(TSX:ECA) (NYSE:ECA)
Encana delivered outstanding financial and
operating results in the fourth quarter to close a year of strong,
consistent performance. The company met or exceeded its 2017
guidance targets, generated net earnings of $827 million, cash from
operating activities of $1.1 billion and expanded its non-GAAP cash
flow margin by 81 percent from 2016. Encana is positioned to meet
or exceed the targets outlined in its five-year plan and sees
potential to generate significantly more cash available than
originally expected.
Demonstrating its focus on shareholder returns,
Encana plans to spend up to $400 million to repurchase up to 35
million common shares over the next 12 months through a normal
course issuer bid (NCIB). The commencement of the NCIB is subject
to and following Toronto Stock Exchange (TSX) approval. The
company plans to fund the NCIB with cash on hand.
Full-year and fourth quarter 2017 highlights
include:
- Net earnings of $827 million, up
from a net loss of $944 million in 2016.
- Cash from operating activities of
$1.1 billion, up over 65 percent from 2016; fourth quarter cash
from operating activities of $369 million, up 85 percent from the
fourth quarter of 2016.
- Non-GAAP cash flow of $1.3 billion,
up 60 percent from 2016; fourth quarter non-GAAP cash flow of $444
million, up 47 percent from the fourth quarter of 2016.
- Non-GAAP cash flow margin up 81
percent from 2016 to $11.75 per barrel of oil equivalent (BOE),
significantly exceeding the original 2017 target of $10 per
BOE.
- Core asset production growth of 31
percent from the fourth quarter of 2016 to the fourth quarter of
2017, significantly exceeding the original 2017 target of greater
than 20 percent.
- Fourth quarter Permian production
of 82,600 barrels of oil equivalent per day (BOE/d), significantly
exceeding the original 2017 target of 75,000 BOE/d; fourth quarter
Montney liquids production more than doubled from the fourth
quarter 2016 to 29,000 barrels per day (bbls/d).
- Replaced 168 percent of full-year
2017 production on a Canadian protocols proved plus probable
reserves basis after royalties (2P reserves) and 228 percent on an
SEC proved reserves basis (U.S. protocols), excluding
dispositions.
- Permian and Montney together
replaced 331 percent of their full-year 2017 production on a
Canadian protocols 2P reserves basis and 339 percent on an SEC
proved reserves basis, excluding dispositions.
“We delivered very strong financial and
operational results in 2017,” said Doug Suttles, Encana President
& CEO. “Driven by disciplined capital allocation, consistent
performance and relentless pursuit of improvement, we significantly
exceeded our cash flow margin target and delivered substantial oil
and condensate growth. We are well positioned for 2018 and expect
to fund our 2018 capital program from corporate cash flows.”
“We have further demonstrated our confidence in
our five-year plan and our commitment to shareholder returns with
the announcement of our share repurchase program which we plan to
fund with cash on hand,” added Suttles. “We are firmly on track to
deliver quality returns and compelling growth through our five-year
plan and we see strong financial upside.”
Innovation, efficiency and commercial
ingenuity drive well performance and valueEncana’s strong
and consistent performance is driven by a relentless focus on
innovation and efficiency. The company’s large-scale cube
development model, high-intensity completions and precision
targeting continue to maximize margin, resource recovery and
capital efficiency. These innovations increased average 180-day
initial production rates by over 25 percent for only 9 percent
additional cost. Encana has secured the majority of expected field
services and materials for 2018 and expects efficiencies to offset
inflation.
Operational highlights include:
Permian: strong finish to 2017 sets
stage for significant 2018 production growth
- Cube development, advanced completions and precision targeting
continue to drive well productivity, efficiencies and returns.
- 2017 total production averaged 66,200 BOE/d, up 37 percent from
2016. Total production in 2018 is expected to increase by
approximately 30 percent from 2017.
Montney: high-quality condensate play
driving significant margin expansion
- Fourth quarter 2017 liquids production more than doubled from
the fourth quarter of 2016 to 29,000 bbls/d. This is expected to
double again in the fourth quarter of 2018 to between 55,000 and
65,000 bbls/d.
- Montney condensate receives premium pricing similar to WTI.
Encana has diversified the markets for its Western Canadian gas
with only four percent of total expected company revenue exposed to
AECO in 2018 and approximately five percent in 2019 and 2020.
Eagle Ford and Duvernay: quality assets
generating free cash flow
- Enhanced completion designs continue to drive productivity
improvements. These plays averaged total combined production of
67,800 BOE/d in 2017 which was consistent with 2016.
- Both assets delivered free operating cash flow in 2017 and are
expected to deliver significant free operating cash flow again in
2018.
2017 year-end and fourth quarter
results: driving quality growth and quality returnsEncana
reported full-year net earnings of $827 million or $0.85 per share
and a fourth quarter net loss of $229 million, reflecting a
non-cash deferred tax charge primarily due to a decrease in tax
rates in 2017 arising from U.S. tax reform. Cash from operating
activities in 2017 was $1.1 billion and $369 million in the fourth
quarter. Full-year non-GAAP operating earnings were $422 million,
up from $76 million in 2016. Fourth quarter non-GAAP operating
earnings were $114 million, up from $85 million in the fourth
quarter of 2016. Non-GAAP cash flow for 2017 was $1.3 billion, up
60 percent from 2016. Non-GAAP cash flow in the fourth quarter was
$444 million, up 47 percent year-over-year.
In 2017, Encana delivered total production of
313,200 BOE/d with the company’s core assets contributing 83
percent. Total fourth quarter production averaged 335,200 BOE/d,
with core assets contributing 93 percent. Full-year liquids
production averaged 129,100 bbls/d with fourth quarter liquids
volumes of 152,600 bbls/d, up 40 percent from the same period in
2016. Full-year natural gas production averaged 1,104 million cubic
feet per day (MMcf/d).
Discipline, innovation and efficiency:
lowering costs and maintaining a strong balance sheet
Encana continued to drive efficiencies across its business in 2017
and met all cost savings targets for the year. The company reduced
transportation and processing expense by $56 million or six percent
compared to 2016; operating expense (excluding long-term incentives
costs) by $78 million or 14 percent; and administrative expense by
$11 million or six percent (excluding the impact of long-term
incentive costs and restructuring charges).
At year-end 2017, Encana had approximately $5.2
billion in total liquidity, composed of $719 million in cash and
cash equivalents and $4.5 billion in available credit
facilities.
2018 capital and production guidance:
disciplined capital allocation, liquids growth and margin
expansionEncana expects its 2018 capital program will be
between $1.8 billion and $1.9 billion which will be fully funded
from cash flows. Approximately 70 percent of its capital program
will be focused on growing oil production from the Permian and
high-margin condensate production in the Montney. The company’s
core assets are expected to contribute over 95 percent of total
2018 production. Encana expects to grow 2018 total annual
production to between 360,000 to 380,000 BOE/d and grow total
liquids production to between 165,000 bbls/d and 175,000 bbls/d.
Visit the company’s website to download its 2018 corporate
guidance.
Managing risk and maximizing realized
priceEncana has a fully integrated and robust risk
management program to manage balance sheet risk and support the
efficient execution of its strategy. This includes financial
derivatives, transportation contracts and a diversified physical
sales portfolio. Encana has secured access to diverse, premium
markets across North America, limiting its exposure to AECO natural
gas pricing through 2020.
As at February 12, 2018, the company has hedged
approximately 104,000 bbls/d of expected oil and condensate
production for the balance of the year using a variety of
structures at an average price of $54.48 per barrel (bbl). In
addition, Encana has hedged approximately 790 MMcf/d of expected
natural gas production for the balance of the year at an average
price of $3.03 per thousand cubic feet (Mcf).
For 2019, the company has hedged approximately
15,000 bbls/d of expected oil and condensate production at an
average price of $58.30 per bbl.
Encana announces planned share
repurchase program The company has announced plans to
repurchase up to $400 million of the company's common shares over
the next 12 months through the NCIB, subject to and following TSX
approval. The company will be submitting a notice to the TSX of its
intention to commence the NCIB (the “Notice”) through which Encana
may purchase for cancellation up to 35,000,000 common shares, which
is equal to approximately 3.6 percent of Encana’s 973,123,364
common shares issued and outstanding as of January 31, 2018.
Purchases will be made on the open market through the facilities of
the TSX, New York Stock Exchange and/or alternative trading systems
at the market price at the time of acquisition, as well as by other
means as may be permitted by stock exchange rules and securities
laws. The company plans to fund the NCIB with cash on
hand.
Encana intends to execute the NCIB in a manner
that is consistent with its commitment to capital discipline by
ensuring that the level of spending is aligned with the prevailing
commodity price environment and resulting cash flows. The actual
number of common shares that may be purchased under the NCIB and
the timing of any such purchases will be determined by Encana.
Encana believes that, depending on the trading price of its common
shares and other relevant factors, purchasing its own shares
represents an attractive opportunity that is in the best interests
of the company and its shareholders. Encana has not purchased any
of its shares pursuant to a normal course issuer bid within the
past 12 months.
Dividend declaredOn February
14, 2018, the Board declared a dividend of $0.015 per share payable
on March 29, 2018 to common shareholders of record as of March 15,
2018.
Non-GAAP Cash Flow Reconciliation |
(for the period ended December 31) ($ millions, except
per share amounts) |
Q42017 |
Q42016 |
2017 |
2016 |
|
Cash from (used in) operating
activities |
369 |
|
199 |
|
1,050 |
|
625 |
|
Deduct (add back): |
|
|
|
|
|
|
|
|
Net change in other assets and liabilities |
(13 |
) |
(11 |
) |
(40 |
) |
(26 |
) |
Net change in non-cash working capital |
(62 |
) |
(92 |
) |
(253 |
) |
(187 |
) |
Non-GAAP cash flow1 |
444 |
|
302 |
|
1,343 |
|
838 |
|
Non-GAAP cash flow
margin1 |
14.40 |
|
10.21 |
|
11.75 |
|
6.49 |
|
Non-GAAP Operating Earnings
Reconciliation |
Net earnings (loss) |
(229 |
) |
(281 |
) |
827 |
|
(944 |
) |
Before-tax (addition) deduction: |
|
|
|
|
|
|
|
|
Unrealized gain (loss) on risk management |
46 |
|
(149 |
) |
442 |
|
(614 |
) |
Impairments |
- |
|
- |
|
- |
|
(1,396 |
) |
Non-operating foreign exchange gain (loss) |
(19 |
) |
(104 |
) |
281 |
|
135 |
|
Restructuring charges |
- |
|
(1 |
) |
- |
|
(34 |
) |
Gain (loss) on divestitures |
(1 |
) |
(3 |
) |
404 |
|
390 |
|
Gain on debt retirement |
- |
|
- |
|
- |
|
89 |
|
|
26 |
|
(257 |
) |
1,127 |
|
(1,430 |
) |
Income tax |
(369 |
) |
(109 |
) |
(722 |
) |
410 |
|
After-tax (addition) deduction |
(343 |
) |
(366 |
) |
405 |
|
(1,020 |
) |
Non-GAAP operating earnings (loss)
1 |
114 |
|
85 |
|
422 |
|
76 |
|
1
Non-GAAP cash flow, non-GAAP cash flow margin and non-GAAP
operating earnings are non-GAAP measures as defined in Note 1.
Production Summary |
(for the period ended December 31) (average) |
Q42017 |
Q42016 |
% ∆ |
2017 |
2016 |
% ∆ |
Oil (Mbbls/d) |
85.0 |
66.4 |
28 |
|
76.3 |
73.7 |
4 |
|
NGLs – Plant Condensate (Mbbls/d) |
33.7 |
19.9 |
69 |
|
26.3 |
20.3 |
30 |
|
Oil & Plant Condensate (Mbbls/d) |
118.7 |
86.3 |
38 |
|
102.6 |
94.0 |
9 |
|
NGLs – Other (Mbbls/d) |
33.9 |
22.6 |
50 |
|
26.5 |
28.1 |
(6 |
) |
Oil and NGLs Total (Mbbls/d) |
152.6 |
108.9 |
40 |
|
129.1 |
122.1 |
6 |
|
Natural gas (MMcf/d) |
1,096 |
1,276 |
(14 |
) |
1,104 |
1,383 |
(20 |
) |
Total production (MBOE/d) |
335.2 |
321.5 |
4 |
|
313.2 |
352.7 |
(11 |
) |
Liquids and Natural Gas Prices |
|
Q4 2017 |
Q4 2016 |
2017 |
2016 |
Liquids ($/bbl) |
|
|
|
|
WTI |
55.40 |
49.29 |
50.95 |
43.32 |
Encana realized liquids prices1 |
|
|
|
|
Oil |
52.94 |
50.78 |
49.76 |
48.68 |
NGLs – Plant Condensate |
52.65 |
45.39 |
48.92 |
39.84 |
NGLs – Other |
24.29 |
17.86 |
20.63 |
12.35 |
|
|
|
|
|
Natural gas |
|
|
|
|
NYMEX ($/MMBtu) |
2.93 |
2.98 |
3.11 |
2.46 |
Encana realized natural gas price1
($/Mcf) |
2.34 |
2.35 |
2.42 |
2.10 |
1 Prices
include the impact of realized gain (loss) on risk management.
Year-End 2017
Reserves Estimates
2017 Reserves Estimates – Canadian Protocols
(Net, After Royalties)1 |
Using forecast prices and costs; simplified table
(MMBOE) |
1PProved |
2PProved +Probable |
3PProved +Probable +Possible |
Canadian Operations |
521 |
1,249 |
1,504 |
USA Operations |
341 |
660 |
735 |
Total as of December 31, 2017 |
861 |
1,909 |
2,239 |
2017 Proved Reserves Estimates – Canadian
Protocols (Net, After Royalties)1 |
Using forecast prices and costs; simplified table. |
Oil & NGLs(MMbbls) |
Natural Gas(Bcf) |
Total(MMBOE) |
December 31, 2016 Revisions and
economic factors Extensions, improved recovery and
discoveries Acquisitions Dispositions Production |
332.0 18.6 93.4 1.3 (11.3) (47.1) |
3,527 207 403 2 (887) (403) |
919.9 53.1 160.4 1.6 (159.2)
(114.3) |
December 31, 2017 |
386.7 |
2,848 |
861.5 |
2017 Proved Reserves Estimates – U.S. Protocols
(Net, After Royalties)1 |
Using constant prices and costs; simplified table. |
Oil & NGLs(MMbbls) |
Natural Gas(Bcf) |
Total(MMBOE) |
December 31, 2016 Revisions and
improved recovery Extensions and discoveries Purchase of
reserves in place Sale of reserves in
place Production |
306.0 (33.9)
158.0 1.2 (9.2) (47.1) |
2,902 (58) 871 2
(795) (403) |
789.7 (43.6)
303.1 1.5 (141.6)
(114.3) |
December 31, 2017 |
375.0 |
2,519 |
794.9 |
1 Numbers may not add due to rounding.
Encana replaced 168 percent of full-year 2017
production on an NI 51-101 (Canadian protocol) proved plus probable
reserves basis after royalties, 188 percent of full-year 2017
production on an NI 51-101 proved reserves basis and 228 percent of
full-year 2017 production on an SEC (U.S. protocol) proved reserves
basis after royalties, excluding dispositions. The changes were
primarily due to Encana’s continued execution and investment in the
core assets resulting in drilling extensions of 497 million barrels
of oil equivalent (MMBOE) (NI 51-101 proved plus probable reserves
basis), 160 MMBOE (NI 51-101 proved reserves basis) and 303 MMBOE
(SEC proved reserves basis), which was primarily a result of
successful drilling in the Permian, Montney and Eagle Ford. For
Permian and Montney together, Encana replaced 331 percent of their
full-year 2017 production on an NI 51-101 proved plus probable
reserves basis and 339 percent of full-year 2017 production on an
SEC proved reserves basis, excluding dispositions.
Differences between estimates under Canadian and
U.S. protocols primarily represent the use of forecast prices in
the estimation of reserves under Canadian standards, while U.S.
standards require the use of 12-month average historical prices
which are held constant. For information on reserves reporting, see
Note 2.
Estimated Risked Economic Contingent
Resources
Net (after royalties) using forecast prices
and costs. |
Estimated Risked Economic Contingent Resources
(MMBOE) 1 |
Contingent Resource Sub-class |
1CLow estimate |
2CBest estimate |
3CHigh estimate |
Canadian Operations |
Development Pending |
1,152 |
2,145 |
2,546 |
Development On Hold |
2 |
2 |
3 |
|
|
|
|
|
USA Operations |
Development Pending |
1,147 |
1,375 |
1,510 |
Development On Hold |
13 |
15 |
17 |
|
|
|
|
|
Total as of December 31,
2017 |
Development Pending |
2,298 |
3,521 |
4,056 |
Development On Hold |
15 |
17 |
19 |
1 Numbers may not add due to rounding.
For information on reserves and economic
contingent resources, see Advisory Regarding Oil and Gas
Information.
Conference call information A
conference call and webcast to discuss the 2017 fourth quarter and
year-end results will be held for the investment community today at
7 a.m. MT (9 a.m. ET). To participate, please dial (844) 707-0663
(toll-free in North America) or (703) 326-3003 (international)
approximately 10 minutes prior to the conference call. The live
audio webcast of the 2017 fourth quarter and year-end conference
call, including slides, will also be available on Encana's website,
www.encana.com, under Investors/Presentations & Events. The
webcasts will be archived for approximately 90 days.
Encana CorporationEncana
Corporation ("Encana") is a leading North American energy producer
that is focused on developing its strong portfolio of resource
plays, held directly and indirectly through its subsidiaries,
producing oil, natural gas liquids (NGLs) and natural gas. 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.
Important InformationEncana
reports in U.S. dollars unless otherwise noted. Production, sales
and reserves estimates are reported on an after-royalties basis,
unless otherwise noted. The term liquids is used to represent oil,
NGLs and condensate. The term liquids-rich is used to represent
natural gas streams with associated liquids volumes. Unless
otherwise specified or the context otherwise requires, references
to Encana or to the company includes reference to subsidiaries of
and partnership interests held by Encana Corporation and its
subsidiaries.
NOTE 1: Non-GAAP measures
Certain measures in this news release do not
have any standardized meaning as prescribed by U.S. GAAP and,
therefore, are considered non-GAAP measures. These measures may not
be comparable to similar measures presented by other companies and
should not be viewed as a substitute for measures reported under
U.S. GAAP. For additional information regarding non-GAAP measures,
see the Company’s website. This news release contains references to
non-GAAP measures as follows:
- Non-GAAP Cash Flow
is a non-GAAP measure defined as cash from (used in) operating
activities excluding net change in other assets and liabilities,
net change in non-cash working capital and current tax on sale of
assets. Non-GAAP Cash Flow Margin is a non-GAAP
measure defined as Non-GAAP Cash Flow per BOE of production.
- Non-GAAP Operating Earnings
(Loss) is a non-GAAP measure defined as net earnings
(loss) excluding non-recurring or non-cash items that management
believes reduces the comparability of the company's financial
performance between periods. These items may include, but are not
limited to, unrealized gains/losses on risk management,
impairments, restructuring charges, non-operating foreign exchange
gains/losses, gains/losses on divestitures and gains on debt
retirement. Income taxes may include valuation allowances and
the provision related to the pre-tax items listed, as well as
income taxes related to divestitures and U.S. tax reform, and
adjustments to normalize the effect of income taxes calculated
using the estimated annual effective income tax rate.
- Operating Cash
Flow is a non-GAAP measure defined as product revenues
less costs associated with delivering the product to market,
including production, mineral and other taxes, transportation and
processing and operating expenses. Operating Cash Flow is used by
management as an internal measure of the profitability of a
play(s). Free Operating Cash Flow is a non-GAAP
measure defined as Operating Cash Flow in excess of capital
investment, excluding net acquisitions and divestitures.
NOTE 2: Information on reserves
reporting – Detailed Canadian protocol disclosure will be
contained in Encana’s Form 51-101F1 for the year ended December 31,
2017 (“Form 51-101F1”) and detailed U.S. protocol disclosure will
be contained in Encana’s Annual Report on Form 10-K for the year
ended December 31, 2017 (“Annual Report on Form 10-K”), each of
which Encana anticipates filing with applicable securities
regulatory authorities on or about February 26, 2018. A description
of the primary differences between the disclosure requirements
under Canadian standards and under U.S. standards will be set forth
under the heading “Note Regarding Additional Reserves Information”
in the Form 51-101F1.
ADVISORY REGARDING OIL AND GAS
INFORMATION - All estimates in this news release are
effective as of December 31, 2017, prepared by qualified reserves
evaluators in accordance with procedures and standards contained in
the Canadian Oil and Gas Evaluation ("COGE") Handbook, National
Instrument 51-101 (NI 51-101) and SEC regulations, as applicable.
On August 14, 2017, Encana was granted an exemption by the Canadian
Securities Administrators from the requirements under NI 51-101
that each qualified reserves evaluator or qualified reserves
auditor appointed under section 3.2 of NI 51-101 and who execute
the report under Item 2 of Section 2 of NI 51-101 be independent of
Encana. Notwithstanding this exemption, for year-ended December 31,
2017, Encana involved independent qualified reserves auditors to
audit a portion of the Company’s reserves and economic contingent
resources estimates. Detailed Canadian and U.S. protocol disclosure
will be contained in the Form 51-101F1 and Annual Report on Form
10-K, respectively, as described in Note 2. Additional detail
regarding Encana's economic contingent resources disclosure will be
available in the Supplemental Disclosure Document filed
concurrently with the Form 51-101F1. Information on the forecast
prices and costs used in preparing the Canadian protocol estimates
will be contained in the Form 51-101F1. For additional information
relating to risks associated with the estimates of reserves and
resources, see "Item 1A. Risk Factors" of the Annual Report on Form
10-K.
Reserves are the estimated remaining quantities
of oil and natural gas and related substances anticipated to be
recoverable from known accumulations, from a given date forward,
based on: analysis of drilling, geological, geophysical and
engineering data, the use of established technology, and specified
economic conditions, which are generally accepted as being
reasonable. Proved reserves are those reserves which can be
estimated with a high degree of certainty to be recoverable. It is
likely that the actual remaining quantities recovered will exceed
the estimated proved reserves. Probable reserves are those
additional reserves that are less certain to be recovered than
proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the
estimated proved plus probable reserves. Possible reserves are
those additional reserves that are less certain to be recovered
than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of
proved plus probable plus possible reserves.
Contingent resources do not constitute, and
should not be confused with, reserves. Contingent resources are
defined as those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations using
established technology or technology under development, but which
are not currently considered to be commercially recoverable due to
one or more contingencies. There is a range of uncertainty of
estimated recoverable volumes. A low estimate (1C) is considered to
be a conservative estimate of the quantity that will actually be
recovered. It is likely that the actual remaining quantities
recovered will exceed the low estimate, which under probabilistic
methodology reflects at least a 90% confidence level. A best
estimate (2C) is considered to be a realistic estimate of the
quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater or less
than the best estimate, which under probabilistic methodology
reflects at least a 50% confidence level. A high estimate (3C) is
considered to be an optimistic estimate. It is unlikely that the
actual remaining quantities recovered will exceed the high
estimate, which under probabilistic methodology reflects at least a
10% confidence level. There is uncertainty that it will be
commercially viable to produce any portion of the resources.
All of the resources classified as contingent
are considered to be discovered, and as such have been assigned a
100% chance of discovery, but have however been risked for the
chance of development. The chance of development is defined as the
likelihood of a project being commercially viable and development
proceeding in a timely fashion. Determining the chance of
development requires taking into consideration each contingency and
quantifying the risks into an overall development risk factor at a
project level. All of the contingent resources disclosed herein are
classified as either Development Pending or Development On Hold.
Development Pending is where resolution of the final conditions for
development is being actively pursued (high chance of development).
Resources classified in this sub-category must be economic and have
been assigned a chance of development ranging between 80 percent
and 99 percent. Development On Hold is where there is a reasonable
chance of development, but there are major non-technical
contingencies to be resolved that are usually beyond the control of
the operator. Resources classified in this sub-category must be
economic and have been assigned a chance of development ranging
between 50 percent and 79 percent. Contingent resources are defined
as “economic contingent resources” if they are currently
economically recoverable and are categorized as economic if those
contingent resources have a positive net present value under
currently forecasted prices and costs. In examining economic
viability, the same fiscal conditions have been applied as in the
estimation of Encana's reserves. Contingencies include factors such
as required corporate or third party (such as joint venture
partners) approvals, legal, environmental, political and regulatory
matters or a lack of infrastructure or markets. None of Encana’s
estimated contingent resources are subject to technical
contingencies.
The conversion of natural gas volumes to barrels
of oil equivalent (BOE) is on the basis of six thousand cubic feet
to one barrel. BOE is based on a generic energy equivalency
conversion method primarily applicable at the burner tip and does
not represent economic value equivalency at the wellhead. Readers
are cautioned that BOE may be misleading, particularly if used in
isolation. 30-day initial or peak production and other short-term
rates are not necessarily indicative of long-term performance or of
ultimate recovery.
ADVISORY REGARDING FORWARD-LOOKING
STATEMENTS - This news release contains certain
forward-looking statements or information (collectively, “FLS”)
within the meaning of applicable securities legislation, including
the United States Private Securities Litigation Reform Act of 1995.
FLS include: expectation of meeting or exceeding targets in
corporate guidance and five-year plan; ability to generate growth,
returns, significant financial upside and anticipated shareholder
returns; anticipated share repurchase program, including amount and
number of shares to be acquired, source of funding, anticipated
timeframe, regulatory filings and approval thereof, method and
location of purchases, commitment to capital discipline, and
reasons and benefits of the program; projected cash available;
anticipated capital program, including funding within expected cash
flows and allocation thereof; success of and benefits from
innovation, including cube development approach, high-intensity
completions and precision well targeting; ability to capture cost
efficiencies and secure field services and materials; anticipated
production, including percentage from core assets, well
productivity, efficiencies, returns, margin expansion, product
types, delivery of significant free operating cash flow and growth
between periods, including impact of commodity prices; exposure to
certain commodity prices; ability to maintain a strong balance
sheet, including access to sources of liquidity; anticipated
hedging and outcomes of risk management program, including amount
of hedged production; performance relative to peers; and
anticipated dividends
Readers are cautioned against unduly relying on
FLS which, by their nature, involve numerous assumptions, risks and
uncertainties that may cause such statements not to occur, or
results to differ materially from those expressed or implied. These
assumptions include: future commodity prices and differentials;
foreign exchange rates; ability to access credit facilities and
shelf prospectuses; assumptions contained in the Company’s
corporate guidance, five-year plan and as specified herein; data
contained in key modeling statistics; availability of attractive
hedges and enforceability of risk management program; effectiveness
of Encana's drive to productivity and efficiencies; results from
innovations; expectation that counterparties will fulfill their
obligations under the gathering, midstream and marketing
agreements; access to transportation and processing facilities
where Encana operates; assumed tax, royalty and regulatory regimes;
enforceability of transaction agreements; and expectations and
projections made in light of, and generally consistent with,
Encana's historical experience and its perception of historical
trends, including with respect to the pace of technological
development, benefits achieved and general industry
expectations.
Risks and uncertainties that may affect these
business outcomes include: ability to generate sufficient cash flow
to meet obligations; commodity price volatility; ability to secure
adequate transportation and potential pipeline curtailments;
variability and discretion of Encana's board of directors to
declare and pay dividends, if any; variability in the amount,
number of shares, method, location and timing of purchases, if any,
pursuant to the share repurchase program, including regulatory
filings and approvals thereof; timing and costs of well, facilities
and pipeline construction; business interruption, property and
casualty losses or unexpected technical difficulties, including
impact of weather; counterparty and credit risk; impact of a
downgrade in credit rating and its impact on access to sources of
liquidity; fluctuations in currency and interest rates; risks
inherent in Encana's corporate guidance; failure to achieve cost
and efficiency initiatives; risks inherent in marketing operations;
risks associated with technology; changes in or interpretation of
royalty, tax, environmental, greenhouse gas, carbon, accounting and
other laws or regulations; risks associated with existing and
potential lawsuits and regulatory actions made against Encana;
impact of disputes arising with its partners, including suspension
of certain obligations and inability to dispose of assets or
interests in certain arrangements; Encana's ability to acquire or
find additional reserves; imprecision of reserves estimates and
estimates of recoverable quantities of liquids and natural gas from
plays and other sources not currently classified as proved,
probable or possible reserves or economic contingent resources,
including future net revenue estimates; risks associated with past
and future acquisitions or divestitures of certain assets or other
transactions or receipt of amounts contemplated under the
transaction agreements (such transactions may include third-party
capital investments, farm-outs or partnerships, which Encana may
refer to from time to time as “partnerships” or “joint ventures”
and the funds received in respect thereof which Encana may refer to
from time to time as “proceeds”, “deferred purchase price” and/or
“carry capital”, regardless of the legal form) as a result of
various conditions not being met; and other risks and uncertainties
impacting Encana's business, as described in its most recent Annual
Report on Form 10-K and as described from time to time in Encana’s
other periodic filings as filed on SEDAR and EDGAR.
Although Encana believes the expectations
represented by such FLS are reasonable, there can be no assurance
that such expectations will prove to be correct. Readers are
cautioned that the assumptions, risks and uncertainties referenced
above are not exhaustive. FLS are made as of the date of this news
release and, except as required by law, Encana undertakes no
obligation to update publicly or revise any FLS. FLS contained in
this news release are expressly qualified by these cautionary
statements.
Further information on Encana Corporation is
available on the company’s website, www.encana.com, or by
contacting:
Investor contact:Corey CodeVice-President,
Investor Relations(403)
645-4606 Patti PosadowskiSr.
Advisor, Investor Relations(403) 645-2252 |
Media contact:Simon ScottVice-President,
Communications(403) 645-2526 Jay
AverillDirector, Media Relations(403)
645-4747 |
SOURCE: Encana Corporation
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