Message from the CEO

During 2009, Encana underwent a year of great change as a result of its corporate reorganization into two highly focused energy companies: one a pure-play natural gas company - Encana Corporation, and the other an integrated oil company - Cenovus Energy Inc. The new Encana remains focused on operating in a principled and ethical manner by continuing to pursue responsible development and energy efficiency. We continually strive to be an employer of choice and actively participate in helping to build the communities where we operate.

We are proud of our accomplishments. We stayed focused in 2009, held to our business model and have exceeded expectations. A challenge to save 10 percent of planned 2009 expenditures without compromising our environmental, health and safety performance was issued. This challenge was not only met, but exceeded - an overall savings of 22 percent was achieved. In the same year we also recorded our best year-over-year safety performance.

Encana remains committed to demonstrating reliability, trustworthiness and responsible, sustainable development - a pledge that will guide our pursuit of doubling production on a per share basis over the next five years. Our company's business and corporate reputation is more than just a point of pride; it is one of our greatest assets, built through continuous learning and improvement as we strive to reduce our impacts on the environment, improve our safety performance, attract and retain the best staff, enhance our community engagement and refine our practices to be among the best in industry. Once you have read through our report, I look forward to your feedback on how we are doing.

A domestic and proven source of energy

By shifting our focus exclusively to clean, affordable, abundant natural gas, we are at the forefront of building a sustainable domestic energy future in North America. Compared to coal, diesel or gasoline, using natural gas produces considerably less carbon dioxide, sulphur dioxide, nitrogen oxides, mercury and other pollutants. Expanding natural gas use in transportation and power generation will not only significantly reduce emissions, but we see it as the most economic environmentally sound energy solution for future generations. To help expand natural gas use in society, we created a Natural Gas Economy team in 2009 to help research and educate public policy makers, opinion leaders and the public on the important role that greater use of natural gas can play in saving money, reducing emissions, and ultimately reducing our continent's dependence on foreign oil.

Environmental stewardship

How our energy developments impact the environment is often at the forefront of many of our discussions with stakeholders. That same sense of environmental stewardship is a front-of-mind concern of our staff, not only because we live and work in the communities where we operate, but caring for our environment is simply the right thing to do.

Over the past year, particularly in the United States, there has been increased public and political discussion of hydraulic fracturing, an essential technology used by Encana and other producers to unlock North America's abundant natural gas supply. In keeping with our commitment to responsible development, Encana is continuously seeking ways to improve its technologies and operations to ensure that this well-proven and environmentally-safe practice is conducted in a responsible manner. Our commitment starts with rigorous engineering standards for wellbore design, and continues through all our operations. Our plans are executed with precision to help ensure we meet, or exceed, all regulatory requirements. We also conduct baseline groundwater testing programs and chemical and water management protection practices at each drilling location to ensure our operations have minimal impact on the environment. We support the disclosure of increased information on the composition of the fluids we use for hydraulic fracturing and are encouraging fluid suppliers to advance the development of more environmentally responsible fluid additives. Through industry associations, Encana is advocating the disclosure of information on fracturing fluids that is sufficient to assure the public that our operations are safe for the environment. I encourage you to review the hydraulic fracturing information on Encana's website.

We are always looking for ways to increase our operational efficiencies, lower our energy use, reduce our environmental impact and increase production. One of the best examples of this is our pioneering installation of multi-well pads, a single location where several wells tap a broad expanse of the gas field. Consolidating drilling, completions and production facilities to a single site saves time and money as it significantly reduces land disturbance and reduces the movement of fleet vehicles, rigs and delivery trucks to and from our work sites, ultimately resulting in fewer tailpipe emissions.

To ensure our employees, contractors and service providers understand their environmental responsibilities, we provide environmental training, specialist field support and supervision to make sure everyone working at Encana can fulfill our ongoing commitment to environmental stewardship.

Read more about our commitment to the environment

Focusing on safety

In all our operations, we strive to reduce our risk, financially and operationally. But foremost is reducing health and workplace risks for all our staff and contractors. At Encana, if something cannot be done safely, we won't do it - a philosophy that is at the heart of what we do everyday. In 2009 our employees achieved the best safety record in company history with a significant decrease in year-over-year lost-time injury frequency.

This is an excellent achievement, but we know we have more work to do as we strive to eliminate injuries from our work sites. In 2009, we experienced three workplace fatalities. We were deeply saddened when two employees of our contractors lost their lives on Encana work sites and one employee died from injuries sustained in a traffic accident while en-route to one of our sites. These tragedies reinforce our belief that safety practices and policies must be continually improved to prevent any recurrence. Achieving an injury-free workplace is not an end in itself; it is a standard that must be maintained through constant vigilance, evaluation and communication. To this end, in 2010 we will be focusing on refreshing our health and safety policies and our environment, health & safety management system to further support our pursuit of an injury-free workplace.

Part of continually striving to improve our performance means learning from incidents when they do happen. In November, 2009, a rare piping failure resulted in a sour gas leak near Pouce Coupe, British Columbia. Our teams thoroughly investigated the cause of the leak and have implemented numerous actions to enhance public and worker safety. We have also shared the lessons we learned with our industry peers and the regulators so that others can learn from our experience. Our dedication to open, honest communication never wavers; we acknowledge there are occasions where we don't always achieve the high standards we set for ourselves. When this happens, we work hard to identify a cause and address it with all of our stakeholders through open and honest dialogue.

Learn more about our safety initiatives

In the community

Mutually beneficial relationships are a priority in the communities where we operate. Corporate citizenship means contributing in a positive way to their well-being. Investing in communities and fostering constructive relationships is a vital part of our business. As a founding sponsor of the WorldSkills Calgary 2009 international competition, we helped to support the training of the next generation of skilled tradespeople.

Read more about our community investments

Our people

Our commitment to responsible development - through community investment, engagement, environmental stewardship and safety - would not be possible without our people, which is why we focus on attracting and retaining the best and the brightest. We work hard to make Encana a company where talented people want to work.

Our people share ideas to decrease costs, improve efficiency, increase production, create a safer place to work and protect our environment. A great example of this last year was the creation of a pandemic management team, encompassing several Encana departments, to identify risks to our staff and operations by developing and implementing contingency plans in the event of an H1N1 virus outbreak. By effectively managing workplace health risks and supporting the well-being of our staff, this dedicated team effort exemplified our approach to corporate responsibility.

Learn more about our commitment to our people

As I reflect on our 2009 achievements, I'm proud of the independent recognition we've received for our work last year. Our responsible approach to resource development made us one of only five energy companies in Canada to be named to Corporate Knights magazine's Global 100 Most Sustainable Corporations in the World, and we were again named to the World Dow Jones Sustainability Index. These accomplishments reflect our dedication to trustworthy performance in all we do and our focus on always striving to do better as we responsibly develop affordable, abundant supplies of clean burning natural gas - the clear energy choice.

About Randy Eresman