EnCana generates first quarter cash flow of US$1.9 billion, or $2.59 per share – down 18 percent

CALGARY, April 22 /PRNewswire-FirstCall/ - EnCana Corporation (TSX NYSE: ECA) continued to deliver strong financial and operating performance in the first quarter of 2009. Cash flow was US$1.9 billion, or $2.59 per share and operating earnings were $948 million, or $1.26 per share - down 18 and 9 percent respectively on a per share basis compared to the first quarter of 2008. These results are on track with 2009 guidance and were achieved during a quarter when benchmark natural gas prices fell about 39 percent and oil prices were down about 56 percent compared to the same period in 2008. First quarter natural gas and oil production increased 3 percent compared to the same period in 2008 to 4.7 billion cubic feet equivalent per day (Bcfe/d). In addition, this production level is higher than EnCana's first quarter production expectations largely due to the impact of price-sensitive royalty rates in Alberta, which are reduced at lower prices and increased at higher prices. EnCana reports production on an after-royalties basis. Before any price-related royalty impacts, EnCana expects 2009 production to be at levels similar to the volumes produced in 2008.

"Operational excellence in our portfolio of low-cost, low-risk resource plays helped EnCana achieve cost-effective production across North America. Underpinning our strong financial performance was close to $700 million in realized after-tax gains from our natural gas hedges during the first quarter," said Randy Eresman, EnCana's President Chief Executive Officer.



Modest capital program aligned to economic conditions



"With continued economic uncertainty and low prices, particularly for natural gas, we remain focused on directing our capital investment to only our highest return projects. For 2009, we set a modest capital program with the flexibility to align investments with the industry conditions. Our North American resource play business model and our conservative investment approach will help EnCana generate strong performance through 2009 and withstand the prevailing economic downturn.

"EnCana's financial position is strong. Our debt ratios remain below our targeted range and we have hedged about two-thirds of our total expected natural gas production through October of this year at an average price of $9.13 per thousand cubic feet (Mcf), which is about two and a half times the current spot price. Our hedging strategy is aimed at providing an increased level of certainty to our cash flows so that we can efficiently manage our capital programs," Eresman said.



Industry costs starting to drop



"In the first quarter, operating and administrative costs decreased about 31 percent compared with the same period the year before, to $1.06 per thousand cubic feet of gas equivalent (Mcfe), due primarily to a weaker Canadian dollar, lower fuel prices and lower long-term incentive costs. Substantially reduced field activity across North America is starting to result in lower supply and services pricing and, by the end of 2009, we anticipate price reductions could reach more than 20 percent from 2008 average costs, if current trends continue. So far in 2009, we're tracking lower on capital investment and operating and administrative costs, and by mid-year we expect to know how much this will impact our overall expenditures for 2009," Eresman said.



    IMPORTANT NOTE: EnCana reports in U.S. dollars unless otherwise noted and
    follows U.S. protocols, which report gas and oil production, sales and
    reserves on an after-royalties basis. The company's financial statements
    are prepared in accordance with Canadian generally accepted accounting
    principles (GAAP). Per share amounts for cash flow and earnings are on a
    diluted basis.

    First Quarter 2009 Highlights
    -----------------------------
    (all year-over-year comparisons are to the first quarter of 2008)

    Financial

    -  Cash flow decreased 18 percent per share to $2.59, or $1.9 billion
    -  Operating earnings were down 9 percent per share to $1.26, or $948
       million
    -  Net earnings increased to $1.28 per share, or $962 million, primarily
       due to an after-tax unrealized mark-to-market hedging gain of $89
       million in the first quarter of 2009 compared to an after-tax loss of
       $737 million in the first quarter of 2008
    -  Capital investment, excluding acquisitions and divestitures, was down
       18 percent to $1.5 billion
    -  Free cash flow was $436 million, down 19 percent (Free cash flow is
       defined in Note 1 on page 6)
    -  EnCana's integrated oil business venture with ConocoPhillips generated
       $116 million in operating cash flow, comprised of $57 million from the
       company's Foster Creek and Christina Lake upstream projects, and $59
       million from the downstream business. Operating cash flow was down
       $54 million due largely to lower oil prices
    -  Realized natural gas prices were down 10 percent to $7.22 per Mcf and
       realized liquids prices decreased 51 percent to $34.24 per barrel
       (bbl). These prices include financial hedges
    -  At the end of the quarter, debt to capitalization was 29 percent and
       debt to adjusted EBITDA was 0.7 times.

    Operating - Upstream

    -  Key resource play production was up 8 percent, with an 8 percent
       increase in natural gas production and oil production increasing
       7 percent
    -  Total natural gas production increased 4 percent to 3.87 billion cubic
       feet per day (Bcf/d), up 4 percent per share
    -  Total oil and natural gas liquids (NGLs) production decreased 2
       percent to 134,280 barrels per day (bbls/d), down 2 percent per share
    -  Foster Creek and Christina Lake oil production grew 18 percent to
       34,729 bbls/d net to EnCana
    -  Operating and administrative costs of $1.06 per Mcfe decreased from
       $1.53 per Mcfe in the first quarter of 2008, primarily due to a weaker
       Canadian dollar, lower fuel costs and lower long-term incentive costs
       as a result of a declining share price.

    Operating - Downstream

    -  Refined products averaged 421,000 bbls/d (210,500 bbls/d net to
       EnCana), down 3 percent
    -  Refinery crude utilization of 88 percent or 398,000 bbls/d crude
       throughput (199,000 bbls/d net to EnCana), down 2 percent.

    Majority of net earnings year-over-year increase related to unrealized
    mark-to-market accounting gains


EnCana's net earnings in the first quarter were $962 million, an increase of $869 million from the first quarter of 2008. First quarter 2009 net earnings included $89 million of after-tax unrealized gains due to mark-to- market accounting for hedging contracts compared to an after-tax loss of $737 million in the first quarter of 2008, a swing of $826 million in net earnings. It is because of these dramatic mark-to-market accounting swings in net earnings that EnCana focuses on operating earnings as a better measure of quarter-over-quarter earnings performance.

Realized after-tax hedging gains for the first five months of the 2008- 2009 natural gas year, which runs from November 1, 2008 to October 31, 2009, were $1.0 billion, and unrealized after-tax gains for the remainder of the gas year are currently forecast to be $1.9 billion, for a total of $2.9 billion, after-tax.



    -------------------------------------------------------------------------
                   Financial Summary - Total Consolidated
    -------------------------------------------------------------------------
    (for the three months ended March 31)        Q1          Q1          %
    ($ millions, except per share amounts)      2009        2008      change
    -------------------------------------------------------------------------
    Cash flow(1)                               1,944       2,389         -19
      Per share diluted                         2.59        3.17         -18
    -------------------------------------------------------------------------
    Net earnings                                 962          93
      Per share diluted                         1.28        0.12
    -------------------------------------------------------------------------
    Operating earnings(1)                        948       1,045          -9
      Per share diluted                         1.26        1.39          -9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
            Earnings Reconciliation Summary - Total Consolidated
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings                                 962          93
    Add back (losses) & deduct gains
    Unrealized mark-to-market hedging
     gain (loss), after-tax                       89        (737)
    Non-operating foreign exchange gain
     (loss), after-tax                           (75)       (215)

    -------------------------------------------------------------------------
    Operating earnings(1)                        948       1,045          -9
      Per share diluted                         1.26        1.39          -9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Cash flow and operating earnings are non-GAAP measures as defined in
        Note 1 on Page 6 &7.


    -------------------------------------------------------------------------
                        Production & Drilling Summary
    -------------------------------------------------------------------------
                             Total Consolidated
    -------------------------------------------------------------------------
    (for the three months ended March 31)        Q1          Q1          %
    (After royalties)                           2009        2008      change
    -------------------------------------------------------------------------
    Natural gas (MMcf/d)                       3,869       3,733          +4
    -------------------------------------------------------------------------
      Natural gas production per
       1,000 shares (Mcf/d)                     5.16        4.98          +4
    -------------------------------------------------------------------------
    Oil and NGLs (Mbbls/d)                       134         137          -2
    -------------------------------------------------------------------------
      Oil and NGLs production per
       1,000 shares (Mcfe/d)                    1.07        1.10          -2
    -------------------------------------------------------------------------
    Total production (MMcfe/d)                 4,675       4,557          +3
    -------------------------------------------------------------------------
      Total production per 1,000 shares
       (Mcfe/d)                                 6.23        6.08          +3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net wells drilled                            883       1,143         -23
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


Key resource play production increased in first quarter



Total production from key resource plays was 3.7 Bcfe/d compared to 3.4 Bcfe/d in the first quarter of 2008. This was led by a 50 percent production increase in the East Texas key resource play due to ongoing success at the Deep Bossier play. EnCana continued to drill prolific wells in the Amoruso field, where 30-day initial production rates averaged more than 19 MMcf/d. The Charlene # 1 well was completed in January and flowed during initial evaluation in excess of 50 MMcf/d.



EnCana encouraged by resource potential in Haynesville shale play



"While it is early days in the development of the Haynesville play in Louisiana and Texas, there have been some very encouraging results from our program as well as from other producers in the region," said Jeff Wojahn, EnCana's Executive Vice-President and President, USA Division. "Given the significant potential of our lands, we plan to re-allocate $290 million of savings from other areas of the company into our Haynesville program this year. With a total capital program of $580 million we will be drilling about 50 net wells which will enable us to continue to increase our understanding of the play, further evaluate our lands, and retain prospective acreage." In anticipation of increased future production from the region and to facilitate unrestrained market access for the company's expected production growth, EnCana is advancing plans for midstream processing and gas transportation. This includes recent commitments of 150 million cubic feet per day of capacity on the proposed Gulf South pipeline expansion and 500 million cubic feet per day of service on the proposed ETC Tiger pipeline.



Development continues in promising Horn River shale play



EnCana remains optimistic about the production potential from its land holdings in the Horn River shale play in northeast British Columbia. The company has adopted a more efficient way to develop the natural gas in this play by increasing the number of fracture stimulations per long-reach horizontal well leg. EnCana and its partner Apache now expect to increase their fracs per leg to as many as 14 from the originally-planned eight fracs. This could reduce the number of wells required to recover the resource because more of the natural gas can be accessed from each well. The revised plan is to drill 12 net wells this year, rather than the 20 initially scheduled. Public consultations are underway for the proposed Cabin Gas Plant, to be built about 60 kilometres northeast of Fort Nelson, British Columbia. The proposed plant, in which EnCana holds a 25 percent interest, is expected to have an initial processing capacity of 400 MMcf/d. Processing capacity is expected to expand in stages in conjunction with production growth from the Horn River Basin. The first phase of the project is expected to be commissioned in the third quarter of 2011. EnCana plans to construct the plant on behalf of industry co-owners who are major land holders in the Horn River Basin.



Foster Creek and Christina Lake expansions increase capacity



The commissioning of recent expansions at Foster Creek, which are expected to increase plant capacity to 60,000 bbls/d net to EnCana, is nearly complete and production is ramping up. First quarter production of approximately 28,000 bbls/d is targeted to increase to more than 45,000 bbls/d by year-end. At Christina Lake, first quarter production was more than 6,500 bbls/d - a 152 percent increase over the first quarter of 2008 as a result of an expansion that was completed in mid-2008. Construction continues on the next phase of expansion at Christina Lake, which is targeted to increase net plant capacity to 29,000 bbls/d in 2011.



                Growth from key North American resource plays

    -------------------------------------------------------------------------
                                          Daily Production
                        -----------------------------------------------------
                         2009                   2008                    2007
                        -----------------------------------------------------
    Resource Play               Full                                    Full
    (After royalties)     Q1    Year      Q4      Q3      Q2      Q1    Year
    -------------------------------------------------------------------------
    Natural gas (MMcf/d)
      Jonah              623     603     573     615     630     595     557
      Piceance           386     385     377     407     383     372     348
      East Texas         409     334     408     339     316     273     143
      Fort Worth         149     142     143     148     137     140     124
      Greater Sierra     215     220     228     228     219     205     211
      Cutbank Ridge      323     296     311     322     280     271     258
      Bighorn            156     167     165     185     170     146     126
      CBM                309     304     308     309     303     298     259
      Shallow Gas        673     700     683     691     712     715     726
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total natural gas
     (MMcf/d)          3,243   3,151   3,196   3,244   3,150   3,015   2,752
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil (Mbbls/d)
      Foster Creek        28      26      29      27      21      27      24
      Christina Lake       7       4       6       5       4       2       3
      Pelican Lake        21      22      20      22      21      24      23
      Weyburn             16      14      15      14      13      14      15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total oil
     (Mbbls/d)(1)         72      66      71      67      59      67      65
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total
     (MMcfe/d)(1)      3,676   3,548   3,621   3,648   3,506   3,417   3,141
    -------------------------------------------------------------------------
    % change from
     prior period       +1.5   +13.0    -0.7    +4.1    +2.6    +2.7   +12.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Totals may not add due to rounding.



           Drilling activity in key North American resource plays
    -------------------------------------------------------------------------
                                         Net Wells Drilled
                        -----------------------------------------------------
                         2009                   2008                    2007
                        -----------------------------------------------------
    Resource Play               Full                                    Full
                          Q1    Year      Q4      Q3      Q2      Q1    Year
    -------------------------------------------------------------------------
    Natural gas
      Jonah               35     175      40      43      49      43     135
      Piceance            53     328      70      94      81      83     286
      East Texas          15      78      23      22      22      11      35
      Fort Worth          16      83      21      21      20      21      75
      Greater Sierra      15     106      14      29      27      36     109
      Cutbank Ridge       20      82      17      17      24      24      93
      Bighorn             21      64       5      11      18      30      62
      CBM                278     698     359      78      10     251   1,079
      Shallow Gas        336   1,195     383     233      83     496   1,914
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total gas wells      789   2,809     932     548     334     995   3,788
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Oil
      Foster Creek         6      20       1       6       1      12      23
      Christina Lake       -       -       -       -       -       -       3
      Pelican Lake         4       -       -       -       -       -       -
      Weyburn              -      21       3       4       5       9      37
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total oil wells       10      41       4      10       6      21      63
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total                799   2,850     936     558     340   1,016   3,851
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                   First quarter natural gas and oil prices
    -------------------------------------------------------------------------
                                                 Q1          Q1          %
    Natural gas                                 2009        2008      change
    -------------------------------------------------------------------------
    NYMEX ($/MMBtu)                             4.89        8.03         -39
    EnCana realized gas price(1) ($/Mcf)        7.22        8.02         -10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Oil and NGLs ($/bbl)
    -------------------------------------------------------------------------
    WTI                                        43.31       97.82         -56
    Western Canadian Select (WCS)              34.38       76.37         -55
    Differential WTI/WCS                        8.93       21.45         -58
    EnCana realized liquids price(1)           34.24       69.59         -51
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Chicago 3-2-1 crack spread ($/bbl)          9.75        7.69         +27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Realized prices include the impact of financial hedging.


Price risk management



Risk management positions at March 31, 2009 are presented in Note 16 to the unaudited Interim Consolidated Financial Statements. In the first quarter of 2009, EnCana's commodity price risk management measures resulted in realized gains of approximately $699 million after-tax, composed of a $693 million after-tax gain on gas price and basis hedges and a $6 million after-tax gain on other hedges.



    Two-thirds of expected 2009 gas production hedged during first 10 months
    of 2009


EnCana has hedged about 2.6 Bcf/d of expected gas production through October 2009 at an average NYMEX equivalent price of $9.13 per Mcf. This price hedging strategy increases certainty in cash flow to help ensure that EnCana can meet its capital and dividend requirements without substantially adding to debt. EnCana continually assesses its hedging needs and the opportunities available prior to establishing its capital program for the upcoming year.



Corporate developments



Quarterly dividend of 40 cents per share declared



EnCana's Board of Directors has declared a quarterly dividend of 40 cents per share payable on June 30, 2009 to common shareholders of record as of June 15, 2009. Based on the April 21, 2009 closing share price on the New York Stock Exchange of $42.94, this represents an annualized yield of about 3.7 percent.

EnCana's corporate guidance is unchanged from the most recent update published February 12, 2009.



Financial strength



EnCana has a very strong balance sheet, with 78 percent of EnCana's outstanding debt comprised of long-term, fixed-rate debt with an average remaining term of more than 14 years. Upcoming debt maturities in 2009 are $250 million and $200 million in 2010. At March 31, 2009, EnCana had $2.0 billion in unused committed credit facilities. EnCana targets a debt to capitalization ratio between 30 and 40 percent and a debt to adjusted EBITDA ratio of 1.0 to 2.0 times. At March 31, 2009, the company's debt to capitalization ratio was 29 percent and debt to adjusted EBITDA, on a trailing 12-month basis, was 0.7 times.

In the first quarter of 2009, EnCana invested $1.5 billion in capital, excluding acquisitions and divestitures, with a focus on continued development of the company's key resource plays and expansion of downstream heavy crude oil refining capacity.

EnCana invested about $79 million in land acquisitions in the first quarter and divested about $33 million of mature properties in Western Canada. Depending on market conditions for the rest of this year, EnCana may divest between $500 million and $1 billion of assets.





    -------------------------------------------------------------------------
                            CONFERENCE CALL TODAY
                 10 a.m. Mountain Time (12 p.m. Eastern Time)

    EnCana will host a conference call today Wednesday, April 22, 2009
    starting at 10:00 a.m. MT (12:00 p.m. ET). To participate, please dial
    (800) 731-6941 (toll-free in North America) or (416) 644-3417
    approximately 10 minutes prior to the conference call. An archived
    recording of the call will be available from approximately 2:00 p.m. MT
    on April 22 until midnight April 29, 2009 by dialling (877) 289-8525 or
    (416) 640-1917 and entering access code 21301123 followed by the pound
    # sign.

    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 non-GAAP measures as follows:
    -   Cash flow is a non-GAAP measure defined as cash from operating
        activities excluding net change in other assets and liabilities and
        net change in non-cash working capital, both of which are defined on
        the Consolidated Statement of Cash Flows, in this news release and
        interim financial statements.
    -   Free cash flow is a non-GAAP measure that EnCana defines as cash flow
        in excess of capital investment, excluding net acquisitions and
        divestitures, and is used to determine the funds available for other
        investing and/or financing activities.
    -   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 debt issued from
        Canada and the partnership contribution receivable, the after-tax
        foreign exchange gain/loss on settlement of intercompany
        transactions, future income tax on foreign exchange related to U.S.
        dollar intercompany debt recognized for tax purposes only and the
        effect of changes in statutory 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
        U.S. dollar debt issued from Canada has maturity dates in excess of
        five years.
    -   Capitalization is a non-GAAP measure defined as debt plus
        shareholders' equity. Debt to capitalization and debt to adjusted
        EBITDA are two ratios which management uses to steward the company's
        overall debt position as measures of the company's overall financial
        strength.
    -   Adjusted EBITDA is a non-GAAP measure defined as net earnings before
        gains or losses on divestitures, income taxes, foreign exchange gains
        or losses, interest net, accretion of asset retirement obligation,
        and depreciation, depletion and amortization.


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 $40 billion, EnCana is a leading North American unconventional natural gas and integrated oil 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.



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, debt to capitalization ratio, debt to adjusted EBITDA ratio, sustainable growth and returns, cash flow, cash flow per share, operating earnings and increases in net asset value); anticipated ability to meet the company's guidance forecasts; anticipated life of proved reserves; anticipated growth and success of resource plays and the expected characteristics of resource plays; anticipated production and drilling in the Horn River and Haynesville areas; anticipated cost reductions and production efficiencies from fracture stimulations; anticipated capacity and timing for the proposed Cabin Gas Plant; planned expansion of in-situ oil production; anticipated crude oil and natural gas prices, including basis differentials for various regions; anticipated expansion and production at Foster Creek and Christina Lake; anticipated divestitures; potential dividends; anticipated success of EnCana's price risk management strategy; anticipated hedging gains; potential demand for natural gas; anticipated drilling; potential capital expenditures and investment; potential oil, natural gas and NGLs production in 2009 and beyond; anticipated costs and cost reductions; 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 assumptions, 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 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 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 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.

Forward-looking information respecting anticipated 2009 cash flow for EnCana is based upon achieving average production of oil and gas for 2009 of approximately 4.6 Bcfe/d, average commodity prices for 2009 based on a WTI price of $55 - $75/bbl for oil, a NYMEX price of $5.50 - $7.50/Mcf for natural gas, an average U.S./Canadian dollar foreign exchange rate of $0.75 - $0.85, an average Chicago 3-2-1 crack spread for 2009 of $5 - $10/bbl for refining margins, and an average number of outstanding shares for EnCana of approximately 750 million. Assumptions relating to forward-looking statements generally include EnCana's current expectations and projections made by the company in light of, and generally consistent with, its historical experience and its perception of historical trends, as well as expectations regarding rates of advancement and innovation, generally consistent with and informed by its past experience, all of which are subject to the risk factors identified elsewhere in this news release.

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.





    EnCana Corporation

    Interim Consolidated Financial Statements
    (unaudited)
    For the period ended March 31, 2009

    (U.S. Dollars)


    First quarter report
    for the period ended March 31, 2009



    CONSOLIDATED STATEMENT OF EARNINGS (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
    ($ millions, except per share amounts)                 2009         2008
    -------------------------------------------------------------------------

    REVENUES, NET OF ROYALTIES            (Note 4)  $     4,608  $     5,434

    EXPENSES                              (Note 4)
      Production and mineral taxes                           61          114
      Transportation and selling                            293          412
      Operating                                             553          696
      Purchased product                                   1,209        2,393
      Depreciation, depletion and
       amortization                                         983        1,035
      Administrative                                         85          156
      Interest, net                       (Note 6)          104          134
      Accretion of asset retirement
       obligation                        (Note 11)           17           21
      Foreign exchange (gain) loss, net   (Note 7)           58           95
      (Gain) loss on divestitures         (Note 5)           (1)           -
    -------------------------------------------------------------------------
                                                          3,362        5,056
    -------------------------------------------------------------------------
    NET EARNINGS BEFORE INCOME TAX                        1,246          378
      Income tax expense                  (Note 8)          284          285
    -------------------------------------------------------------------------
    NET EARNINGS                                    $       962  $        93
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NET EARNINGS PER COMMON SHARE        (Note 15)
      Basic                                         $      1.28  $      0.12
      Diluted                                       $      1.28  $      0.12
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying Notes to Consolidated Financial Statements.



    CONSOLIDATED STATEMENT OF RETAINED EARNINGS (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
    ($ millions)                                           2009         2008
    -------------------------------------------------------------------------

    RETAINED EARNINGS, BEGINNING OF YEAR            $    17,584  $    13,082
    Net Earnings                                            962           93
    Dividends on Common Shares                             (300)        (300)
    Charges for Normal Course Issuer Bid   (Note 12)          -         (229)
    -------------------------------------------------------------------------
    RETAINED EARNINGS, END OF PERIOD                $    18,246  $    12,646
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
    ($ millions)                                           2009         2008
    -------------------------------------------------------------------------
    NET EARNINGS                                    $       962  $        93
    OTHER COMPREHENSIVE INCOME, NET OF TAX
      Foreign Currency Translation Adjustment              (271)        (400)
    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME                            $       691  $      (307)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENT OF ACCUMULATED OTHER COMPREHENSIVE INCOME
    (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
    ($ millions)                                           2009         2008
    -------------------------------------------------------------------------

    ACCUMULATED OTHER COMPREHENSIVE INCOME,
     BEGINNING OF YEAR                              $       833  $     3,063
    Foreign Currency Translation Adjustment                (271)        (400)
    -------------------------------------------------------------------------
    ACCUMULATED OTHER COMPREHENSIVE INCOME,
     END OF PERIOD                                  $       562  $     2,663
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying Notes to Consolidated Financial Statements.



    CONSOLIDATED BALANCE SHEET (unaudited)

                                                          As at        As at
                                                       March 31, December 31,
    ($ millions)                                           2009         2008
    -------------------------------------------------------------------------
    ASSETS
      Current Assets
        Cash and cash equivalents                   $       629  $       383
        Accounts receivable and
         accrued revenues                                 1,360        1,568
        Current portion of partnership
         contribution receivable                            317          313
        Risk management                  (Note 16)        3,038        2,818
        Inventories                       (Note 9)          536          520
    -------------------------------------------------------------------------
                                                          5,880        5,602
      Property, Plant and Equipment, net  (Note 4)       35,657       35,424
      Investments and Other Assets                          862          727
      Partnership Contribution Receivable                 2,753        2,834
      Risk Management                    (Note 16)           63          234
      Goodwill                                            2,370        2,426
    -------------------------------------------------------------------------
                                          (Note 4)  $    47,585  $    47,247
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
      Current Liabilities
        Accounts payable and accrued
         liabilities                                $     2,482  $     2,871
        Income tax payable                                  366          424
        Current portion of partnership
         contribution payable                               310          306
        Risk management                  (Note 16)           18           43
        Current portion of
         long-term debt                  (Note 10)          250          250
    -------------------------------------------------------------------------
                                                          3,426        3,894
      Long-Term Debt                     (Note 10)        9,192        8,755
      Other Liabilities                                     745          576
      Partnership Contribution Payable                    2,778        2,857
      Risk Management                    (Note 16)            3            7
      Asset Retirement Obligation        (Note 11)        1,238        1,265
      Future Income Taxes                                 6,835        6,919
    -------------------------------------------------------------------------
                                                         24,217       24,273
    -------------------------------------------------------------------------
      Shareholders' Equity
        Share capital                    (Note 12)        4,560        4,557
        Retained earnings                                18,246       17,584
        Accumulated other
         comprehensive income                               562          833
    -------------------------------------------------------------------------
      Total Shareholders' Equity                         23,368       22,974
    -------------------------------------------------------------------------
                                                    $    47,585  $    47,247
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying Notes to Consolidated Financial Statements.



    CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
    ($ millions)                                           2009         2008
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES
      Net earnings                                  $       962  $        93
      Depreciation, depletion
       and amortization                                     983        1,035
      Future income taxes                 (Note 8)           37          (79)
      Unrealized (gain) loss on
       risk management                   (Note 16)         (111)       1,093
      Unrealized foreign exchange
       (gain) loss                                           20           76
      Accretion of asset retirement
       obligation                        (Note 11)           17           21
      (Gain) loss on divestitures         (Note 5)           (1)           -
      Other                                                  37          150
      Net change in other assets
       and liabilities                                       14          (93)
      Net change in non-cash
       working capital                                     (127)        (538)
    -------------------------------------------------------------------------
      Cash From Operating Activities                      1,831        1,758
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Capital expenditures                (Note 4)       (1,587)      (1,907)
      Proceeds from divestitures          (Note 5)           33           72
      Net change in investments and other                  (142)           9
      Net change in non-cash
       working capital                                      (92)         292
    -------------------------------------------------------------------------
      Cash (Used in) Investing Activities                (1,788)      (1,534)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
      Net issuance (repayment) of
       revolving long-term debt                             505          (59)
      Issuance of long-term debt         (Note 10)            -          723
      Issuance of common shares          (Note 12)            2           63
      Purchase of common shares          (Note 12)            -         (311)
      Dividends on common shares                           (300)        (300)
    -------------------------------------------------------------------------
      Cash From (Used in) Financing
       Activities                                           207          116
    -------------------------------------------------------------------------

    FOREIGN EXCHANGE GAIN (LOSS)
     ON CASH AND CASH EQUIVALENTS
     HELD IN FOREIGN CURRENCY                                (4)          (4)
    -------------------------------------------------------------------------

    INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                   246          336
    CASH AND CASH EQUIVALENTS,
     BEGINNING OF YEAR                                      383          553
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS,
     END OF PERIOD                                  $       629  $       889
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    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 ("GAAP"). EnCana's operations are in the business of the
    exploration for, the development of, and the production and marketing of
    natural gas, crude oil and natural gas liquids ("NGLs"), 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, 2008, 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, 2008.

    2.  CHANGES IN ACCOUNTING POLICIES AND PRACTICES

    On January 1, 2009, the Company adopted the following Canadian Institute
    of Chartered Accountants ("CICA") Handbook Section:

    -   "Goodwill and Intangible Assets", Section 3064. The new standard
        replaces the previous goodwill and intangible asset standard and
        revises the requirement for recognition, measurement, presentation
        and disclosure of intangible assets. The adoption of this standard
        has had no material impact on EnCana's Consolidated Financial
        Statements.

    3.  RECENT ACCOUNTING PRONOUNCEMENTS

    In February 2008, the CICA's Accounting Standards Board confirmed that
    International Financial Reporting Standards ("IFRS") will replace
    Canadian GAAP in 2011 for profit-oriented Canadian publicly accountable
    enterprises. EnCana will be required to report its results in accordance
    with IFRS beginning in 2011. The Company has developed a changeover plan
    to complete the transition to IFRS by January 1, 2011, including the
    preparation of required comparative information. The impact of IFRS on
    the Company's Consolidated Financial Statements is not reasonably
    determinable at this time.

    As of January 1, 2011, EnCana will be required to adopt the following
    CICA Handbook sections:

    -   "Business Combinations", Section 1582, which replaces the previous
        business combinations standard. The standard requires assets and
        liabilities acquired in a business combination, contingent
        consideration and certain acquired contingencies to be measured at
        their fair values as of the date of acquisition. In addition,
        acquisition-related and restructuring costs are to be recognized
        separately from the business combination and included in the
        statement of earnings. The adoption of this standard will impact the
        accounting treatment of future business combinations.

    -   "Consolidated Financial Statements", Section 1601, which together
        with Section 1602 below, replace the former consolidated financial
        statements standard. Section 1601 establishes the requirements for
        the preparation of consolidated financial statements. The adoption of
        this standard should not have a material impact on EnCana's
        Consolidated Financial Statements.

    -   "Non-controlling Interests", Section 1602. The standard establishes
        the accounting for a non-controlling interest in a subsidiary in
        consolidated financial statements subsequent to a business
        combination. This standard requires a non-controlling interest in a
        subsidiary to be classified as a separate component of equity. In
        addition, net earnings and components of other comprehensive income
        are attributed to both the parent and non-controlling interest. The
        adoption of this standard should not have a material impact on
        EnCana's Consolidated Financial Statements.

    4.  SEGMENTED INFORMATION

    The Company's operating and reportable segments are as follows:

    -   Canada includes the Company's exploration for, and development and
        production of natural gas, crude oil and NGLs and other related
        activities within the Canadian cost centre.

    -   USA includes the Company's exploration for, and development and
        production of natural gas, NGLs and other related activities within
        the United States cost centre.

    -   Downstream Refining is focused on the refining of crude oil into
        petroleum and chemical products at two refineries located in the
        United States. The refineries are jointly owned with ConocoPhillips.

    -   Market Optimization is primarily responsible for the sale of the
        Company's proprietary production. These results are included in the
        Canada and USA segments. Market optimization activities include
        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 and Other mainly 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 sells substantially all of the Company's upstream
    production to third-party customers. Transactions between segments are
    based on market values and eliminated on consolidation. The tables in
    this note present financial information on an after eliminations basis.

    On December 31, 2008, EnCana updated its segmented reporting to present
    the upstream Canadian and United States cost centres and Downstream
    Refining as separate reportable segments. This resulted in EnCana
    presenting the Canadian portion of the Integrated Oil Division as part of
    the Canada segment. Previously, this was aggregated and presented in the
    Integrated Oil segment. Prior periods have been restated to reflect the
    new presentation.

    EnCana has a decentralized decision making and reporting structure.
    Accordingly, the Company is organized into Divisions as follows:

    -   Canadian Plains Division includes natural gas and crude oil
        exploration, development and production assets located in eastern
        Alberta and Saskatchewan.

    -   Canadian Foothills Division includes natural gas exploration,
        development and production assets located in western Alberta and
        British Columbia as well as the Company's Canadian offshore assets.

    -   USA Division includes natural gas exploration, development and
        production assets located in the United States and comprises the USA
        segment described above.

    -   Integrated Oil Division is the combined total of Integrated Oil -
        Canada and Downstream Refining. Integrated Oil - Canada includes the
        Company's exploration for, and development and production of bitumen
        using enhanced recovery methods. Integrated Oil - Canada is composed
        of EnCana's interests in the FCCL Oil Sands Partnership jointly owned
        with ConocoPhillips, the Athabasca natural gas assets and other
        bitumen interests.


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

    Segment and Geographic Information

                                                               Downstream
                             Canada              USA            Refining
    -------------------------------------------------------------------------
                           2009     2008     2009     2008     2009     2008
    -------------------------------------------------------------------------
    Revenues, Net of
     Royalties          $ 1,883  $ 2,503  $ 1,174  $ 1,354  $   926  $ 2,046
    Expenses
      Production and
       mineral taxes         15       18       46       96        -        -
      Transportation
       and selling          170      297      123      115        -        -
      Operating             286      384      115      169      118      132
      Purchased product     (13)     (35)       -        -      749    1,821
    -------------------------------------------------------------------------
                          1,425    1,839      890      974       59       93
      Depreciation,
       depletion and
       amortization         484      569      416      397       51       44
    -------------------------------------------------------------------------
    Segment Income
     (Loss)             $   941  $ 1,270  $   474  $   577  $     8  $    49
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                             Market           Corporate
                          Optimization         & Other        Consolidated
    -------------------------------------------------------------------------
                           2009     2008     2009     2008     2009     2008
    -------------------------------------------------------------------------
    Revenues, Net of
     Royalties          $   492  $   625  $   133  $(1,094) $ 4,608  $ 5,434
    Expenses
      Production and
       mineral taxes          -        -        -        -       61      114
      Transportation
       and selling            -        -        -        -      293      412
      Operating               8       11       26        -      553      696
      Purchased product     473      607        -        -    1,209    2,393
    -------------------------------------------------------------------------
                             11        7      107   (1,094)   2,492    1,819
      Depreciation,
       depletion and
       amortization           5        4       27       21      983    1,035
    -------------------------------------------------------------------------
    Segment Income
     (Loss)              $    6  $     3  $    80  $(1,115)   1,509      784
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Administrative                                             85      156
      Interest, net                                             104      134
      Accretion of
       asset retirement
       obligation                                                17       21
      Foreign exchange
       (gain) loss, net                                          58       95
      (Gain) loss on
       divestitures                                              (1)       -
    -------------------------------------------------------------------------
                                                                263      406
    -------------------------------------------------------------------------
    Net Earnings Before
     Income Tax                                               1,246      378
      Income tax expense                                        284      285
    -------------------------------------------------------------------------
    Net Earnings                                            $   962  $    93
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    Product and Divisional Information

                                        Canada Segment
    -------------------------------------------------------------------------
                    Canadian       Canadian    Integrated Oil
                     Plains        Foothills      - Canada         Total
    -------------------------------------------------------------------------
                   2009    2008   2009    2008   2009    2008   2009    2008
    -------------------------------------------------------------------------
    Revenues,
     Net of
     Royalties   $  775  $1,141 $  915  $1,075 $  193  $  287 $1,883  $2,503
    Expenses
      Production
       and mineral
       taxes         10      13      5       4      -       1     15      18
      Transport-
       ation and
       selling       62     109     37      56     71     132    170     297
      Operating     103     142    130     178     53      64    286     384
      Purchased
       product        -       -      -       -    (13)    (35)   (13)    (35)
    -------------------------------------------------------------------------
    Operating
     Cash Flow   $  600  $  877 $  743  $  837 $   82  $  125 $1,425  $1,839
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                   Canadian Plains Division
    -------------------------------------------------------------------------
                       Gas        Oil & NGLs        Other          Total
    -------------------------------------------------------------------------
                   2009    2008   2009    2008   2009    2008   2009    2008
    -------------------------------------------------------------------------
    Revenues,
     Net of
     Royalties   $  521  $  590 $  252  $  549 $    2  $    2 $  775  $1,141
    Expenses
      Production
       and mineral
       taxes          3       5      7       8      -       -     10      13
      Transport-
       ation and
       selling       11      19     51      90      -       -     62     109
      Operating      51      73     51      68      1       1    103     142
    -------------------------------------------------------------------------
    Operating
     Cash Flow   $  456  $  493 $  143  $  383 $    1  $    1 $  600  $  877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                     Canadian Foothills Division
    -------------------------------------------------------------------------
                       Gas        Oil & NGLs        Other          Total
    -------------------------------------------------------------------------
                   2009    2008   2009    2008   2009    2008   2009    2008
    -------------------------------------------------------------------------
    Revenues,
     Net of
     Royalties   $  848  $  909 $   57  $  148 $   10  $   18 $  915  $1,075
    Expenses
      Production
       and mineral
       taxes          4       3      1       1      -       -      5       4
      Transport-
       ation and
       selling       34      53      3       3      -       -     37      56
      Operating     120     161      6      11      4       6    130     178
    -------------------------------------------------------------------------
    Operating
     Cash Flow   $  690  $  692 $   47  $  133 $    6  $   12 $  743  $  837
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                         USA Division
    -------------------------------------------------------------------------
                       Gas        Oil & NGLs        Other          Total
    -------------------------------------------------------------------------
                   2009    2008   2009    2008   2009    2008   2009    2008
    -------------------------------------------------------------------------
    Revenues,
     Net of
     Royalties   $1,118  $1,183 $   29  $   99 $   27  $   72 $1,174  $1,354
    Expenses
      Production
       and mineral
       taxes         43      87      3       9      -       -     46      96
      Transport-
       ation and
       selling      123     115      -       -      -       -    123     115
      Operating      82     101      -       -     33      68    115     169
    -------------------------------------------------------------------------
    Operating
     Cash Flow   $  870  $  880 $   26  $   90 $   (6) $    4 $  890  $  974
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                   Integrated Oil Division
    -------------------------------------------------------------------------
                                  Downstream
                     Oil*        Refining       Other*         Total
    -------------------------------------------------------------------------
                   2009    2008   2009    2008   2009    2008   2009    2008
    -------------------------------------------------------------------------
    Revenues,
     Net of
     Royalties   $  163  $  238 $  926  $2,046 $   30  $   49 $1,119  $2,333
    Expenses
      Production
       and mineral
       taxes          -       -      -       -      -       1      -       1
      Transport-
       ation and
       selling       66     120      -       -      5      12     71     132
      Operating      40      41    118     132     13      23    171     196
      Purchased
       product        -       -    749   1,821    (13)    (35)   736   1,786
    -------------------------------------------------------------------------
    Operating
     Cash Flow   $   57  $   77 $   59  $   93 $   25  $   48 $  141  $  218
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Oil and Other comprise Integrated Oil - Canada. Other includes
        production of natural gas and bitumen from the Athabasca and Senlac
        properties.



    Capital Expenditures
                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
                                                           2009         2008
    -------------------------------------------------------------------------
    Capital
      Canadian Plains                               $       159  $       262
      Canadian Foothills                                    465          780
      Integrated Oil - Canada                               126          208
    -------------------------------------------------------------------------
      Canada                                                750        1,250
      USA                                                   540          519
      Downstream Refining                                   202           55
      Market Optimization                                    (3)           2
      Corporate & Other                                      19           23
    -------------------------------------------------------------------------
                                                          1,508        1,849
    -------------------------------------------------------------------------

    Acquisition Capital
      Canadian Foothills                                     73           72
      USA*                                                  6          (14)
    -------------------------------------------------------------------------
                                                             79           58
    -------------------------------------------------------------------------
    Total                                           $     1,587  $     1,907
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * 2008 includes purchase price adjustments for the November 2007 Leor
        acquisition in East Texas.

    On September 25, 2008, EnCana acquired certain land and property in
    Louisiana for approximately $101 million before closing adjustments. The
    purchase was facilitated by an unrelated party, Brown Haynesville
    Leasehold LLC ("Brown Haynesville"), which held the majority of the
    assets in trust for the Company in anticipation of a qualifying like kind
    exchange for U.S. tax purposes. The relationship with Brown Haynesville
    represented an interest in a variable interest entity ("VIE") from
    September 25, 2008 to March 24, 2009. During this period, EnCana was the
    primary beneficiary of the VIE and consolidated Brown Haynesville. On
    March 24, 2009, when the arrangement with Brown Haynesville was
    completed, the assets were transferred to EnCana.

    On July 23, 2008, EnCana acquired certain land and mineral interests in
    Louisiana for approximately $457 million before closing adjustments. The
    purchase was facilitated by an unrelated party, Brown Southwest Minerals
    LLC ("Brown Southwest"), which held the majority of the assets in trust
    for the Company in anticipation of a qualifying like kind exchange for
    U.S. tax purposes. On November 12, 2008, an unrelated party exercised an
    option to purchase certain interests as part of the above acquisition for
    approximately $157 million, reducing the qualifying like kind exchange to
    approximately $300 million. The relationship with Brown Southwest
    represented an interest in a VIE from July 23, 2008 to January 19, 2009.
    During this period, EnCana was the primary beneficiary of the VIE and
    consolidated Brown Southwest. On January 19, 2009, when the arrangement
    with Brown Southwest was completed, the assets were transferred to
    EnCana.


    Property, Plant and Equipment and Total Assets by Segment

                               Property, Plant
                                and Equipment             Total Assets
                          ---------------------------------------------------
                                    As at                     As at
                          ---------------------------------------------------
                             March 31, December 31,    March 31, December 31,
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    Canada                $    16,976  $    17,082  $    23,248  $    23,419
    USA                        13,669       13,541       14,696       14,635
    Downstream Refining         4,189        4,032        4,752        4,637
    Market Optimization           129          140          391          429
    Corporate & Other             694          629        4,498        4,127
    -------------------------------------------------------------------------
    Total                 $    35,657  $    35,424  $    47,585  $    47,247
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    On February 9, 2007, EnCana announced that it had entered into a 25 year
    lease agreement with a third party developer for The Bow office project.
    As at March 31, 2009, Corporate and Other Property, Plant and Equipment
    and Total Assets includes EnCana's accrual to date of $323 million
    ($252 million at December 31, 2008) related to this office project as an
    asset under construction.

    On January 4, 2008, EnCana signed the contract for the design and
    construction of the Production Field Centre ("PFC") for the Deep Panuke
    project. As at March 31, 2009, Canada Property, Plant, and Equipment and
    Total Assets includes EnCana's accrual to date of $280 million
    ($199 million at December 31, 2008) related to this offshore facility as
    an asset under construction.

    Corresponding liabilities for these projects are 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 or the Deep Panuke PFC.

    5.  DIVESTITURES

    Total year-to-date proceeds received on the sale of assets were
    $33 million (2008 - $72 million). The significant items are described
    below.

    Canada

    In 2009, the Company completed the divestiture of mature conventional oil
    and natural gas assets for proceeds of $33 million (2008 - $61 million)
    in Canadian Foothills and did not complete any divestitures in Canadian
    Plains (2008 - $31 million).

    6.  INTEREST, NET
                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
                                                           2009         2008
    -------------------------------------------------------------------------
    Interest Expense - Long-Term Debt               $       118  $       140
    Interest Expense - Other*                              39           54
    Interest Income*                                      (53)         (60)
    -------------------------------------------------------------------------
                                                    $       104  $       134
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Interest Expense - Other and Interest Income are primarily due to the
        Partnership Contribution Payable and Receivable, respectively.


    7.  FOREIGN EXCHANGE (GAIN) LOSS, NET
                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
                                                           2009         2008
    -------------------------------------------------------------------------
    Unrealized Foreign Exchange (Gain) Loss on:
      Translation of U.S. dollar debt
       issued from Canada*                        $       150  $       217
      Translation of U.S. dollar partnership
       contribution receivable issued from Canada*        (87)        (143)
    Other Foreign Exchange (Gain) Loss                       (5)          21
    -------------------------------------------------------------------------
                                                    $        58  $        95
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Reflects the current year change in foreign exchange rates calculated
        on the period end balance.


    8.  INCOME TAXES

    The provision for income taxes is as follows:

                                                       Three Months Ended
                                                            March 31,
                                                    -------------------------
                                                           2009         2008
    -------------------------------------------------------------------------
    Current
      Canada                                        $       172  $       234
      United States                                          76          129
      Other Countries                                        (1)           1
    -------------------------------------------------------------------------
    Total Current Tax                                       247          364
    -------------------------------------------------------------------------

    Future                                                   37          (79)
    -------------------------------------------------------------------------
                                                    $       284  $       285
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    9.  INVENTORIES
                                                          As at        As at
                                                       March 31, December 31,
                                                           2009         2008
    -------------------------------------------------------------------------
    Product
      Canada                                        $        55  $        46
      USA                                                    11            8
      Downstream Refining                                   333          323
      Market Optimization                                   123          127
    Parts and Supplies                                       14           16
    -------------------------------------------------------------------------
                                                    $       536  $       520
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    10. LONG-TERM DEBT
                                                          As at        As at
                                                       March 31, December 31,
                                                           2009         2008
    -------------------------------------------------------------------------

    Canadian Dollar Denominated Debt
      Revolving credit and term loan borrowings     $     1,745  $     1,410
      Unsecured notes                                       992        1,020
    -------------------------------------------------------------------------
                                                          2,737        2,430
    -------------------------------------------------------------------------

    U.S. Dollar Denominated Debt
      Revolving credit and term loan borrowings             377          247
      Unsecured notes                                     6,350        6,350
    -------------------------------------------------------------------------
                                                          6,727        6,597
    -------------------------------------------------------------------------

    Increase in Value of Debt Acquired                       46           49
    Debt Discounts and Financing Costs                      (68)         (71)
    Current Portion of Long-Term Debt                      (250)        (250)
    -------------------------------------------------------------------------
                                                    $     9,192  $     8,755
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    11. 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,
                                                           2009         2008
    -------------------------------------------------------------------------

    Asset Retirement Obligation, Beginning of Year  $     1,265  $     1,458
    Liabilities Incurred                                      7           54
    Liabilities Settled                                     (15)        (115)
    Liabilities Divested                                      -          (38)
    Change in Estimated Future Cash Flows                    (8)          54
    Accretion Expense                                        17           79
    Foreign Currency Translation                            (28)        (227)
    -------------------------------------------------------------------------
    Asset Retirement Obligation, End of Period      $     1,238  $     1,265
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    12. SHARE CAPITAL
                                         March 31, 2009    December 31, 2008
                                      ---------------------------------------
    (millions)                          Number    Amount    Number    Amount
    -------------------------------------------------------------------------

    Common Shares Outstanding,
     Beginning of Year                   750.4  $  4,557     750.2  $  4,479
    Common Shares Issued under
     Option Plans                          0.2         2       3.0        80
    Stock-Based Compensation                 -         1         -        11
    Common Shares Purchased                  -         -      (2.8)      (13)
    -------------------------------------------------------------------------
    Common Shares Outstanding,
     End of Period                       750.6  $  4,560     750.4  $  4,557
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Normal Course Issuer Bid
    EnCana has received regulatory approval each year under Canadian
    securities laws to purchase Common Shares under seven consecutive Normal
    Course Issuer Bids ("Bids"). EnCana is entitled to purchase, for
    cancellation, up to approximately 75.0 million Common Shares under the
    renewed Bid which commenced on November 13, 2008 and terminates on
    November 12, 2009. To March 31, 2009 there have been no purchases under
    the current bid (2008 - 4.6 million Common Shares for approximately
    $311 million).

    Stock Options
    EnCana has stock-based compensation plans that allow employees to
    purchase Common Shares of the Company. Option exercise prices approximate
    the market price for the Common Shares on the date the options were
    granted. 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 related to options to
    purchase Common Shares that do not have Tandem Share Appreciation Rights
    ("TSARs") attached to them at March 31, 2009. Information related to
    TSARs is included in Note 14.


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

    Outstanding, Beginning of Year                          0.5        11.62
    Exercised                                              (0.2)       11.57
    -------------------------------------------------------------------------
    Outstanding, End of Period                              0.3        11.78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Exercisable, End of Period                              0.3        11.78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    11.50 to 14.50       0.3         0.9       11.78         0.3       11.78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    13. CAPITAL STRUCTURE

    The Company's capital structure is comprised of Shareholders' Equity plus
    Long-Term Debt. The Company's objectives when managing its capital
    structure are to:

        i)  maintain financial flexibility to preserve EnCana's access to
            capital markets and its ability to meet its financial
            obligations; and
        ii) finance internally generated growth as well as potential
            acquisitions.

    The Company monitors its capital structure and short-term financing
    requirements using non-GAAP financial metrics consisting of Debt to
    Capitalization and Debt to Adjusted Earnings Before Interest, Taxes,
    Depreciation and Amortization ("EBITDA"). These metrics are used to
    steward the Company's overall debt position as measures of the Company's
    overall financial strength.

    EnCana targets a Debt to Capitalization ratio of between 30 and 40
    percent. At March 31, 2009, EnCana's Debt to Capitalization ratio was 29
    percent (December 31, 2008 - 28 percent) calculated as follows:


                                                              As at
                                                    -------------------------
                                                       March 31, December 31,
                                                           2009         2008
    -------------------------------------------------------------------------

    Debt                                            $     9,442  $     9,005
    Total Shareholders' Equity                           23,368       22,974
    -------------------------------------------------------------------------
    Total Capitalization                            $    32,810  $    31,979
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Debt to Capitalization ratio                            29%          28%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EnCana targets a Debt to Adjusted EBITDA of 1.0 to 2.0 times. At
    March 31, 2009, Debt to Adjusted EBITDA was 0.7x (December 31, 2008 -
    0.7x) calculated on a trailing twelve-month basis as follows:

                                                              As at
                                                    -------------------------
                                                       March 31, December 31,
                                                           2009         2008
    -------------------------------------------------------------------------

    Debt                                            $     9,442  $     9,005
    -------------------------------------------------------------------------

    Net Earnings                                    $     6,813  $     5,944
    Add (deduct):
      Interest, net                                         556          586
      Income tax expense                                  2,632        2,633
      Depreciation, depletion and amortization            4,171        4,223
      Accretion of asset retirement obligation               75           79
      Foreign exchange (gain) loss, net                     386          423
      (Gain) loss on divestitures                          (141)        (140)
    -------------------------------------------------------------------------
    Adjusted EBITDA                                 $    14,492  $    13,748
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Debt to Adjusted EBITDA                                0.7x         0.7x
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EnCana has a long-standing practice of maintaining capital discipline,
    managing its capital structure and adjusting its capital structure
    according to market conditions to maintain flexibility while achieving
    the objectives stated above. To manage the capital structure, the Company
    may adjust capital spending, adjust dividends paid to shareholders,
    purchase shares for cancellation pursuant to normal course issuer bids,
    issue new shares, issue new debt or repay existing debt.

    The Company's capital management objectives, evaluation measures,
    definitions and targets have remained unchanged over the periods
    presented. EnCana is subject to certain financial covenants in its credit
    facility agreements and is in compliance with all financial covenants.


    14. COMPENSATION PLANS

    The following tables outline certain information related to EnCana's
    compensation plans at March 31, 2009. Additional information is contained
    in Note 19 of the Company's annual audited Consolidated Financial
    Statements for the year ended December 31, 2008.

    A) Pensions

    The following table summarizes the net benefit plan expense:

                                                          Three Months Ended
                                                               March 31,
                                                    -------------------------
                                                           2009         2008
    -------------------------------------------------------------------------

    Current Service Cost                            $         4  $         4
    Interest Cost                                             5            5
    Expected Return on Plan Assets                           (4)          (5)
    Amortization of Net Actuarial Losses                      2            1
    Expected Amortization of Past Service Costs               1            1
    Amortization of Transitional Obligation                   -           (1)
    Expense for Defined Contribution Plan                    11           10
    -------------------------------------------------------------------------
    Net Benefit Plan Expense                        $        19  $        15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2009, no contributions have been made to
    the defined benefit pension plans (2008 - nil).


    B) Tandem Share Appreciation Rights ("TSARs")

    The following table summarizes information related to the TSARs at
    March 31, 2009:

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

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                   19,411,939        53.97
    Granted                                           3,904,660        55.30
    Exercised - SARs                                   (166,067)       39.29
    Exercised - Options                                 (38,754)       33.92
    Forfeited                                          (139,795)       57.78
    -------------------------------------------------------------------------
    Outstanding, End of Period                       22,971,983        54.32
    -------------------------------------------------------------------------
    Exercisable, End of Period                       13,551,066        49.59
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2009, EnCana recorded a reduction of
    compensation costs of $18 million related to the outstanding TSARs
    (2008 - costs of $169 million).


    C) Performance Tandem Share Appreciation Rights ("Performance TSARs")

    The following table summarizes information related to the Performance
    TSARs at March 31, 2009:
                                                                    Weighted
                                                                     Average
                                                    Outstanding     Exercise
                                                          TSARs        Price
    -------------------------------------------------------------------------

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                   12,979,725        63.13
    Granted                                           7,751,720        55.31
    Exercised - SARs                                     (3,917)       56.09
    Forfeited                                        (1,622,171)       62.87
    -------------------------------------------------------------------------
    Outstanding, End of Period                       19,105,357        59.98
    -------------------------------------------------------------------------
    Exercisable, End of Period                        3,955,358        60.38
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2009, EnCana recorded a reduction of
    compensation costs of $3 million related to the outstanding Performance
    TSARs (2008 - costs of $46 million).


    D) Share Appreciation Rights ("SARs")

    The following table summarizes information related to the SARs at
    March 31, 2009:
                                                                    Weighted
                                                                     Average
                                                    Outstanding     Exercise
                                                           SARs        Price
    -------------------------------------------------------------------------

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                    1,285,065        72.13
    Granted                                           1,089,520        55.33
    Forfeited                                           (20,400)       67.90
    -------------------------------------------------------------------------
    Outstanding, End of Period                        2,354,185        64.39
    -------------------------------------------------------------------------
    Exercisable, End of Period                          242,403        69.46
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2009, EnCana has not recorded any
    compensation costs related to the outstanding SARs (2008 - $1 million).


    E) Performance Share Appreciation Rights ("Performance SARs")

    The following table summarizes information related to the Performance
    SARs at March 31, 2009:

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

    Canadian Dollar Denominated (C$)
    Outstanding, Beginning of Year                    1,620,930        69.40
    Granted                                           2,140,440        55.31
    Forfeited                                          (199,071)       68.83
    -------------------------------------------------------------------------
    Outstanding, End of Period                        3,562,299        60.97
    -------------------------------------------------------------------------
    Exercisable, End of Period                          299,265        69.40
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2009, EnCana has not recorded any
    compensation costs related to the outstanding Performance SARs (2008 -
    $1 million).


    F) Deferred Share Units ("DSUs")

    The following table summarizes information related to the DSUs at
    March 31, 2009:

                                                                 Outstanding
                                                                        DSUs
    -------------------------------------------------------------------------

    Canadian Dollar Denominated
    Outstanding, Beginning of Year                                   656,841
    Granted                                                           71,519
    Converted from HPR awards                                         46,884
    Units, in Lieu of Dividends                                        7,561
    -------------------------------------------------------------------------
    Outstanding, End of Period                                       782,805
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the period ended March 31, 2009, EnCana has not recorded any
    compensation costs related to the outstanding DSUs (2008 - $12 million).

    In 2009, employees had the option to convert either 25 or 50 percent of
    their annual High Performance Results ("HPR") award into DSUs. The number
    of DSUs is based on the value of the award divided by the closing value
    of EnCana's share price at the end of the performance period of the HPR
    award. DSUs vest immediately, can be redeemed in accordance with the
    terms of the agreement and expire on December 15 of the calendar year
    following the year of termination.


    15. PER SHARE AMOUNTS

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

                                                          Three Months Ended
                                                               March 31,
                                                    -------------------------
    (millions)                                             2009         2008
    -------------------------------------------------------------------------

    Weighted Average Common Shares
     Outstanding - Basic                                  750.5        749.5
    Effect of Dilutive Securities                           0.9          3.5
    -------------------------------------------------------------------------
    Weighted Average Common Shares
     Outstanding - Diluted                                751.4        753.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    16. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

    EnCana's financial assets and liabilities are comprised of cash and cash
    equivalents, accounts receivable and accrued revenues, accounts payable
    and accrued liabilities, the partnership contribution receivable and
    payable, risk management assets and liabilities, and long-term debt. Risk
    management assets and liabilities arise from the use of derivative
    financial instruments. Fair values of financial assets and liabilities,
    summarized information related to risk management positions, and
    discussion of risks associated with financial assets and liabilities are
    presented as follows:

    A) Fair Value of Financial Assets and Liabilities

    The fair values of cash and cash equivalents, accounts receivable and
    accrued revenues, and accounts payable and accrued liabilities
    approximate their carrying amount due to the short-term maturity of those
    instruments.

    The fair values of the partnership contribution receivable and
    partnership contribution payable approximate their carrying amount due to
    the specific nature of these instruments in relation to the creation of
    the integrated oil joint venture. Further information about these notes
    is disclosed in Note 11 to the Company's annual audited Consolidated
    Financial Statements for the year ended December 31, 2008.

    Risk management assets and liabilities are recorded at their estimated
    fair value based on the mark-to-market method of accounting, using quoted
    market prices or, in their absence, third-party market indications and
    forecasts.

    Long-term debt is carried at amortized cost using the effective interest
    method of amortization. The estimated fair values of long-term borrowings
    have been determined based on market information where available, or by
    discounting future payments of interest and principal at estimated
    interest rates expected to be available to the Company at period end.

    The fair value of financial assets and liabilities were as follows:

                                              As at               As at
                                         March 31, 2009    December 31, 2008
                                      ---------------------------------------
                                      Carrying      Fair  Carrying      Fair
                                        Amount     Value    Amount     Value
    -------------------------------------------------------------------------
    Financial Assets
      Held-for-Trading:
        Cash and cash equivalents     $    629  $    629  $    383  $    383
        Risk management assets*        3,101     3,101     3,052     3,052
      Loans and Receivables:
        Accounts receivable and
         accrued revenues                1,360     1,360     1,568     1,568
        Partnership contribution
         receivable*                   3,070     3,070     3,147     3,147
    Financial Liabilities
      Held-for-Trading:
        Risk management
         liabilities*               $     21  $     21  $     50  $     50
      Other Financial Liabilities:
        Accounts payable and accrued
         liabilities                     2,482     2,482     2,871     2,871
        Long-term debt*                9,442     8,959     9,005     8,242
        Partnership contribution
         payable*                      3,088     3,088     3,163     3,163
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Including current portion.


    B) Risk Management Assets and Liabilities

    Net Risk Management Position                          As at        As at
                                                       March 31, December 31,
                                                           2009         2008
    -------------------------------------------------------------------------

    Risk Management
      Current asset                                 $     3,038  $     2,818
      Long-term asset                                        63          234
    -------------------------------------------------------------------------
                                                          3,101        3,052
    -------------------------------------------------------------------------

    Risk Management
      Current liability                                      18           43
      Long-term liability                                     3            7
    -------------------------------------------------------------------------
                                                             21           50
    -------------------------------------------------------------------------
    Net Risk Management Asset (Liability)           $     3,080  $     3,002
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Summary of Unrealized Risk Management Positions

                           As at March 31, 2009      As at December 31, 2008
                        -----------------------------------------------------
                              Risk Management            Risk Management
                        -----------------------------------------------------
                          Asset Liability     Net    Asset Liability     Net
    -------------------------------------------------------------------------

    Commodity Prices
      Natural gas       $ 3,060  $     4  $ 3,056  $ 2,941  $    10  $ 2,931
      Crude oil              35       17       18       92       40       52
      Power                   6        -        6       19        -       19
    -------------------------------------------------------------------------
    Total Fair Value    $ 3,101  $    21  $ 3,080  $ 3,052  $    50  $ 3,002
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Net Fair Value Methodologies Used to Calculate Unrealized Risk Management
    Positions
                                                          As at        As at
                                                       March 31, December 31,
                                                           2009         2008
    -------------------------------------------------------------------------

    Prices actively quoted                          $     2,291  $     2,055
    Prices sourced from observable data or
     market corroboration                                   789          947
    -------------------------------------------------------------------------
    Total Fair Value                                $     3,080  $     3,002
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Prices actively quoted refers to the fair value of contracts valued using
    quoted prices in an active market. Prices sourced from observable data or
    market corroboration refers to the fair value of contracts valued in part
    using active quotes and in part using observable, market-corroborated
    data.


    Net Fair Value of Commodity Price Positions at March 31, 2009

                               Notional                   Average       Fair
                                Volumes     Term            Price      Value
    -------------------------------------------------------------------------

    Natural Gas Contracts
    Fixed Price Contracts

      NYMEX Fixed Price    1,549 MMcf/d     2009     9.28 US$/Mcf   $  2,225
      NYMEX Fixed Price       35 MMcf/d     2010     9.21 US$/Mcf         43

    Purchased Options

      NYMEX Call            (140)MMcf/d     2009    11.67 US$/Mcf        (18)
      NYMEX Put              482 MMcf/d     2009     9.10 US$/Mcf        614

    Basis Contracts

      Canada                  80 MMcf/d     2009                           5
      United States          687 MMcf/d     2009                          39
      Canada and
       United States*                   2010-2013                       66
    -------------------------------------------------------------------------
                                                                       2,974
    Other Financial
     Positions**                                                         5
    -------------------------------------------------------------------------
    Total Unrealized Gain
     on Financial Contracts                                            2,979
    Premiums Paid on
     Unexpired Options                                                    77
    -------------------------------------------------------------------------
    Natural Gas Fair
     Value Position                                                 $  3,056
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    *  EnCana has entered into swaps to protect against widening natural
         gas price differentials between production areas, including Canada,
         the U.S. Rockies and Texas, and various sales points. These basis
         swaps are priced using both fixed prices and basis prices determined
         as a percentage of NYMEX.
    ** Other financial positions are part of the ongoing operations of the
         Company's proprietary production management.

                                                                        Fair
                                                                       Value
    -------------------------------------------------------------------------
    Crude Oil Contracts
    Crude Oil Fair Value Position*                                $     18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    *  The Crude Oil financial positions are part of the ongoing operations
         of the Company's proprietary production and condensate management.

                                                                        Fair
                                                                       Value
    -------------------------------------------------------------------------
    Power Purchase Contracts
    Power Fair Value Position                                       $      6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net Earnings Impact of Realized and Unrealized Gains (Losses) on Risk
    Management Positions

                                                         Realized Gain (Loss)
                                                    -------------------------
                                                          Three Months Ended
                                                               March 31,
                                                    -------------------------
                                                           2009         2008
    -------------------------------------------------------------------------

    Revenues, Net of Royalties                      $     1,069  $        20
    Operating Expenses and Other                            (24)           2
    -------------------------------------------------------------------------
    Gain (Loss) on Risk Management                  $     1,045  $        22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                       Unrealized Gain (Loss)
                                                    -------------------------
                                                          Three Months Ended
                                                               March 31,
                                                    -------------------------
                                                           2009         2008
    -------------------------------------------------------------------------

    Revenues, Net of Royalties                      $       133  $    (1,096)
    Operating Expenses and Other                            (22)           3
    -------------------------------------------------------------------------
    Gain (Loss) on Risk Management                  $       111  $    (1,093)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Reconciliation of Unrealized Risk Management Positions from January 1 to
    March 31, 2009

                                                 2009                   2008
                                       --------------------------------------
                                                          Total        Total
                                                     Unrealized   Unrealized
                                        Fair Value   Gain (Loss)  Gain (Loss)
    -------------------------------------------------------------------------

    Fair Value of Contracts,
     Beginning of Year                 $     2,892
    Change in Fair Value of Contracts
     in Place at Beginning of Year and
     Contracts Entered into During
     the Period                              1,156   $    1,156  $    (1,071)
    Fair Value of Contracts Realized
     During the Period                      (1,045)      (1,045)         (22)
    -------------------------------------------------------------------------
    Fair Value of Contracts
     Outstanding                       $     3,003  $       111  $    (1,093)
    Premiums Paid on Unexpired Options          77
    -------------------------------------------------------------------------
    Fair Value of Contracts and
     Premiums Paid, End of Period      $     3,080
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Commodity Price Sensitivities

    The following table summarizes the sensitivity of the fair value of the
    Company's risk management positions to fluctuations in commodity prices,
    with all other variables held constant. When assessing the potential
    impact of these commodity price changes, the Company believes 10%
    volatility is a reasonable measure. Fluctuations in commodity prices
    could have resulted in unrealized gains (losses) impacting net earnings
    as at March 31, 2009 as follows:

                                                    Favourable  Unfavourable
                                                    10% Change    10% Change
    -------------------------------------------------------------------------

    Natural gas price                              $       204   $      (203)
    Crude oil price                                          4            (4)
    Power price                                              4            (4)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    C) Risks Associated with Financial Assets and Liabilities

    The Company is exposed to financial risks arising from its financial
    assets and liabilities. Financial risks include market risks (such as
    commodity prices, foreign exchange and interest rates), credit risk and
    liquidity risk. The fair value or future cash flows of financial assets
    or liabilities may fluctuate due to movement in market prices and the
    exposure to credit and liquidity risks.

    Commodity Price Risk
    Commodity price risk arises from the effect that fluctuations of future
    commodity prices may have on the fair value or future cash flows of
    financial assets and liabilities. To partially mitigate exposure to
    commodity price risk, the Company has entered into various financial
    derivative instruments. The use of these derivative instruments is
    governed under formal policies and is subject to limits established by
    the Board of Directors. The Company's policy is to not use derivative
    financial instruments for speculative purposes.

    Natural Gas - To partially mitigate the natural gas commodity price risk,
    the Company has entered into option contracts and swaps, which fix the
    NYMEX prices. To help protect against widening natural gas price
    differentials in various production areas, EnCana has entered into swaps
    to manage the price differentials between these production areas and
    various sales points.

    Crude Oil - The Company has partially mitigated its exposure to commodity
    price risk on its condensate supply with fixed price swaps.

    Power - The Company has in place two Canadian dollar denominated
    derivative contracts, which commenced January 1, 2007 for a period of 11
    years, to manage its electricity consumption costs.

    Credit Risk
    Credit risk arises from the potential the Company may incur a loss if a
    counterparty to a financial instrument fails to meet its obligation in
    accordance with agreed terms. This credit risk exposure is mitigated
    through the use of Board-approved credit policies governing the Company's
    credit portfolio and with credit practices that limit transactions
    according to counterparties' credit quality. All foreign currency
    agreements are with major financial institutions in Canada and the United
    States or with counterparties having investment grade credit ratings. A
    substantial portion of the Company's accounts receivable are with
    customers in the oil and gas industry and are subject to normal industry
    credit risks. As at March 31, 2009, approximately 97 percent of EnCana's
    accounts receivable and financial derivative credit exposures are with
    investment grade counterparties.

    At March 31, 2009, EnCana had two counterparties whose net settlement
    position individually account for more than 10 percent of the fair value
    of the outstanding in-the-money net financial instrument contracts by
    counterparty. The maximum credit risk exposure associated with accounts
    receivable and accrued revenues, risk management assets and the
    partnership contribution receivable is the total carrying value.

    Liquidity Risk
    Liquidity risk is the risk the Company will encounter difficulties in
    meeting a demand to fund its financial liabilities as they come due. The
    Company manages its liquidity risk through cash and debt management. As
    disclosed in Note 13, EnCana targets a Debt to Capitalization ratio
    between 30 and 40 percent and a Debt to Adjusted EBITDA of 1.0 to 2.0
    times to steward the Company's overall debt position.

    In managing liquidity risk, the Company has access to a wide range of
    funding at competitive rates through commercial paper, capital markets
    and banks. As at March 31, 2009, EnCana had available unused committed
    bank credit facilities in the amount of $2.0 billion and unused capacity
    under shelf prospectuses, the availability of which is dependent on
    market conditions, for $5.0 billion. The Company believes it has
    sufficient funding through the use of these facilities to meet
    foreseeable borrowing requirements.

    EnCana maintains investment grade credit ratings on its senior unsecured
    debt. On May 12, 2008, following the announcement of the proposed
    corporate reorganization, Standard & Poor's Ratings Service assigned a
    rating of A- and placed the Company on "CreditWatch Negative", DBRS
    Limited assigned a rating of A(low) and placed the Company "Under Review
    with Developing Implications" and Moody's Investors Services assigned a
    rating of Baa2 and changed the outlook to "Stable" from "Positive". On
    March 2, 2009, Standard & Poor's affirmed its A- rating and removed the
    rating from "CreditWatch". The outlook is "Negative". On March 5, 2009,
    DBRS Limited maintained the long-term rating of EnCana at A(low) "Under
    Review with Developing Implications".

    The timing of cash outflows relating to financial liabilities are
    outlined in the table below:

                               Less Than    1 - 3    4 - 5    There-
                                  1 Year    Years    Years    after    Total
    -------------------------------------------------------------------------

    Accounts Payable and
     Accrued Liabilities         $ 2,482  $     -  $     -  $     -  $ 2,482
    Risk Management Liabilities       18        3        -        -       21
    Long-Term Debt*                720    1,990    3,381   10,282   16,373
    Partnership Contribution
     Payable*                      489      978      978    1,466    3,911
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    * Principal and interest, including current portion.

    Included in EnCana's total long-term debt obligations of $16,373 million
    at March 31, 2009 are $2,122 million in principal obligations related to
    Bankers' Acceptances, Commercial Paper and LIBOR loans. These amounts are
    fully supported and Management expects that they will continue to be
    supported by revolving credit and term loan facilities that have no
    repayment requirements within the next year. The revolving credit and
    term loan facilities are fully revolving for a period of up to five
    years. Based on the current maturity dates of the credit facilities,
    these amounts are included in cash outflows for the period disclosed as
    4 - 5 Years. Further information on Long-term Debt is contained in
    Note 10.

    Foreign Exchange Risk
    Foreign exchange risk arises from changes in foreign exchange rates that
    may affect the fair value or future cash flows of the Company's financial
    assets or liabilities. As EnCana operates primarily in North America,
    fluctuations in the exchange rate between the U.S./Canadian dollar can
    have a significant effect on the Company's reported results. EnCana's
    functional currency is Canadian dollars, however, the Company reports its
    results in U.S. dollars as most of its revenue is closely tied to the
    U.S. dollar and to facilitate a more direct comparison to other North
    American oil and gas companies. As the effects of foreign exchange
    fluctuations are embedded in the Company's results, the total effect of
    foreign exchange fluctuations are not separately identifiable.

    To mitigate the exposure to the fluctuating U.S./Canadian exchange rate,
    EnCana maintains a mix of both U.S. dollar and Canadian dollar debt.

    As disclosed in Note 7, EnCana's foreign exchange (gain) loss is
    primarily comprised of unrealized foreign exchange gains and losses on
    the translation of U.S. dollar debt issued from Canada and the
    translation of the U.S. dollar partnership contribution receivable issued
    from Canada. At March 31, 2009, EnCana had $5,350 million in U.S. dollar
    debt issued from Canada ($5,350 million at December 31, 2008) and
    $3,070 million related to the U.S. dollar partnership contribution
    receivable ($3,147 million at December 31, 2008). A $0.01 change in the
    U.S. to Canadian dollar exchange rate would have resulted in an
    $18 million change in foreign exchange (gain) loss at March 31, 2009.

    Interest Rate Risk
    Interest rate risk arises from changes in market interest rates that may
    affect the fair value or future cash flows from the Company's financial
    assets or liabilities. The Company partially mitigates its exposure to
    interest rate changes by maintaining a mix of both fixed and floating
    rate debt.

    At March 31, 2009, the increase or decrease in net earnings for each one
    percent change in interest rates on floating rate debt amounts to
    $15 million (2008 - $14 million).


    17. 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. All but one of these lawsuits has been settled
    prior to 2009, without admitting any liability in the lawsuits.

    The remaining lawsuit was commenced by E. & J. Gallo Winery ("Gallo").
    The Gallo lawsuit claims damages in excess of $30 million. California law
    allows for the possibility that the amount of damages assessed could be
    tripled.

    The Company and WD intend to vigorously defend against this outstanding
    claim; 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.


    18. RECLASSIFICATION

    Certain information provided for prior periods has been reclassified to
    conform to the presentation adopted in 2009.

ECA stock price

TSX $14.27 Can 0

NYSE $11.11 USD 0

As of 2017-12-15 16:03. Minimum 15 minute delay