500 million from divestitures in 2008. With a continued focus on
a moderate, sustainable pace of growth and capital discipline, EnCana plans to
continue returning free cash flow to shareholders through an ongoing program
of dividends and share purchases. Consistent with the company's focus on
shareholder value creation, EnCana plans to double its dividend in 2008. Board
approval of the planned increase in 2008 would result in an annual dividend of
$1.60 per share, increasing the yield to about 2.4 percent at the current
share price. The company also expects to purchase about 2 percent of its
shares in 2008 under its Normal Course Issuer Bid program.
    "In recent years, we have redesigned the company to focus on our core
strength - North American unconventional resource development. It's what we do
best and our resource play strategy is working very well. Our core business
strategy is steadfast. We capture large, early-life resource plays; we
rigorously seek technical and commercial solutions to enhance their value; we
use a manufacturing approach to development and target a sustainable level of
production growth of about 5 percent a year. We maintain a strong balance
sheet, which gives us the flexibility to high-grade our portfolio through both
acquisitions and divestitures when the market presents the opportunity.
Through the entire process, we manage operational, financial and reputational
risks. The strength, stability and profitability of our business model is
clearly demonstrating industry-leading performance in developing
unconventional natural gas and in-situ oilsands," said Randy Eresman, EnCana's
President & Chief Executive Officer.
    EnCana expects to grow 2008 natural gas production by about 7 percent,
while oil and natural gas liquids production is expected to decrease slightly,
resulting in a total production increase of about 5 percent to about
4.6 billion cubic feet equivalent per day. On a per share basis, gas
production is expected to increase about 8 percent, while total production is
forecast to increase about 7 percent per share.


    Cash flow forecast(1)
    ($ billions, excluding
     per share amounts)                     2007F           2008F   % change
    Cash flow                           8.2 - 8.3       8.0 - 8.8        + 2
    Cash flow per share
     ($ per share diluted)          10.75 - 10.85   10.70 - 11.75        + 4
    Pre-tax cash flow
      Upstream, excluding
       Integrated Oilsands                    9.1             9.3
      Integrated Oilsands                     1.3             0.9
      Other expenses, net(2)                 (0.5)           (0.8)
    Pre-tax cash flow                         9.9             9.4        - 5
    (1) 2008 based on NYMEX of $6.50 to $8.50 per Mcf and WTI of $75 per bbl,
        a Chicago 3-2-1 crack spread of $12 per bbl and the US$/C$ at par.
        The pre-tax cash flow forecast represents the midpoint of the
        estimated range resulting from pricing assumptions. Cash flow is a
        non-GAAP measure: See Note 1: Non-GAAP measures on page 5.
    (2) Includes administrative & interest expense, realized foreign
        exchange, net of operating cash flow from Midstream & Marketing and

    Diversified North America investment opportunities, led by U.S. natural
     gas production

    "The strength and diversification of our portfolio reduces our risk and
gives us opportunities for direct investment in the most attractive return
projects, which is what we plan to continue to do in 2008. With the geological
and economic success in our unconventional gas fields in Wyoming and Texas, we
are substantially increasing investment in our U.S. natural gas production,
which is expected to grow by about 25 percent this year. Our gas growth is
largely driven by our leading-return projects - Jonah in Wyoming and the
Amoruso Field in East Texas, where a planned investment increase of about 65
percent, to more than $1 billion, is expected to boost production more than 45
percent," Eresman said.

    Integrated oilsands investment up close to double, investment in
    Deep Panuke ramps up

    EnCana will approximately double its investment in integrated oilsands to
about $1.2 billion in 2008, split about evenly between growing upstream
production and expanding downstream heavy oil processing capacity. EnCana's
integrated oilsands production is expected to grow about 25 percent in 2008 to
about 34,000 barrels per day. Downstream investment is focused on a long-term
refinery expansion (subject to regulatory approval) to add 65,000 bbls/d
(gross) of coking capacity and 55,000 bbls/d (gross) of refining capacity at
the ConocoPhillips-EnCana Wood River refinery in Illinois. Off Canada's East
Coast, EnCana plans to invest about $40 million in 2008 on the Deep Panuke gas
development, which is expected to produce first gas in late 2010.

    Capital investment forecast
    ($ billions)                            2007F           2008F   % change
    Upstream, excluding
     Integrated Oilsands                      5.4             5.5        + 2
    Integrated Oilsands                       0.6             1.2      + 100
      Subtotal                                6.0             6.7       + 12
    Midstream & Marketing & Corporate         0.1             0.2      + 100
    Total capital investment                  6.1             6.9       + 13
    Net acquisitions & divestitures           2.1            (0.5)       n/a
    Net capital investment                    8.2             6.4       - 20

    Higher Alberta royalties, tax increases and exchange rate impacts prompt
    investment cut in Canada

    A large change in the Canada-U.S. dollar exchange rate, increased labour
rates, higher energy costs and significant increases in property taxes have
made some of EnCana's Alberta-based projects less economic, as compared to
previous years and relative to the rest of its portfolio. In addition, the
planned Alberta royalty increases starting in 2009 have significantly
diminished returns for deep gas well drilling and new and emerging resource
plays. Compared to EnCana's preliminary capital investment plan for 2008,
increases in Alberta royalties have resulted in a reduction of about
$500 million of EnCana's Alberta investment next year. Taking all these
factors into consideration, EnCana's Alberta drilling for shallow gas, deep
gas, coalbed methane and its delineation drilling of new oilsands plays will
be lower than in previous years. Investment in British Columbia in 2008 is
expected to be about the same as in 2007. In Canada excluding Integrated
Oilsands, about $3.0 billion is planned for upstream investment, about
10 percent lower than in 2007.

    Capital inflation rate moderates; operating costs continue to rise

    With the expected slowdown of non-oilsands industry activity levels in
Canada, capital inflation is expected to be very low in 2008. In the U.S.,
where activity remains robust, the company expects inflation of about 5
percent as service capacity has expanded to meet demands. Canadian oilsands
inflation is expected to be between 5 and 10 percent, reflecting high activity
levels. Operating costs, however, continue to rise due to increased labour and
energy costs and property taxes, offset by lower service sector costs.
Operating costs on a per-unit basis, excluding the impact of foreign exchange,
are expected to increase by about 10 percent year over year.

    Expecting competitive 2007 finding and development costs

    Despite these rising cost structures, EnCana's resource play assets and
strategies will continue to help ensure that its capital and operating cost
efficiencies are amongst the best in the industry. For 2007, the company
expects its finding and development costs, before any adjustments due to
year-end prices, to be very competitive.

    Gas production to increase 7 percent in 2008

    Natural gas production, which represents more than 80 percent of EnCana's
production, is expected to increase about 7 percent, while oil and natural gas
liquids (NGLs) production (excluding volumes from Integrated Oilsands) is
expected to decrease about 8 percent, mostly due to natural decline in mature
properties. EnCana's total production is expected to increase about 5 percent
in 2008.

    Natural gas and liquids production forecast
    Production (after royalties)            2007F           2008F   % change
    Natural gas (MMcf/d)
      Canada                                2,210           2,120        - 4
      United States                         1,330           1,660         25
    Total natural gas                       3,540           3,780          7
    Oil & NGLs excluding Integrated
     Oilsands (Mbbls/d)
      Canada                                   95              85        - 11
      United States                            12              13        +  8
    Total oil & NGLs, excluding
     Integrated Oilsands (Mbbls/d)            107              98        - 8
    Upstream production, excluding
     Integrated Oilsands (MMcfe/d, 6:1)     4,180           4,368          4
    Integrated Oilsands (Mbbls/d)              27              34         26
    Total oil, NGLs &  Integrated
     Oilsands (Mbbls/d)                       134             132        - 1
    Total production (MMcfe/d)              4,340           4,570          5

    Natural gas and liquids production forecast per share(1)
    Production (after royalties)            2007F           2008F   % change
    Natural gas (per 1,000 shares,
     Basic, Mcf)                             1.71            1.85        + 8
    Oil & NGLs (per 1,000 shares,
     Basic, Mcfe)                            0.39            0.39          0
    Total production (per 1,000 shares,
     Basic, Mcfe)                            2.09            2.23        + 7
    (1) Per share calculations assume basic weighted average shares
        outstanding of 757 million in 2007 and 747 million in 2008.

    Updated guidance and key resource play information is posted on EnCana's
website: www.encana.com.

    EnCana plans to double dividend to $1.60 per share

    Consistent with the company's focus on shareholder value creation,
EnCana's board of directors intends to double the quarterly dividend in 2008.
Approval of the increase would result in an annual dividend of $1.60 per
common share.

    Share purchases continue

    As of September 30, 2007, EnCana had purchased about 5.0 percent of its
outstanding shares at an average price of approximately US$51.83 per share
under the company's Normal Course Issuer Bid program. During 2008, the company
plans to purchase approximately 2 percent of the shares outstanding (about
15 million shares).

    Close to half of expected 2008 gas production hedged during first
    10 months of 2008

    EnCana has about 1.9 billion cubic feet per day (Bcf/d) of expected gas
production from January to the end of October 2008 hedged at an average fixed
price of about $8.20 per Mcf. In oil, EnCana has about 23,000 bbls/d of
expected 2008 oil production hedged at a fixed price of WTI $70.13 per bbl.
This price hedging strategy helps reduce uncertainty in cash flow during
periods of commodity price volatility.

    U.S. Rockies and Canadian basis differential hedges

    For 2008, EnCana has hedged 100 percent of its expected U.S. Rockies basis
exposure using a combination of downstream transportation and basis hedges,
including some hedges that are based on a percentage of NYMEX prices. At
December 6, 2007, the U.S. Rockies basis hedges had an effective annual
average differential of NYMEX less $1.01 per Mcf. In Canada for 2008, EnCana
has hedged 8 percent of its expected production at an average AECO basis
differential of 78 cents per Mcf.

                     2008 OUTLOOK MEETING WEBCAST TODAY
                 10 a.m. Eastern Time (8 a.m. Mountain Time)

    EnCana is hosting its 2008 Outlook Meeting on Wednesday, December 12,
    2007 at 10:00 a.m. ET (8:00 a.m. MT) in Toronto, Ontario. To accommodate
    a wider audience, the presentations will be webcast. The webcast link is
    noted below:

    Webcast Information:

    Date:        Wednesday, December 12, 2007
    Time:        10:00 a.m. ET (8:00 a.m. MT)
                 Strategic Outlook by Randy Eresman, EnCana's President &
                  Chief Executive Officer
    Duration:    10:00 a.m. - 12:15 p.m. ET (8:00 a.m. - 10:15 a.m. MT)
    Webcast URL:

    This is an audio-only webcast. Presentation slides will be available at
    the start of the meeting on December 12, 2007 via EnCana's website at
    www.encana.com, in the Presentations & Events section under Investor
    Relations. It is recommended that users access the webcast approximately
    10 minutes before its scheduled start time. If you are unable to listen
    to the live webcast, an archive of the presentations will be available
    within 24 hours of the event and will be available on EnCana's website
    for approximately 60 days.

    EnCana Corporation

    With an enterprise value of approximately US$60 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.

    NOTE 1: Non-GAAP measures

    This news release contains references to cash flow, pre-tax cash flow,
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.
    -   Pre-tax cash flow is calculated as cash flow before cash taxes.
    -   Operating earnings is a non-GAAP measure that shows net earnings
        excluding non-operating items such as the after-tax impacts of a
        gain/loss 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 from
        Canada and the partnership contribution receivable 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 denominated Notes issued from
        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 total capital investment and is used to determine the
        funds available for other investing and/or financing activities.


    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'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 necessarily represent
value equivalency at the well head.

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, cash flow and increase in net asset
value); anticipated growth and success of resource plays and the expected
characteristics of resource plays; potential common share purchases under the
company's Normal Course Issuer Bid and the projected source of funds therefor;
free cash flow which may be generated in 2007 and beyond, and potential uses
for such free cash flow, including share purchases and dividend payments;
anticipated production and sales of oil, natural gas and NGLs in 2007 and
2008; anticipated dividend increases; anticipated impact and success of
EnCana's price hedging strategy; anticipated costs; anticipated prices for oil
and natural gas; anticipated Chicago 3-2-1 crack spread; anticipated
downstream revenue and cash flow; anticipated capital investment in 2007 and
2008 and the allocation thereof; anticipated capital inflation; anticipated
capital and operating cost efficiencies; anticipated royalty increases in
Alberta and the effects of such increases; anticipated timing, production and
capital expenditures associated with the Deep Panuke project; anticipated
refining capacity and the timing thereof; anticipated growth in U.S. natural
gas production; and forecast cash flow for 2007 and 2008 and the anticipated
ability to meet guidance targets. 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 reserve estimates and
estimates of recoverable quantities of oil, bitumen, natural gas and liquids
from resource plays and other sources not currently classified as proved; the
company's ability to replace and expand oil and gas 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 generate sufficient cash flow from operations to meet its current and
future obligations; the company's 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 royalty, tax, environmental and other laws or regulations or the
interpretations of such laws or regulations; political and economic conditions
in the countries in which the company operates; the risk of international 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

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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