EnCana cash flow tops $ 1 billion in third quarter

CALGARY, Nov. 5 /CNW/ - EnCana Corporation (TSX & NYSE: ECA) generated
$1,022 million of cash flow, or $2.12 per share diluted, in the third quarter
of 2002. Daily oil and gas sales reached 718,225 barrels of oil equivalent, up
9 percent from the pro forma third quarter results of EnCana's founding
companies one year earlier. The company's average daily sales are on track to
achieve publicly stated targets for 2002.
    All references to 2001 production and nine month 2002 financial
information in this news release text and tables for EnCana are presented on a
pro forma basis as if the merger of PanCanadian Energy Corporation
("PanCanadian" or "PCE") and Alberta Energy Company Ltd. ("AEC") had occurred
at the beginning of the respective periods.
    <<

    EnCana cash flow & earnings                   Q3            Nine month
                                                                 Pro forma
                                           ----------------------------------
                                             $MM   $/share     $MM   $/share
    -------------------------------------------------------------------------
    Cash flow                              1,022      2.12   2,739      5.66
    -------------------------------------------------------------------------
    Earnings excluding foreign exchange on
     translation of US$ debt (after tax)     349      0.72     808      1.66
    -------------------------------------------------------------------------
    Foreign exchange gain or (loss) on
     translation of US$ debt (after tax)    (145)    (0.30)     17      0.04
    -------------------------------------------------------------------------
    Net earnings as reported                 204      0.42     825      1.70
    -------------------------------------------------------------------------

    EnCana achieves strong third quarter earnings from operations
    In the third quarter of 2002, EnCana earned $349 million, or $0.72 per
share diluted, excluding an unrealized after tax foreign exchange loss of
$145 million, or $0.30 per share diluted, on EnCana's US dollar denominated
debt. This loss, which had no impact on cash flow, resulted from the Canadian
dollar depreciating relative to the US dollar during the quarter. Including
the impact of the foreign exchange loss, the company earned $204 million, or
$0.42 per share diluted, in the quarter. The year to date impact of foreign
exchange on US dollar denominated debt is an unrealized after tax net gain of
$17 million, or $0.04 per share diluted, resulting in nine month pro forma net
earnings of $825 million, or $1.70 per common share diluted.
    "Our third quarter results confirm that we are right on track to
accomplish our 2002 sales growth targets and are well positioned to achieve
our industry leading 2003 sales growth targets. EnCana has once again produced
profitable growth from its high quality asset base, a solid inventory of
identifiable growth opportunities, strong technical expertise and cost
control. Our increased production base of more than 718,000 barrels of oil
equivalent per day, combined with higher than expected oil prices, yielded
solid results. As winter approaches, EnCana is poised to capitalize on
anticipated strong seasonal gas markets by increasing sales from our growing
production and by withdrawing produced gas stored earlier this year," said
Gwyn Morgan, EnCana's President & Chief Executive Officer.
    "In the seven months since creating EnCana, our teams have come together
in an efficient integration as we build a best-in-class independent. We have
not missed a beat in delivering profit and growth for shareholders while
enhancing our already strong suite of assets. During the third quarter, we
completed our second opportunistic natural gas acquisition this year, adding
600 billion cubic feet equivalent of established reserves in the U.S. Rockies -
currently our highest production growth region. Our exploration teams are also
appraising promising oil and natural gas discoveries in the Gulf of Mexico and
offshore Canada's East Coast. Plus we have an exciting roster of drilling
prospects lined up for evaluation this winter," Morgan said. "We also
continued to optimize our portfolio, making good progress towards the planned
sale of our interests in two major oil pipelines. This anticipated disposition
is expected to be completed by year end."

    Strong oil and natural gas growth continues in third quarter
    EnCana's third quarter natural gas production averaged 2.8 billion cubic
feet per day, up 10 percent over pro forma results in the third quarter of
2001. During the quarter, 80 million cubic feet per day was injected into
storage, yielding third quarter sales of 2.7 billion cubic feet per day. Oil
and natural gas liquids sales averaged 270,225 barrels per day, up about 6
percent, compared to pro forma results in the third quarter of 2001.
Conventional operating plus administrative costs were approximately $4.91 per
barrel of oil equivalent in the quarter. EnCana drilled 571 net wells in the
third quarter.

    For the three months ended September 30, 2002, EnCana's highlights
include:
    - Earnings, excluding impact of foreign exchange on translation of US
      dollar debt (after tax), of $349 million, or $0.72 per common share
      diluted
    - Reported net earnings of $204 million, or $0.42 per common share
      diluted
    - Cash flow of $1,022 million, or $2.12 per common share diluted
    - Natural gas sales of 2,688 million cubic feet per day, up 10 percent
      from pro forma third quarter of 2001, with the average realized price
      declining 15 percent to $3.56 per thousand cubic feet
    - Crude oil and natural gas liquids sales of 270,225 barrels per day, up
      6 percent from pro forma third quarter of 2001, with the average
      realized price up 9 percent to $33.64 per barrel
    - Total capital investment, including acquisitions and dispositions, of
      $1,374 million
    - A strong financial position with debt to capitalization of 39 percent
      (all preferred securities included as debt)

    Natural gas prices begin strengthening in advance of winter
    The average industry gas price at AECO for the third quarter of 2002 was
$3.25 per thousand cubic feet, compared to $3.92 per thousand cubic feet in
the same period a year earlier. However, EnCana's average realized gas price
in the third quarter was $3.56 per thousand cubic feet, reflecting the
positive impact of having about 1.4 billion cubic feet of gas per day hedged.
EnCana's fixed price hedges for the third quarter included 875 million cubic
feet per day at an effective AECO price of C$4.24 per thousand cubic feet,
333 million cubic feet per day at an effective Opal, Wyo. price of US$2.61 per
thousand cubic feet and 205 million cubic feet per day at a NYMEX related
price of US$3.33 per thousand cubic feet. Gas prices have reversed their
downward trend and shown significant strength over the past month, achieving
levels higher than at the same time in 2001.

    EnCana storage poised to increase winter gas sales
    EnCana has approximately 26 billion cubic feet of produced gas in its
North American storage facilities and is poised to increase sales to
capitalize on seasonally stronger pricing. Using a combination of storage and
field production, EnCana's fourth quarter sales are expected to exceed 3
billion cubic feet per day.

    World oil prices stronger, Canadian heavy oil differentials narrowed
further
    In the third quarter of 2002, the average West Texas Intermediate crude
oil benchmark price was US$28.25 per barrel, up 6 percent from US$26.60 per
barrel for the same quarter in 2001. World oil prices strengthened during the
third quarter primarily due to increasing speculation over U.S. military
action against Iraq. In addition to this global oil price rise, Canadian heavy
oil differentials narrowed in the third quarter, averaging US$5.38 compared
with US$7.16 per barrel in the third quarter of 2001, due to lower world-wide
heavy crude oil production in 2002. In Ecuador, the third quarter oil quality
differential also improved, dropping to average US$4.35 from US$5.22 per
barrel in the third quarter of 2001, due to lower OPEC production of heavy
oil. Entering the fourth quarter, Canadian heavy oil differentials are
widening, due to softer winter demand for heavier grades of oil.

    Crude Oil Price Risk Hedging Program
    EnCana has entered into a crude oil price risk management program for a
portion of its oil production in 2003 and 2004. For 2003, EnCana has
established a series of fixed price swaps on 40,000 barrels per day at an
average WTI price of US$25.72 per barrel. Another 40,000 barrels per day has
been hedged using costless collars with a WTI floor averaging US$21.95 per
barrel and a cap of US$29.00 per barrel. For 2004, EnCana has entered into a
series of swaps on 50,000 barrels per day at an average price of US$23.10 per
barrel and costless collars for an additional 62,500 barrels per day with a
WTI floor of US$20.00 per barrel and a cap averaging US$25.69 per barrel.

    Nine month pro forma financial and operating performance
    For the first nine months of 2002, EnCana earned pro forma $825 million,
or $1.70 per share diluted, and generated $2.7 billion in cash flow, or
$5.66 per share diluted. Sales for the first nine months averaged 704,000
barrels of oil equivalent per day, up 10 percent over pro forma sales from one
year earlier. Daily sales for the first nine months were comprised of 2.7
billion cubic feet of natural gas, up 14 percent in the past year, and 260,136
barrels of oil and natural gas liquids, up 4 percent over pro forma sales for
the first nine months of 2001. EnCana drilled 2,114 net wells in the first
nine months.

    Sales targets on track for 2002, growth expected to continue in 2003
    EnCana's 2002 daily sales volumes are forecast to grow by about 10
percent from 2001 pro forma sales. The 2002 forecast is between 2,715 million
and 2,785 million cubic feet of gas and 245,000 and 264,000 barrels of oil,
for a total daily sales forecast of between 697,000 and 728,000 barrels of oil
equivalent. Sales volumes during 2003 are expected to increase to between
788,000 and 830,000 barrels of oil equivalent per day.

    Important Notice: Readers are cautioned that a portion of the nine month
results and the comparisons to prior years' results are based on pro forma
calculations and these pro forma results may not reflect all adjustments and
reconciliations that may be required under Canadian generally accepted
accounting principles. These pro forma results may not be indicative of the
results that actually would have occurred or of the results that may be
obtained in the future.

                       Consolidated EnCana Highlights



    Financial Highlights
    (as at and for the period ending                    EnCana       EnCana
     September 30, 2002)                               3 months     9 months
    ($ millions, except per share amounts)              Actuals    Pro forma
    -------------------------------------------------------------------------
    Revenues, net of royalties and production taxes       2,882        7,821
    Cash Flow                                             1,022        2,739
      Per share - basic                                    2.14         5.78
      Per share - diluted                                  2.12         5.66

    Net earnings                                            204          825
      Per share - basic(1)                                 0.43         1.74
      Per share - diluted                                  0.42         1.70

    Capital investment, excluding dispositions            1,507        4,249

    Total assets                                         30,788          n/a
    Long-term debt                                        8,306          n/a
    Preferred securities                                    584          n/a
    Shareholders' equity                                 13,342          n/a
    Debt-to-capitalization ratio                            39%          n/a
    (adjusted for working capital and including
      preferred securities as debt)
    -------------------------------------------------------------------------
    Common shares
      Outstanding September 30, 2002 (millions)           477.4          n/a
      Weighted average diluted (millions)                 482.2        483.6
    -------------------------------------------------------------------------

    (1) Impact of including share options in earnings calculations
    As required by Canadian generally accepted accounting principles, the
notes to EnCana's third quarter financial statements show that the inclusion
of stock options as compensation expense in the calculations of earnings would
have resulted in a reduction of 14 cents in basic earnings per share in the
first nine months of 2002.

    Operating Highlights
    (for the three months ending September 30) Q3  2002    Q3 2001    Percent
                                                Actuals   Pro forma   Change
    -------------------------------------------------------------------------
    Sales
    Total barrels of oil equivalent per day     718,225     661,202      + 9
    Natural gas (million cubic feet per day)      2,688       2,444     + 10
    Total liquids (barrels per day)             270,225     253,869      + 6
    Onshore North America
    Conventional oil and NGLs                   169,069     160,790      + 5
    Syncrude                                     36,039      28,938     + 25
    Offshore & International                     65,117      64,141      + 2
    -------------------------------------------------------------------------
    Prices
    North American gas price ($ per thousand
     cubic feet)                                   3.56        4.19     - 15
    North American conventional oil price
     ($ per barrel)
    Light/medium                                  35.12       33.51      + 5
    Heavy                                         28.55       24.94     + 14
    Syncrude ($ per barrel)                       42.54       40.74     +  4
    International crude oil ($ per barrel)
    Ecuador                                       33.59       28.43     + 18
    U.K.                                          39.30       32.05     + 23
    Natural gas liquids ($ per barrel)            31.18       31.21        -
    Total liquids ($ per barrel)                  33.64       30.82      + 9
    -------------------------------------------------------------------------

    EnCana corporate developments
    -----------------------------

    Strategic realignment continues
    EnCana continues to sharpen its focus on core operated exploration and
production assets, which are characterized by high working interests in large
resource properties with low operating costs, strategic advantage and the
potential to achieve strong growth yielding attractive rates of return. This
year, the company has completed two significant upstream acquisitions in the
U.S. Rockies adding 1.1 trillion cubic feet of high-quality, established
natural gas reserves. EnCana has also sold some smaller, non-core upstream and
midstream production assets, bringing total proceeds from dispositions, as of
early November 2002, to approximately $525 million before tax. Discussions are
continuing with a variety of parties who have expressed strong interest in
purchasing EnCana's Express and Cold Lake pipeline assets, a transaction which
the company expects to complete by year-end. EnCana plans to continue this
strategic refinement of its asset portfolio.

    Merger integration on track after creation of EnCana Corporation on
April 5, 2002
    The creation of EnCana and integration of its two founding companies,
Alberta Energy Company Ltd. and PanCanadian Energy Corporation, is on track.
"Daily discussions, from the senior executive team to the field production
meetings, have shifted away from integration issues to focus on achieving
best-in-class performance," Morgan said. The company is targeting annual,
post-merger synergies, on a pre-tax basis in 2003, of approximately $250
million in operations and administration and approximately $250 million in
capital investments.

    Dividends
    The board of directors of EnCana declared a quarterly dividend of ten
cents (10 cents) per share payable on December 31, 2002 to common shareholders
of record as of December 13, 2002.

    Normal Course Issuer Bid approved
    Effective October 16, 2002, EnCana received approval from the Toronto
Stock Exchange for a Normal Course Issuer Bid. Under the bid, EnCana may
purchase for cancellation up to 23,843,565 of its Common Shares, representing
5 percent of the 476,871,300 Common Shares outstanding as at October 4, 2002.
On October 22, 2002, the company became entitled to make purchases under the
bid for a period of up to one year.

    AEC capital securities meeting set
    Alberta Energy Company Ltd. (AEC) has set November 26, 2002 as the date
for a meeting of holders of its 8.38% Capital Securities due June 27, 2040 and
its 8.50% Capital Securities due December 20, 2040 to consider, and if thought
advisable to approve, amendments to the terms of such Capital Securities to
provide AEC with the right to call for the early redemption of the Capital
Securities.

    EnCana operational highlights

    Onshore North America

    Continued strong natural gas growth
    EnCana's North American natural gas production continued to grow during
the third quarter, reaching nearly 2.8 billion cubic feet per day, up 10
percent compared to pro forma results of the same period in 2001. Daily
production growth was led by increases in the U.S. Rockies and northeast
British Columbia. The Onshore North America division drilled 559 net wells
during the third quarter.

    Exceptional growth in the U.S. Rockies
    EnCana completed its second U.S. Rockies acquisition since the company's
creation in April with the purchase of an additional 25 percent interest in
the Jonah gas field for approximately C$539 million. With this addition of
approximately 600 billion cubic feet equivalent of established natural gas and
associated natural gas liquids reserves, EnCana now owns about 75 percent of
the Jonah field in southwest Wyoming.
    "Our move into the U.S. Rockies, started less than 30 months ago,
continues to exceed our expectations for growth and potential. This is
currently our highest growth region and we have clearly demonstrated our
ability to add value to acquisitions with drill bit success. During the third
quarter, production from the region averaged 550 million cubic feet per day, a
remarkable achievement in such a short time frame," said Randy Eresman,
President of EnCana's Onshore North America division.
    To help mitigate the impact of gas transportation limitations from the
U.S. Rockies to markets, EnCana has established a series of fixed price
differentials from the NYMEX index at an average of US$0.47 per thousand cubic
feet on effectively all of EnCana's U.S. Rockies winter production and on
approximately 400 million cubic feet per day from April 2003 to October 2007.

    Greater Sierra on target
    EnCana continues its successful exploration and development program in
the Greater Sierra area of northeast British Columbia, drilling 29 wells
during the summer season. Initial production rates continue to improve and
EnCana has lowered drilling costs this year by more than 15 percent.
    "The cost and operational efficiencies achieved to date are really just a
starting point. As we gain a greater understanding of the geology and refine
our drilling techniques over this large property, we expect to reduce costs
further and continue generating strong returns from this high growth area,"
Eresman said.

    Canada's first commercial coalbed methane project underway
    EnCana has started development of Canada's first commercial coalbed
methane project, drilling the first of 32 anticipated net wells on EnCana's
contiguous fee simple lands east of Calgary. This demonstration-scale project
is designed to verify the commercial potential of natural gas production from
coal seams located under Canada's prairies. During the pilot project, EnCana
drilled about 76 net wells. The pilot is currently producing gas from 14
wells, which have production that ranges from approximately 30 thousand to
approximately 250 thousand cubic feet per day. EnCana continues to evaluate
the potential of coalbed methane at other projects located in the Elk Valley
of southeast B.C. and the Grizzly Valley in northeast B.C.

    Oil and natural gas liquids production rise
    Daily production of conventional oil and natural gas liquids from
EnCana's Onshore North America division averaged 169,069 barrels per day in
the third quarter of 2002, a 5 percent increase from pro forma results of the
third quarter of 2001. This production increase has come largely from two
Western Canadian properties, EnCana's Foster Creek steam-assisted gravity
drainage (SAGD) project in northeast Alberta and Suffield in southern Alberta.

    EnCana's two SAGD projects growing production
    EnCana's inaugural commercial SAGD project, at Foster Creek in northeast
Alberta, averaged approximately 14,000 barrels of daily production during the
third quarter. This production rate is lower than originally forecast as the
company works to achieve optimum production efficiency and ramps up the
facilities to full operation. While facilities start up of this industry
leading SAGD project has taken longer than originally anticipated, current
well performance is exceeding design parameters. Production from Foster Creek
is expected to average 20,000 barrels per day in 2003. Given EnCana's
technical success at Foster Creek, expansion is underway to increase
production by an anticipated 10,000 barrels per day to about 30,000 barrels
per day, which the company expects to reach in 2004. Initial production has
also started from EnCana's second SAGD project at Christina Lake in northeast
Alberta, where the learning experience from Foster Creek is being applied.

    Syncrude volumes reach record levels, costs down substantially
    EnCana's share of Syncrude production during the third quarter of 2002
averaged a record 36,039 barrels per day, up 25 percent from the same period
in 2001. Operating costs averaged $13.38 per barrel, down substantially from
levels earlier this year as a result of increased production volumes.
Production rose as the world's largest oil sands plant resumed full production
following the completion of planned maintenance and an upgrade of one of
Syncrude's coker units. EnCana expects average operating costs of
approximately $19 per barrel for 2002. Syncrude's production for 2003 is
estimated at 31,000 to 34,000 barrels per day, with a slight improvement in
non-energy related operating costs.

    Offshore & International Operations

    Ecuador - strong third quarter sales
    Oil production in Ecuador, which is limited by existing pipeline
capacity, averaged 52,344 barrels of oil per day in the third quarter. Daily
oil sales averaged 55,579 barrels, up 8 percent from the same period one year
earlier due to increased access to the existing SOTE pipeline combined with
higher volumes shipped from port. The OCP Pipeline project is about 70 percent
complete, with first oil shipments expected in mid 2003. EnCana has current
productive capability of more than 80,000 barrels per day in Ecuador and is
targeting production of between 80,000 and 100,000 barrels per day by late
2003 following the planned opening of OCP. Reaching the higher production
targets requires the Government of Ecuador's approval of EnCana's expansion
plans onto lands located adjacent to the company's existing producing
properties. Additionally, a number of outstanding issues, including resolution
of the industry's dispute over value added tax assessments, may impact
EnCana's timing for reaching production of the forecast 100,000 barrels per
day. EnCana participated in drilling three successful exploration discoveries
during the third quarter on its Ecuador Blocks.

    U.K. North Sea - Buzzard pre-engineering contract awarded
    Development work on one of the largest oil discoveries in the U.K. North
Sea in the past 25 years is moving ahead with the awarding of a major
engineering contract for the concept definition and project specification for
development and production facilities at the Buzzard oil field. Evaluation of
the appraisal drilling continues and EnCana plans to explore both possible
field extensions and adjacent geological structures. Buzzard is estimated to
contain between 800 million and 1.1 billion barrels of oil-in-place and
recoverable reserve estimates are currently being updated. EnCana owns 35 and
45 percent of the two blocks where Buzzard is located.

    East Coast of Canada - Regulatory review and engineering continues on
    Deep Panuke gas project
    The National Energy Board (NEB) and the Canada-Nova Scotia Offshore
Petroleum Board (CNSOPB) are proceeding with a full review of EnCana's
development plan for the Deep Panuke natural gas project, located on the
Scotian Shelf offshore Nova Scotia. Recent plans by both regulatory boards to
hold a single hearing for review are encouraging. The regulatory hearing for
Deep Panuke is expected to start in the first quarter of 2003, with a decision
anticipated by mid 2003. EnCana had been working towards a 2005 target start
date for the project. However, given a longer than anticipated Canadian
Environmental Assessment Act (CEAA) comprehensive study report (CSR) process,
it is unlikely that the project will be operational by that time. The CSR has
been filed with the federal minister of the environment and EnCana is awaiting
a firm date for the hearing. The company is also examining newly acquired
seismic and related exploration opportunities in the vicinity of Deep Panuke
that could enhance project economics. EnCana continues to promote timely
regulatory approvals that balance the needs of the company, the public and the
regulators. Once the NEB and CNSOPB have ruled on the Deep Panuke application,
EnCana will review the regulatory decisions, including all conditions for
approval, and make a decision on project sanction.

    Offshore & New Ventures Exploration

    Canada's East Coast - a gas discovery and more drilling this winter
    The Annapolis G-24 deep water exploration well, located about 350
kilometres southeast of Halifax offshore Nova Scotia, encountered
approximately 30 metres of net natural gas pay over several zones. EnCana has
a 26 percent interest in the well operated by Marathon Oil Company. Further
plans to assess the potential of this discovery are under development.
    The Eirik Raude, a highly sophisticated, deep water drilling rig, has
completed its inaugural sea trials in preparation for drilling the first of
three EnCana exploration wells starting this fall. This dynamically
positioned, semi-submersible rig is designed for the harsh environment of the
North Atlantic and capable of drilling in 3,000 metres of water. EnCana plans
to use the Eirik Raude to drill the Torbrook prospect starting this month
offshore Nova Scotia, followed by two wells offshore Newfoundland, in the
Flemish Pass, that will be operated by Petro-Canada.

    Gulf of Mexico - Tahiti appraisal underway, more exploration planned this
    winter
    Two appraisal wells are planned this winter to evaluate the Tahiti oil
discovery in the Gulf of Mexico. Operator ChevronTexaco has estimated that
Tahiti holds 400 million to 500 million barrels of recoverable oil. The Tahiti
find, announced in June, is the second of a four-well program that will earn
EnCana a 25 percent interest in 71 ChevronTexaco-operated blocks in the
Mississippi Fanfold Belt in the Gulf of Mexico. EnCana owns a 25 percent
interest in Tahiti, located in the deep water Green Canyon Block 640. The
third of the four ChevronTexaco wells - the Sierra well located in Atwater
Valley Block 187 - is expected to reach total depth before year-end. EnCana is
also participating in a four-well farm-in program with Conoco. The third well
in that program, Spa, was drilled in the Walker Ridge Block 285 during the
third quarter but did not encounter commercial quantities of hydrocarbons.
Conoco is currently drilling the fourth well in the program, the Voss prospect
in Keathley Canyon Block 511. Voss is expected to reach total depth by year-
end and is adjacent to blocks where EnCana holds options to participate in
additional exploration.

    Midstream & Marketing

    Pipeline sale interest strong
    A variety of parties have expressed strong interest in purchasing
EnCana's ownership in two major oil pipelines - the 100-percent-owned Express
Pipeline System and the 70-percent-owned Cold Lake Pipeline System. In
combination, these oil transportation systems deliver Canada's growing oil
sands production to Canadian and U.S. refineries. Since the sale is expected
to be completed by year-end, financial information related to the Express and
Cold Lake pipeline systems has been presented as Discontinued Operations in
the third quarter unaudited consolidated financial statements.

    Gas storage expansions underway in Alberta and California
    EnCana is further expanding North America's largest independent network
of underground natural gas storage reservoirs. In southeastern Alberta, EnCana
recently announced the commencement of development of the Countess gas storage
facility, which is designed to store up to 40 billion cubic feet of gas. In
northern California, construction is underway to double the size of EnCana's
Wild Goose storage facility to an estimated 29 billion cubic feet of capacity.
These two projects, which are anticipated to be completed in 2005, would
increase EnCana's continental storage capacity to about 200 billion cubic
feet. At that time, the network's total peak withdrawal capacity is expected
to grow to approximately 4 billion cubic feet per day.
    "EnCana is growing its storage capacity at a time when demand for gas
storage is increasing. As North America's leading independent gas producer,
our storage network assists us in managing our inventory of produced gas,
timing our sales to meet consumer and seasonal demand and optimizing the value
of our production. It also provides storage services to Canadian and U.S.
producers and marketers for managing gas supplies and sales," said Bill
Oliver, President of EnCana's Midstream & Marketing division.

    Financial Strength

    EnCana's financial position is among the strongest of upstream
independents. At September 30, 2002, the company's debt-to-capitalization
ratio was 39:61 (all preferred securities included as debt). Third quarter
core capital investment and acquisitions were $1,507 million. Dispositions
were $133 million, resulting in net capital investment of $1,374 million.
EnCana maintains strong investment grade ratings from the major bond rating
services: Dominion Bond Rating Service Limited, A(low), Moody's Investors
Service, Baa1, and Standard and Poor's Ratings Services, A-. On October 2,
2002, EnCana issued C$300 million in medium term notes that bear an annual
interest rate of 5.30 percent.


    -------------------------------------------------------------------------
                              IMPORTANT NOTICE

    NOTE:  This press release includes two sets of financial statements:
    1) EnCana'a actual financial statements, which reflect results as
    illustrated in the table below.

    -------------------------------------------------------------------------
                     EnCana actual financial statements
    -------------------------------------------------------------------------

    Q3 2002            Q3 2001      Nine months 2002     Nine months 2001
    -------------------------------------------------------------------------
    EnCana            PCE alone           EnCana             PCE alone
    (PCE & AEC)                    (PCE & AEC) for Q2
                                   & Q3, plus PCE
                                      alone Q1
    -------------------------------------------------------------------------

    2) EnCana's pro forma nine month financial statements, which reflect
    results as if the merger of PanCanadian Energy Corporation ("PCE") and
    Alberta Energy Company Ltd. ("AEC") had occurred at the beginning of
    2002.

    Also, this press release and Alberta Energy Company Ltd.'s third quarter
    2002 financial statements are filed on Sedar and posted on www.sedar.com



    This press release and EnCana's supplemental information are posted on
    the company Web site www.encana.com

    -------------------------------------------------------------------------


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                            CONFERENCE CALL TODAY

    EnCana Corporation will host a conference call today, Tuesday,
    November 5, 2002 starting at 9 a.m., Mountain Time (11 a.m. Eastern Time)
    to discuss EnCana's third quarter 2002 financial and operating results.

    To participate, please dial 416-640-4127 approximately 10 minutes prior
    to the conference call.  An archived recording of the call will be
    available from approximately midnight on November 5, 2002 until
    November 12, 2002 by dialling 416-640-1917 and entering pass code
    213694 followed by the pound key.

    A live audio Web cast of the conference call will also be available
    either via EnCana's Web site, www.encana.com under Investor Relations or
    via Canada NewsWire at the following address:
http://webevents.broadcast.com/cnw/encana20021105.  The Web cast will be
    archived for 60 days.
    -------------------------------------------------------------------------

    EnCana is one of the world's leading independent oil and gas companies
with an enterprise value of approximately C$30 billion. EnCana is North
America's largest independent natural gas producer and gas storage operator.
Ninety percent of the company's assets are in four key North American growth
platforms. EnCana is the largest producer and landholder in Western Canada and
is a key player in Canada's emerging offshore East Coast basins. In the U.S.,
EnCana is one of the largest gas explorers and producers in the Rocky Mountain
states and has a strong position in the deepwater Gulf of Mexico. The company
has two key high potential international growth platforms: EnCana is the
largest private sector oil producer in Ecuador and is the operator of a very
large oil discovery in the U.K. central North Sea. The company also conducts
high upside potential New Ventures exploration in other parts of the world.
EnCana is driven to be the industry's best-in-class benchmark in production
cost, per-share growth and value creation for shareholders. EnCana common
shares trade on the Toronto and New York stock exchanges under the symbol ECA.

    ADVISORY - In the interests of providing EnCana shareholders and
potential investors with information regarding EnCana, including management's
assessment of EnCana's future plans and operations, certain statements
contained in this news release are forward-looking statements within the
meaning of the "safe harbour" provisions of the United States Private
Securities Litigation Reform Act of 1995.  Forward-looking statements in this
news release include, but are not limited to, EnCana's internal projections,
expectations or beliefs concerning future operating results, and various
components thereof; future economic performance; the production and growth
potential of its various assets, including assets in the U.S. Rockies, Greater
Sierra, offshore Canada's East Coast, the U.K. central North Sea and Ecuador;
the anticipated oil and natural gas prices for the remainder of 2002; the
ability to achieve 2002 and 2003 sales growth targets; the sources and
deployment of expected capital in 2002; the projected annual post-merger
synergies in 2003; the anticipated completion in 2005 of the Countess and Wild
Goose gas storage projects, and the projected gas storage capacity in 2005;
the timing of regulatory review regarding Deep Panuke and the projected
production date from the Deep Panuke project; the success of future drilling
prospects; potential exploration; the potential success of certain projects
such as SAGD (including in 2003 and 2004), coalbed methane, the OCP Pipeline
and Syncrude and the expected rates of returns from such projects; the ability
to sell the Cold Lake and Express pipeline interests, the price realized on
such sales and the timing of such sales; and the potential success of other
exploratory wells in the Gulf of Mexico, offshore Canada's East Coast and the
U.K. central North Sea.

    Readers are cautioned not to place undue reliance on forward-looking
statements, as there can be no assurance that the plans, intentions or
expectations upon which they are based will occur.  By their nature, forward-
looking statements involve numerous assumptions, known and unknown risks and
uncertainties, both general and specific, that contribute to the possibility
that the predictions, forecasts, projections and other forward-looking
statements will not occur, which may cause the company's actual performance
and financial results in future periods to differ materially from any
estimates or projections of future performance or results expressed or implied
by such forward-looking statements.  These risks and uncertainties include,
among other things: volatility of oil and gas prices; fluctuations in currency
and interest rates; product supply and demand; market competition; risks
inherent in the company's marketing operations; imprecision of reserve
estimates; 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 risk that the anticipated synergies to be realized by
the merger of AEC and PanCanadian will not be realized; costs relating to the
merger of AEC and PanCanadian being higher than anticipated and other risks
and uncertainties described from time to time in the reports and filings made
with securities regulatory authorities by EnCana and its indirect wholly-owned
subsidiary, AEC.  Although EnCana believes that the expectations represented
by such forward-looking statements are reasonable, there can be no assurance
that such expectations will prove to be correct. Readers are cautioned that
the foregoing list of important factors is not exhaustive. Furthermore, the
forward-looking statements contained in this news release are made as of the
date of this news release, and 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.

    Further information on EnCana Corporation and Alberta Energy Company Ltd.
is available on the company's Web site, www.encana.com.


    Consolidated Financial Statements
    For the period ended September 30, 2002


    EnCana Corporation

    Interim Report
    For the period ended September 30, 2002

    EnCana Corporation
    Consolidated Statement of Earnings

    <<
                                              September 30
                                   Three Months Ended    Nine Months Ended
    (unaudited) ($ millions,     -------------------------------------------
     except per share amounts)      2002       2001       2002       2001
    ------------------------------------------------------------------------
    Revenues, Net of Royalties and
     Production Taxes  (note 4) $  2,882   $  1,139   $  6,619   $  3,950
    ------------------------------------------------------------------------
    Expenses           (note 4)
      Transportation and selling     176         43        383        125
      Operating                      394        159        981        530
      Purchased product            1,041        220      2,317        861
      Administrative                  50         36        111         77
      Interest, net                  112          2        242         21
      Foreign exchange (note 7)      156         17        (24)        14
      Depreciation, depletion
       and amortization              616        202      1,410        591
    ------------------------------------------------------------------------
                                   2,545        679      5,420      2,219
    ------------------------------------------------------------------------
    Net Earnings Before the
     Undernoted                      337        460      1,199      1,731
      Income tax
       expense         (note 6)      142        183        379        566
    Distributions on Subsidiary
     Preferred Securities,
     Net of Tax                       11          -         11          -
    ------------------------------------------------------------------------
    Net Earnings from
     Continuing Operations           184        277        809      1,165
    Net Earnings from
     Discontinued Operations
                       (note 5)       20         (2)       (14)        32
    ------------------------------------------------------------------------
    Net Earnings                $    204   $    275   $    795   $  1,197
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Net Earnings From Continuing
     Operations        (note 9)
      Basic                     $   0.38   $   1.07   $   2.03   $   4.54
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
      Diluted                   $   0.38   $   1.05   $   1.99   $   4.44
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Net Earnings       (note 9)
      Basic                     $   0.43   $   1.07   $   1.99   $   4.67
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
      Diluted                   $   0.42   $   1.04   $   1.96   $   4.56
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Consolidated Statement of Retained Earnings


                                              Nine Months Ended September 30
                                            --------------------------------
    (unaudited) ($ millions)                               2002         2001
    ------------------------------------------------------------------------
    Retained Earnings, Beginning of Year
      As previously reported                          $  3,689      $  3,721
      Retroactive adjustment for change
       in accounting policy (note 2)                       (59)          (42)
    ------------------------------------------------------------------------
      As restated                                        3,630         3,679
    Net Earnings                                           795         1,197
    Dividends on Common Shares & Other
     Distributions, net of tax                            (122)       (1,259)
    Other Adjustments                                        -           (50)
    ------------------------------------------------------------------------
    Retained Earnings, End of Period                  $  4,303      $  3,567
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------



    Consolidated Balance Sheet
                                                          As at        As at
                                                   September 30, December 31,
    (unaudited) ($ millions)                              2002          2001
    ------------------------------------------------------------------------
    Assets
    Current Assets
      Cash and cash equivalents                       $    430      $    963
      Accounts receivable and accrued revenue            1,819           623
      Inventories                                          537            87
    ------------------------------------------------------------------------
                                                         2,786         1,673
    Capital Assets, net            (note 4)             23,117         8,162
    Investments and Other Assets                           472           237
    Assets of Discontinued
     Operations                    (note 5)              1,336           728
    Goodwill                       (note 3)              3,077             -
    ------------------------------------------------------------------------
                                   (note 4)           $ 30,788      $ 10,800
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Liabilities and Shareholders' Equity
    Current Liabilities
      Accounts payable and accrued liabilities        $  2,068      $    824
      Income tax payable                                   176           656
      Current portion of long-term
       debt                        (note 7)                213           160
    ------------------------------------------------------------------------
                                                         2,457         1,640
    Long-Term Debt                 (note 7)              8,306         2,210
    Deferred Credits and Other Liabilities                 563           325
    Future Income Taxes                                  4,820         2,060
    Liabilities of Discontinued
     Operations                    (note 5)                842           586
    Preferred Securities of Subsidiary                     458             -
    ------------------------------------------------------------------------
                                                        17,446         6,821
    ------------------------------------------------------------------------

    Shareholders' Equity
      Preferred securities                                 126           126
      Share capital                (note 8)              8,689           196
     Share options, net (note 3)                           147             -
      Paid in surplus                                       47            27
      Retained earnings                                  4,303         3,630
      Foreign currency translation
       adjustment                  (note 2)                 30             -
    ------------------------------------------------------------------------
                                                        13,342         3,979
    ------------------------------------------------------------------------
                                                      $ 30,788      $ 10,800
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------



    Consolidated Statement of Cash Flows

                                               September 30
                                   Three Months Ended    Nine Months Ended
    ------------------------------------------------------------------------
    (unaudited) ($ millions,
     except per share amounts)      2002       2001       2002       2001
    ------------------------------------------------------------------------
    Operating Activities
      Net earnings from
       continuing operations    $    184   $     277   $    809   $  1,165
      Depreciation, depletion
       and amortization              616        202      1,410        591
      Future income taxes
                       (note 6)      130         61        271        111
      Other                           97         22       (160)         8
    ------------------------------------------------------------------------
      Cash flow from
       continuing operations       1,027        562      2,330      1,875
      Cash flow from discontinued
       operations      (note 5)       (5)        (2)        19         45
    ------------------------------------------------------------------------
      Cash flow                    1,022        560      2,349      1,920
      Net change in non-cash
       working capital from
       continuing operations        (355)       132       (823)       490
      Net change in non-cash
       working capital from
       discontinued operations        80        (19)        79        (70)
    ------------------------------------------------------------------------
                                     747        673      1,605      2,340
    ------------------------------------------------------------------------

    Investing Activities
      Business combination
                       (note 3)        -          -       (128)         -
      Capital expenditures
                       (note 4)   (1,507)      (539)    (3,434)    (1,370)
      Proceeds on disposal of
       assets                        133         41        376        223
      Net change in
       investments and other          26        (26)        13        (21)
      Net change in non-cash
       working capital from
       continuing operations          83         45       (167)       (30)
      Discontinued operations          3          1         (9)        10
    ------------------------------------------------------------------------
                                  (1,262)      (478)    (3,349)    (1,188)
    ------------------------------------------------------------------------

    Financing Activities
      Issuance of short-term
       financing                       -        440          -        440
      Repayment of short-term
       financing                       -          -          -       (250)
      Issuance of long-term debt     813        150      1,462        244
      Repayment of long-term debt      -          -       (157)      (249)
      Issuance of common shares       27          8         96         41
      Dividends on common shares     (47)    (1,205)      (120)    (1,256)
      Payments to preferred
       securities holders            (24)        (2)       (31)        (6)
      Net change in non-cash
       working capital                 3         (3)         2         (2)
      Discontinued operations         (4)         -         (9)         -
      Other                            7          -        (25)         -
    ------------------------------------------------------------------------
                                     775       (612)     1,218     (1,038)
    ------------------------------------------------------------------------

    Foreign Exchange Gain (Loss) on
     Cash and Cash Equivalents
     held in Foreign Currency          4          6         (7)        15
    ------------------------------------------------------------------------

    Increase (Decrease) in
     Cash and Cash Equivalents       264       (411)      (533)       129
    Cash and Cash Equivalents,
     Beginning of Period             166        737        963        197
    ------------------------------------------------------------------------
    Cash and Cash Equivalents,
     End of Period              $    430   $    326   $    430   $    326
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Cash Flow per Common Share
                       (note 9)
      Basic                     $   2.14   $   2.19   $   5.90   $   7.51
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
      Diluted                   $   2.12   $   2.13   $   5.80   $   7.34
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    See accompanying notes to Consolidated Financial Statements.



    EnCana Corporation
    Notes to Consolidated Financial Statements  (unaudited)

    1. BASIS OF PRESENTATION

    The interim consolidated financial statements include the accounts of
EnCana Corporation (formerly PanCanadian Energy Corporation) ("PanCanadian")
and its subsidiaries (the "Company"), including Alberta Energy Company Ltd.
(see note 3), and are presented in accordance with Canadian generally accepted
accounting principles. The Company is in the business of exploration,
production and marketing of natural gas and crude oil, as well as pipelines,
natural gas liquids processing and gas storage 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, 2001, except as described in Note 2. 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, 2001.

    2. CHANGES IN ACCOUNTING POLICIES

    Foreign Currency Translation

    At January 1, 2002, the Company retroactively adopted amendments to the
Canadian accounting standard for foreign currency translation. As a result of
the amendments, all exchange gains and losses on long-term monetary items,
that do not qualify for hedge accounting, are recorded in earnings as they
arise. Specifically, the Company is now required to translate long-term debt
denominated in U.S. dollars into Canadian dollars at the period end exchange
rate with any resulting adjustment recorded in the Consolidated Statement of
Earnings. Previously, these exchange gains and losses were deferred and
amortized over the remaining life of the monetary item.
    As required by the standard, all prior periods have been restated for the
change in accounting policy. The change results in a decrease in net earnings
of $65 million for the three months ended September 30, 2002 (2001 -
$14 million) and an increase in net earnings of $16 million for the nine
months ended September 30, 2002 (2001 - decrease of $16 million). The effect
of this change on the December 31, 2001 consolidated balance sheet is an
increase in long-term debt and a reduction in deferred credits of $92 million,
as well as a reduction in deferred charges and retained earnings of $59
million.
    In conjunction with the business combination described in Note 3, the
Company reviewed its accounting for operations outside of Canada and
determined that all such operations are self-sustaining. The accounts of
self-sustaining foreign subsidiaries are translated using the current rate
method, whereby assets and liabilities are translated at period-end exchange
rates, while revenues and expenses are translated using average rates for the
period. Translation gains and losses relating to the subsidiaries are deferred
and included as a separate component of shareholders' equity. Previously,
operations outside of Canada were considered to be integrated and translated
using the temporal method. Under the temporal method, monetary assets and
liabilities were translated at the period-end exchange rate, other assets and
liabilities at the historical rates and revenues and expenses at the average
monthly rates except depreciation and depletion, which were translated on the
same basis as the related assets.
    This change was adopted prospectively beginning April 5, 2002, and
results in a decrease in net earnings of $2 million for the three months ended
September 30, 2002 and a decrease of $7 million for the nine months ended
September 30, 2002.

    Accounting for Marketing Operations

    As a result of the substantial completion in the third quarter of the
wind down of the Houston-based merchant energy operation, the Company reviewed
its accounting for the continuing marketing operations and determined that
such operations will not follow mark-to-market accounting. This change to
accounting for continuing marketing operations was adopted prospectively at
the end of the third quarter.


    3. BUSINESS COMBINATION

    On January 27, 2002, PanCanadian and Alberta Energy Company Ltd. ("AEC")
announced plans to combine their companies. The transaction was accomplished
through a plan of arrangement (the "Arrangement") under the Business
Corporations Act (Alberta). The Arrangement included a common share exchange,
pursuant to which holders of common shares of AEC received 1.472 common shares
of PanCanadian for each common share of AEC that they held. After obtaining
approvals of the common shareholders and optionholders of AEC and the common
shareholders of PanCanadian, the Court of Queen's Bench of Alberta and
appropriate regulatory and other authorities, the transaction closed April 5,
2002, and PanCanadian changed its name to EnCana Corporation ("EnCana").
    This business combination has been accounted for using the purchase
method with the results of operations of AEC included in the consolidated
financial statements from the date of acquisition. The Arrangement resulted in
PanCanadian issuing 218.5 million common shares and a transaction value of
$8,714 million. The calculation of the purchase price and the preliminary
allocation to assets and liabilities acquired as of April 5, 2002 is shown
below. The purchase price and goodwill allocation is preliminary because
certain items such as the determination of the final tax bases and fair values
of the assets and liabilities as of the acquisition date have not been
completed. Further information related to AEC can be obtained from the audited
consolidated financial statements included in the Joint Information Circular
concerning the merger of AEC and PanCanadian.

                                                                 ($ millions)
    -------------------------------------------------------------------------
    Calculation of Purchase Price:
      Common Shares issued to AEC shareholders  (millions) 218.5
      Price of Common Shares  ($ per common share)         38.43
      -----------------------------------------------------------------------
      Value of Common Shares issued                                 $  8,397
      Fair value of AEC share options exchanged for
       share options of EnCana Corporation ("Share options")             167
      Transaction costs                                                  150
      -----------------------------------------------------------------------
      Total purchase price                                             8,714
      Plus: Fair value of liabilities assumed
        Current liabilities                                            1,781
        Long-term debt, including Capital Securities                   4,843
        Project financing debt                                           604
        Preferred securities                                             458
        Other non-current liabilities                                    193
        Future income taxes                                            2,647
    -------------------------------------------------------------------------
    Total Purchase Price and Liabilities Assumed                    $ 19,240
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                                 ($ millions)
    -------------------------------------------------------------------------
    Fair Value of Assets Acquired:
      Current assets                                                $  1,505
      Capital assets                                                  14,053
      Other non-current assets                                           605
      Goodwill                                                         3,077
    -------------------------------------------------------------------------
    Total Fair Value of Assets Acquired                             $ 19,240
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    4. SEGMENTED INFORMATION

    Due to the business combination as described in Note 3, the Company has
redefined its operations into the following segments. Onshore North America
includes the Company's North America onshore exploration for, and production
of, natural gas and crude oil. Offshore & International combines the Offshore
& International Operations Division's exploration for, and production of,
crude oil and natural gas in Ecuador, the Canadian East Coast, the Gulf of
Mexico and the U.K. North Sea with the Offshore & New Ventures Exploration
Division's exploration activity in the Canadian East Coast, the North America
frontier region, the Gulf of Mexico, the U.K. North Sea, the Middle East,
Africa, Australia and Latin America. Midstream & Marketing includes natural
gas liquids processing and gas storage operations as well as marketing
activity under which the Company purchases and takes delivery of product from
others and delivers product to customers under transportation arrangements not
utilized for the Company's own production. All prior periods have been
restated to conform to these definitions. Operations that have been
discontinued are disclosed in Note 5.

    Results of Operations (For the Three Months Ended September 30)

                                                                 Offshore
                                 Onshore North America      and International
                                 --------------------------------------------
    ($ millions)                    2002        2001         2002       2001
    -------------------------------------------------------------------------
    Revenues
      Gross revenue              $ 1,725     $   863     $   223      $   43
      Royalties and production
       taxes                         194          62          64           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes        1,531         801         159          43

    Expenses
      Transportation and selling     109          35          19           5
      Operating                      276         109          43           4
      Purchased product                -          -            -           -
      Depreciation, depletion
       and amortization              516         176          68          19
    -------------------------------------------------------------------------
      Segment Income             $   630     $   481     $    29     $    15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                                Midstream
                                                              and Marketing
                                                         --------------------
    ($ millions)                                            2002        2001
    -------------------------------------------------------------------------
    Revenues
      Gross revenue                                      $ 1,188     $   291
      Royalties and production
       taxes                                                   -           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes                                1,188         291

    Expenses
      Transportation and selling                              48           3
      Operating                                               75          46
      Purchased product                                    1,041         220
      Depreciation, depletion
       and amortization                                       14           3
    -------------------------------------------------------------------------
      Segment Income                                     $    10     $    19
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                        Corporate             Consolidated
                                 --------------------------------------------
                                    2002        2001        2002        2001
    -------------------------------------------------------------------------
    Revenues
      Gross revenue              $     4     $     4     $ 3,140     $ 1,201
      Royalties and production
       taxes                           -           -         258          62
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes            4           4       2,882       1,139

    Expenses
      Transportation and selling       -           -         176          43
      Operating                        -           -         394         159
      Purchased product                -           -       1,041         220
      Depreciation, depletion and
       amortization                   18           4         616         202
    -------------------------------------------------------------------------
      Segment Income                 (14)          -         655         515
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Administrative                  50          36          50          36
      Interest, net                  112           2         112           2
      Foreign exchange               156          17         156          17
    -------------------------------------------------------------------------
                                     318          55         318          55
    -------------------------------------------------------------------------
    Net Earnings Before Income Tax  (332)        (55)        337         460
      Income tax expense             142         183         142         183
      Distribution on Subsidiary
       Preferred Securities,
       net of tax                     11           -          11           -
    -------------------------------------------------------------------------
    Net Earnings from Continuing
     Operations                  $  (485)    $  (238)    $   184     $   277
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Geographic and Product Information
      (For the Three Months Ended September 30)

    Onshore North America                     Produced Gas and NGLs
                                 --------------------------------------------
                                         Canada               U.S. Rockies
                                 --------------------------------------------
                                    2002        2001        2002        2001
    -------------------------------------------------------------------------
    Revenues
      Gross revenue              $   883     $   561     $   260     $    31
      Royalties and production
       taxes                          83          22          55           7
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes          800         539         205          24
    Expenses
      Transportation and selling      58          28          32           -
      Operating                      123          46          18           6
    -------------------------------------------------------------------------
    Operating Cash Flow          $   619      $  465     $   155     $    18
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                 Conventional Crude Oil          Syncrude
                                 --------------------------------------------
                                    2002        2001        2002        2001
                                 --------------------------------------------
    Revenues
      Gross revenue              $   439     $   271     $   143     $     -
      Royalties and production
       taxes                          54          33           2           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes          385         238         141           -

    Expenses
      Transportation and selling      17           7           2           -
      Operating                       91          57          44           -
    -------------------------------------------------------------------------
    Operating Cash Flow          $   277     $   174     $    95     $     -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                              Total Onshore
                                                              North America
                                                            2002        2001
                                                         --------------------
    Revenues
      Gross revenue                                      $ 1,725     $   863
      Royalties and production
       taxes                                                 194          62
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes                                1,531         801

    Expenses
      Transportation and selling                             109          35
      Operating                                              276         109
    -------------------------------------------------------------------------
    Operating Cash Flow                                  $ 1,146     $   657
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Offshore & International

                                        Ecuador              U.K. North Sea
                                 --------------------------------------------
                                    2002        2001        2002        2001
                                 --------------------------------------------
    Revenues
    -------------------------------------------------------------------------
      Gross revenue              $   186     $     -     $    37     $    43
      Royalties and production
       taxes                          64           -           -           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes          122           -          37          43

    Expenses
      Transportation and selling      14           -           5           5
      Operating                       24           -           5           4
    -------------------------------------------------------------------------
    Operating Cash Flow          $    84     $     -     $    27     $    34
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                              Total Offshore
                                     Other Countries        and International
                                 --------------------------------------------
                                     2002        2001       2002        2001
                                 --------------------------------------------
    Revenues
      Gross revenue               $     -     $     -    $   223     $    43
      Royalties and production
       taxes                            -           -         64           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes             -           -        159          43

    Expenses
      Transportation and selling        -           -         19           5
      Operating                        14           -         43           4
    -------------------------------------------------------------------------
    Operating Cash Flow           $   (14)    $     -    $    97     $    34
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Midstream & Marketing
                                         Midstream              Marketing
                                  -------------------------------------------
                                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $   179     $    51    $ 1,009     $   240

    Expenses
      Transportation and selling        -           -         48           3
      Operating                        69          43          6           3
      Purchased product                72           -        969         220
    -------------------------------------------------------------------------
    Operating Cash Flow           $    38     $     8    $   (14)    $    14
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                            Total Midstream
                                                             and Marketing
                                                         --------------------
                                                            2002        2001
                                                         --------------------
    Revenues
      Gross revenue                                      $ 1,188     $   291

    Expenses
      Transportation and selling                              48           3
      Operating                                               75          46
      Purchased product                                    1,041         220
    -------------------------------------------------------------------------
    Operating Cash Flow                                  $    24     $    22
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Results of Operations
     (For the Nine Months Ended September 30)
                                                               Offshore
                                  Onshore North America    and International
                                  -------------------------------------------
    ($ millions)                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $ 3,942     $ 2,906    $   494     $   130
      Royalties and production
       taxes                          485         244        123           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes         3,457       2,662        371         130

    Expenses
      Transportation and selling      241          99         39          14
      Operating                       651         319         92          11
      Purchased product                 -           -          -           -
      Depreciation, depletion
       and amortization             1,187         506        142          52
    -------------------------------------------------------------------------
      Segment Income              $ 1,378     $ 1,738     $   98     $    53
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                      Midstream and Marketing
                                                      -----------------------
    ($ millions)                                            2002        2001
                                                      -----------------------
    Revenues
      Gross revenue                                      $ 2,788     $ 1,137
      Royalties and production
       taxes                                                   -           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes                                2,788       1,137

    Expenses
      Transportation and selling                             103          12
      Operating                                              238         200
      Purchased product                                    2,317         861
      Depreciation, depletion
       and amortization                                       45          10
    -------------------------------------------------------------------------
      Segment Income                                     $    85     $    54
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                         Corporate            Consolidated
                                  -------------------------------------------
                                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $     3     $    21    $ 7,227     $ 4,194
      Royalties and production
       taxes                            -           -        608         244
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes             3          21      6,619       3,950

    Expenses
      Transportation and selling        -           -        383         125
      Operating                         -           -        981         530
      Purchased product                 -           -      2,317         861
      Depreciation, depletion
       and amortization                36          23      1,410         591
    -------------------------------------------------------------------------
      Segment Income                  (33)         (2)     1,528       1,843
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Administrative                  111          77         111         77
      Interest, net                   242          21         242         21
      Foreign exchange                (24)         14         (24)        14
    -------------------------------------------------------------------------
                                      329         112         329        112
    -------------------------------------------------------------------------
    Net Earnings Before Income Tax   (362)       (114)      1,199      1,731
      Income tax expense              379         566         379        566
      Distributions on Subsidiary
       Preferred Securities,
       net of tax                      11           -          11          -
    -------------------------------------------------------------------------
    Net Earnings from Continuing
     Operations                   $  (752)    $  (680)    $   809    $ 1,165
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Geographic and Product Information
    (For the Nine Months Ended September 30)

    Onshore North America                       Produced Gas and NGLs
                                           Canada              U.S. Rockies
                                  -------------------------------------------
                                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $ 2,199     $ 2,100    $   467     $    94
      Royalties and production
       taxes                          243         116        104          32
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes         1,956       1,984        363          62

    Expenses
      Transportation and selling      146          79         57           -
      Operating                       274         126         38          12
    -------------------------------------------------------------------------
    Operating Cash Flow           $ 1,536     $ 1,779    $   268     $    50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                  Conventional Crude Oil        Syncrude
                                  -------------------------------------------
                                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $ 1,042     $   712    $   234     $     -
      Royalties and production
       taxes                          135          96          3           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes           907         616        231           -

    Expenses
      Transportation and selling       35          20          3           -
      Operating                       227         181        112           -
    -------------------------------------------------------------------------
    Operating Cash Flow           $   645     $   415    $   116     $     -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                              Total Onshore
                                                              North America
                                                         --------------------
                                                            2002        2001
                                                         --------------------
    Revenues
      Gross revenue                                      $ 3,942     $ 2,906
      Royalties and production
       taxes                                                 485         244
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes                                3,457       2,662

    Expenses
      Transportation and selling                             241          99
      Operating                                              651         319
    -------------------------------------------------------------------------
    Operating Cash Flow                                  $ 2,565     $ 2,244
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Offshore & International

                                          Ecuador            U.K. North Sea
                                  -------------------------------------------
                                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $   368     $     -    $   126     $   130
      Royalties and production
       taxes                          123           -          -           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes           245           -        126         130

    Expenses
      Transportation and selling       24           -         15          14
      Operating                        55           -         11          11
    -------------------------------------------------------------------------
    Operating Cash Flow           $   166     $     -    $   100     $   105
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                              Total Offshore
                                      Other Countries       and International
                                  -------------------------------------------
                                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $     -     $     -    $   494     $   130
      Royalties and production
       taxes                            -           -        123           -
    -------------------------------------------------------------------------
      Revenues, net of royalties
       and production taxes             -           -        371         130

    Expenses
      Transportation and selling        -           -         39          14
      Operating                        26           -         92          11
    -------------------------------------------------------------------------
    Operating Cash Flow           $   (26)    $     -    $   240     $   105
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Midstream & Marketing

                                         Midstream              Marketing
                                  -------------------------------------------
                                     2002        2001       2002        2001
                                  -------------------------------------------
    Revenues
      Gross revenue               $   439     $   221    $ 2,349     $   916

    Expenses
      Transportation and selling        -           -        103          12
      Operating                       226         188         12          12
      Purchased product               123           -      2,194         861
    -------------------------------------------------------------------------
    Operating Cash Flow           $    90     $    33    $    40     $    31
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                            Total Midstream
                                                             and Marketing
                                                        ---------------------
                                                           2002         2001
                                                        ---------------------
    Revenues
      Gross revenue                                     $ 2,788      $ 1,137

    Expenses
      Transportation and selling                            103           12
      Operating                                             238          200
      Purchased product                                   2,317          861
    -------------------------------------------------------------------------
    Operating Cash Flow                                 $   130      $    64
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Capital Expenditures

                                 Three Months Ended     Nine Months Ended
                                      September 30          September 30
                              ----------------------------------------------
                                    2002       2001       2002       2001
    ------------------------------------------------------------------------
    Onshore North America       $  1,168   $    372   $  2,552   $    978
    Offshore and International       294        129        703        265
    Midstream and Marketing           24         36        148        105
    Corporate                         21          2         31         22
    ------------------------------------------------------------------------
    Total                       $  1,507   $    539   $  3,434   $  1,370
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    Capital and Total Assets

                                                   As at
                              ----------------------------------------------
                                    Capital Assets        Total Assets
    ------------------------------------------------------------------------
                                 September   December  September   December
                                     30,        31,        30,        31,
                                    2002       2001       2002       2001
    ------------------------------------------------------------------------
    Onshore North America       $ 18,724   $  6,552   $ 20,094   $  7,080
    Offshore and International     3,182      1,018      3,490      1,111
    Midstream and Marketing          998        426      2,127        817
    Corporate (including
     unallocated Goodwill)           213        166      3,701      1,064
    Assets of Discontinued
     Operations                        -          -      1,376        728
    ------------------------------------------------------------------------
    Total                       $ 23,117   $  8,162   $ 30,788   $ 10,800
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

    5. DISCONTINUED OPERATIONS

    On April 24, 2002, the Company adopted formal plans to exit from the
Houston-based merchant energy operation, which was included in the Midstream
and Marketing segment. Accordingly, these operations have been accounted for
as discontinued operations.
    On July 9, 2002, the Company announced that it plans to sell its 70%
equity investment in the Cold Lake Pipeline System and its 100% interest in
the Express Pipeline System. Both crude oil pipeline systems were acquired in
the business combination with Alberta Energy Company Ltd. on April 5, 2002
described in Note 3. Accordingly, these operations have been accounted for as
discontinued operations. The Company, through indirect wholly owned
subsidiaries, is a shipper on the Express system and the Cold Lake pipeline.
The financial results for the nine months ended September 30, 2002 shown below
includes tariff revenue of $42 million paid by the Company for services on
Express (three months ended - $19 million).
    The following tables present the effect of the discontinued operations on
the consolidated financial statements:

    Consolidated
     Statement of Earnings        For the Three Months Ended September 30
                            -------------------------------------------------
                                 Merchant       Midstream
                                  Energy       - Pipelines         Total
                            -------------------------------------------------
    ($ millions)               2002    2001    2002    2001    2002    2001
    -------------------------------------------------------------------------
    Revenues                  $ 154   $ 782   $  91   $   -   $ 245   $ 782
    -------------------------------------------------------------------------
    Expenses
       Operating                  -       -      33       -      33       -
       Purchased product        162     758       -       -     162     758
       Administrative            16      25       -       -      16      25
       Interest, net              -       -      11       -      11       -
       Foreign exchange           -       -       7       -       7       -
       Depreciation,
        depletion and
        amortization              -       1      12       -      12       1
       Gain on
        discontinuance          (29)      -       -       -     (29)      -
    -------------------------------------------------------------------------
                                149     784      63       -     212     784
    -------------------------------------------------------------------------
    Net Earnings (Loss)
     Before Income Tax            5      (2)     28       -      33      (2)
       Income tax expense         2       -      11       -      13       -
    -------------------------------------------------------------------------
    Net Earnings (Loss) from
     Discontinued Operations  $   3   $  (2)  $  17   $   -   $  20   $  (2)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                   For the Nine Months Ended September 30
                            -------------------------------------------------
                                 Merchant       Midstream
                                  Energy      - Pipelines(*)         Total
                            -------------------------------------------------
    ($ millions)               2002    2001    2002    2001    2002    2001
    -------------------------------------------------------------------------
    Revenues                $ 1,463 $ 3,349 $   149 $     - $ 1,612 $ 3,349
    -------------------------------------------------------------------------
    Expenses
       Operating                  -       -      53       -      53       -
       Purchased product      1,475   3,253       -       -   1,475   3,253
       Administrative            34      40       -       -      34      40
       Interest, net              -       -      22       -      22       -
       Foreign exchange           -       -      (3)      -      (3)      -
       Depreciation,
        depletion and
        amortization              1       3      23       -      24       3
       Loss on
        discontinuance           24       -       -       -      24       -
    -------------------------------------------------------------------------
                              1,534   3,296      95       -   1,629   3,296
    -------------------------------------------------------------------------
    Net Earnings (Loss)
     Before Income Tax          (71)     53      54       -     (17)     53
       Income tax expense
        (recovery)              (25)     21      22       -      (3)     21
    -------------------------------------------------------------------------
    Net Earnings (Loss)
     from Discontinued
     Operations               $ (46)  $  32   $  32   $   -   $ (14)  $  32
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (*) Reflects only six months of earnings as EnCana did
        not own the pipelines until April 5, 2002.



    Consolidated Balance Sheet
                                            As at September 30
                            -------------------------------------------------
                                 Merchant       Midstream
                                  Energy       - Pipelines         Total
                            -------------------------------------------------
    ($ millions)               2002    2001    2002    2001    2002    2001
    -------------------------------------------------------------------------
    Assets
       Cash and cash
        equivalents           $   -   $   -   $  60   $   -   $  60   $   -
       Accounts receivable
        and accrued revenue      55   1,377      32       -      87   1,377
       Inventories                -      33       1       -       1      33
    -------------------------------------------------------------------------
                                 55   1,410      93       -     148   1,410

       Capital assets, net        -       8     819       -     819       8
       Investments and
        other assets              -      17     369       -     369      17
    -------------------------------------------------------------------------
                                 55   1,435   1,281       -   1,336   1,435
    -------------------------------------------------------------------------
    Liabilities
       Accounts payable
        and accrued
        liabilities              30   1,269      44       -      74   1,269
       Income tax payable         -       -       5       -       5       -
       Current portion of
        long-term debt            -       -      25       -      25       -
    -------------------------------------------------------------------------
                                 30   1,269      74       -     104   1,269
       Long-term debt             -       -     583       -     583       -
       Deferred Credits
        and Other
        Liabilities               -       2       -       -       -       2
       Future income taxes        -       -     155       -     155       -
    -------------------------------------------------------------------------
                                 30   1,271     812       -     842   1,271
    -------------------------------------------------------------------------
    Net Assets of
     Discontinued
     Operations               $  25   $ 164   $ 469   $   -   $ 494   $ 164
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For comparative purposes, the following tables present the effect of only
the Merchant Energy Discontinued Operations on the Consolidated Financial
Statements for the years ended December 31. It does not include any financial
information related to Midstream - Pipelines as EnCana did not own the
pipelines being discontinued at that time.

                                                      Year Ended December 31
    Consolidated Statement of Earnings      --------------------------------
    ($ millions)                                          2001          2000
    ------------------------------------------------------------------------
    Revenues                                          $  4,085(*)   $  3,025
    ------------------------------------------------------------------------
    Expenses
       Purchased product                                 3,983(*)      2,961
       Administrative                                       43            26
       Depreciation, depletion and
        amortization                                         4             3
    ------------------------------------------------------------------------
                                                         4,030         2,990
    ------------------------------------------------------------------------
    Net Earnings Before Income Tax                          55            35
       Income tax expense                                   22            13
    ------------------------------------------------------------------------
    Net Earnings from Discontinued
     Operations                                        $    33      $     22
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    (*) Upon review of additional information related to 2001 sales and
        purchases of natural gas by the U.S. marketing subsidiary, the
        Company has determined certain revenue and expenses should have been
        reflected in the financial statements on a net basis rather than
        included on a gross basis as Revenue and Expenses - Purchased
        product.  The amendment had no effect on net earnings or cash flow
        but Revenues and Expenses - Purchased product have been reduced by
        $1,126 million.


                                                          As at December 31
    Consolidated Balance Sheet              --------------------------------
    ($ millions)                                          2001          2000
    ------------------------------------------------------------------------
    Assets
       Accounts receivable and accrued revenue        $    323      $    699
       Risk management assets                              309             -
       Inventories                                          70             2
    ------------------------------------------------------------------------
                                                           702           701

       Capital assets, net                                   9             3
       Deferred charges and other assets                    17            32
    ------------------------------------------------------------------------
                                                           728           736
    ------------------------------------------------------------------------
    Liabilities
       Accounts payable and accrued
        liabilities                                        306           631
       Risk management liabilities                         278             -
    ------------------------------------------------------------------------
                                                           584           631

       Deferred credits and liabilities                      2             3
    ------------------------------------------------------------------------
                                                           586           634
    ------------------------------------------------------------------------
    Net Assets of Discontinued Operations             $    142      $    102
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------


                                                     Year Ended December 31
    Consolidated Statement of Cash Flows    --------------------------------
    ($ millions)                                          2001          2000
    ------------------------------------------------------------------------
    Operating Activities
       Cash flow                                      $     47      $     26
       Net change in non-cash working capital              (48)           (2)
    ------------------------------------------------------------------------
                                                      $     (1)     $     24
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------


    6. INCOME TAXES

                                  Three Months Ended     Nine Months Ended
                                       September 30          September 30
                              ----------------------------------------------
    ($ millions)                     2002       2001       2002       2001
    ------------------------------------------------------------------------
    Provision for Income Taxes:
      Current
        Canada                       $ 56      $ 119      $ 129      $ 454
        United States                 (57)         -        (49)        (7)
        Ecuador                         7          -         14          -
        United Kingdom                  4          2         12          7
        Other                           2          1          2          1
    ------------------------------------------------------------------------
                                       12        122        108        455
      Future                          130         61        271        111
    ------------------------------------------------------------------------
                                    $ 142      $ 183      $ 379      $ 566
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------


    7. LONG-TERM DEBT
                                                             As at
                                                ----------------------------
                                                 September 30,  December 31,
    ($ millions)                                          2002          2001
    ------------------------------------------------------------------------
    Canadian dollar denominated debt
       Revolving credit and term loan
        borrowings                                    $  1,752      $     37
       Unsecured debentures, including
        Capital Securities                               1,955           725
    ------------------------------------------------------------------------
                                                         3,707           762
    ------------------------------------------------------------------------

    U.S. dollar denominated debt
       U.S. unsecured senior notes                       3,936         1,608
       U.S. revolving credit and term loan
        borrowings                                         751             -
    ------------------------------------------------------------------------
                                                         4,687         1,608
    ------------------------------------------------------------------------
                                                         8,394         2,370
    Increase in value of debt acquired                     125             -
    Current portion of long-term debt                     (213)         (160)
    ------------------------------------------------------------------------
                                                      $  8,306      $  2,210
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    Certain of the notes and debentures of the Company were acquired in the
business combination described in Note 3 and are accounted for at their fair
value. The difference between the fair value and the principal amount of the
debt acquired is being amortized over the remaining life of the outstanding
debt acquired, approximately 15 years.
    As required by Canadian generally accepted accounting principles, the
Company's U.S. dollar denominated debt is translated into Canadian dollars at
the period end exchange rate. Translation gains and losses are recorded in
income. Included in the $24 million foreign exchange gain for the nine months
ended September 30, 2002, the Company recorded a foreign exchange gain of
$21 million ($17 million after tax) related to the translation of U.S. dollar
debt. Included in the $156 million foreign exchange loss for the three months
ended September 30, 2002, the Company recorded a foreign exchange loss of
$183 million ($145 million after tax) related to the translation of U.S.
dollar debt.
    On October 2, 2002, the Company issued $300 million of unsecured
debentures at a coupon rate of 5.30%. Proceeds from the offering were used to
repay amounts outstanding under revolving credit and term loan borrowings.
    On October 16, 2002, the Company announced that it had established
October 22, 2002 as the record date for a meeting of Capital Securities
holders to consider, and if thought advisable to approve, amendments to the
terms of such Capital Securities to provide the Company with the right to call
for the early redemption of the Capital Securities, with a face value of
$430 million.


    8.  SHARE CAPITAL

                                      September 30, 2002   December 31, 2002
                                      --------------------------------------
    (millions)                           Number   Amount   Number   Amount
    ------------------------------------------------------------------------
    Common shares outstanding,
     beginning of period                  254.9   $  196    254.8   $  148
    Shares repurchased                        -        -     (0.2)       -
    Shares issued under option plans        4.0       96      1.9       48
    Shares issued to AEC
     Shareholders (note 3)                218.5    8,397        -        -
    Adjustments due to Canadian
     Pacific Limited reorganization           -        -     (1.6)       -
    ------------------------------------------------------------------------
    Common shares outstanding, end
     of period                            477.4   $8,689    254.9    $  196
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    The Company has a stock-based compensation plan (EnCana plan) that allows
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 issued. Options granted under the plan are generally fully exercisable
after three years and expire five years after the grant date. Options granted
under previous EnCana and Canadian Pacific Limited replacement plans expire
10 years from the date the options were granted.
    In conjunction with the business combination transaction described in
Note 3, options to purchase AEC common shares were replaced with options to
purchase common shares of EnCana (AEC replacement plan). The transaction also
resulted in these replacement options along with all options outstanding under
the EnCana plan, becoming exercisable after the close of business on
April 5, 2002.

    The following tables summarize the information about options
     to purchase common shares at September 30, 2002:

                                         Share Options      Weighted Average
                                          (millions)       Exercise Price ($)
    ------------------------------------------------------------------------
    Outstanding, beginning of period              10.5                 32.31
    Granted under EnCana plan                     11.7                 48.23
    Granted under AEC replacement plan            13.1                 32.01
    Granted under Directors' plan                  0.1                 48.04
    Exercised                                     (4.0)                24.10
    Forfeited                                     (0.2)                36.87
    ------------------------------------------------------------------------
    Outstanding, end of period                    31.2                 39.16
    ------------------------------------------------------------------------
    Exercisable, end of period                    19.4                 33.69
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------

                               Outstanding Options        Exercisable Options
                      -------------------------------------------------------
                                    Weighted
                       Number of    Average     Weighted   Number    Weighted
                        Options    Remaining    Average  of Options   Average
                      Outstanding  Contractual  Exercise Outstanding Exercise
                      (millions)   Life (years) Price($) (millions)  Price($)
    Range of Exercise
      Price ($)
    ------------------------------------------------------------------------
    13.50  to  19.99           4.0       1.4     18.62       4.0     18.62
    20.00  to  24.99           2.4       2.6     22.24       2.4     22.24
    25.00  to  29.99           3.4       2.6     26.58       3.4     26.58
    30.00  to  43.99           2.1       3.3     38.09       2.0     38.01
    44.00  to  53.00          19.3       4.1     47.92       7.6     47.40
    ------------------------------------------------------------------------
                              31.2       3.1     39.16      19.4     33.69
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------


    The Company does not record compensation expense in the financial
statements for share options granted to employees and directors because there
is no intrinsic value at the date of grant.  If the fair-value method had been
used, the Company's net earnings and net earnings per share would approximate
the following pro-forma amounts:

                                                           Nine Months Ended
                                                              September 30
    ($ millions, except per share                 --------------------------
     amounts)                                             2002          2001
    ------------------------------------------------------------------------
    Compensation Costs                                      65            18

    Net Earnings
       As reported                                         795         1,197
       Pro forma                                           730         1,179

    Net Earnings per Common Share
       Basic
           As reported                                    1.99          4.67
           Pro forma                                      1.83          4.60
       Diluted
           As reported                                    1.96          4.56
           Pro forma                                      1.80          4.49
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    As described above, the acquisition of AEC resulted in all outstanding
options at April 5, 2002 becoming fully exercisable. As the stock option
expense is normally recognized over the expected life, the early vesting of
outstanding options resulted in an acceleration of the compensation cost. As
such, a $33 million expense relating to options outstanding at April 5, 2002
was included in the 2002 pro forma earnings above.
    The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with weighted average assumptions
for grants as follows:

                                                           Nine Months Ended
                                                              September 30
                                                  --------------------------
                                                          2002          2001
    ------------------------------------------------------------------------
    Risk free interest rate                               4.36%         4.24%
    Expected lives (years)                                3.00          3.00
    Expected volatility                                   0.35          0.35
    Annual dividend per share                         $   0.40      $   0.40
    ------------------------------------------------------------------------

    9.  PER SHARE AMOUNTS

    The following table summarizes the common shares used in calculating net
earnings and cash flow per common share.

                              Three   Three
                             Months  Months   Three Months     Nine Months
                              Ended   Ended      Ended            Ended
                           March 31 June 30   September 30    September 30
                           -------------------------------------------------
                              2002    2002    2002    2001    2002    2001
    ------------------------------------------------------------------------
    Weighted average
     Common Shares
     outstanding - basic     255.3   461.1   476.8   256.2   397.8   255.8
    Effect of dilutive
     securities                5.7     8.9     5.4     5.6     6.9     5.9
    ------------------------------------------------------------------------
    Weighted average
     Common Shares
     outstanding - diluted   261.0   470.0   482.2   261.8   404.7   261.7
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    The net earnings per common share calculations include the effect of the
Distributions on Preferred Securities, net of tax for the three months of
$1 million (2001 - $1 million) and for the year to date $2 million
(2001 - $3 million).


    10.  RISK MANAGEMENT

    Unrecognized gains (losses) on risk management activities:

    ($ millions)                                         September 30, 2002
    ------------------------------------------------------------------------
    Natural gas                                                         293
    Crude oil                                                           (32)
    Gas Storage                                                         (24)
    Electricity                                                         (13)
    Foreign currency                                                   (132)
    Interest rates                                                       64
    Preferred securities                                                  5
    ------------------------------------------------------------------------
                                                                        161
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    Information with respect to contracts in place at December 31, 2001, is
disclosed in Note 17 to the PanCanadian annual audited consolidated financial
statements and Note 15 to the AEC annual audited consolidated financial
statements.

    11.  RECLASSIFICATION

    Certain information provided for prior periods has been reclassified to
conform to the presentation adopted in 2002.

    EnCana Corporation
    Pro Forma Consolidated Financial Statements
    (unaudited)
    September 30, 2002

    Pro Forma
    Consolidated Statement of Earnings
    (Unaudited)
    -------------------------------------------------------------------------
    ($ millions, except per
     share amounts)       EnCana            AEC       Pro Forma      EnCana
                     9 Months Ended   3 Months Ended Adjustments   Pro Forma
                   September 30, 2002  March 31,2002    Note 1   Consolidated
    -------------------------------------------------------------------------
    Revenues, net of
     royalties and
     production taxes
      Upstream               $ 3,828        $   844     $  (141)     $ 4,531

      Midstream and Marketing  2,788            358         141        3,287

      Other                        3              -           -            3
    -------------------------------------------------------------------------
                               6,619          1,202           -        7,821
    Expenses
      Transportation and
       selling                   383            103           -          486
      Operating                  981            202           -        1,183
      Purchased product        2,317            406           -        2,723

      Administrative             111             24           -          135
      Interest, net              242             61           9          312
      Foreign exchange           (24)            (1)          -          (25)
      Depreciation, depletion
       and amortization        1,410            302          45        1,757
    -------------------------------------------------------------------------
    Earnings Before the
     Undernoted                1,199            105         (54)       1,250
      Income tax expense
       (recovery)                379             39         (23)         395
      Distributions on
       subsidiary preferred
       securities, net of tax     11             16          (5)          22
    -------------------------------------------------------------------------
    Net Earnings from
     Continuing Operations       809             50         (26)         833
    Net Earnings from
     Discontinued Operations     (14)             6           -           (8)
    -------------------------------------------------------------------------
    Net Earnings                 795             56         (26)         825
      Distributions on
       preferred securities,
       net of tax                  2              -           -            2
    -------------------------------------------------------------------------
    Net Earnings Attributable
     to Common Shareholders  $   793        $    56     $   (26)     $   823
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings  per  Common Share
    Continuing Operations
      Basic                                                          $  1.75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                                                        $  1.72
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Earnings
      Basic                                                          $  1.74
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                                                        $  1.70
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Pro Forma
    Consolidated Statement of Cash Flow from Operations
    (Unaudited)
    -------------------------------------------------------------------------
    ($ millions, except
     per share amounts)   EnCana            AEC        Pro Forma    EnCana
                     9 Months Ended   3 Months Ended Adjustments  Pro Forma
                   September 30, 2002  March 31,2002    Note 1   Consolidated
    -------------------------------------------------------------------------
    Operating Activities
      Net earnings from
       continuing operations $   809        $    50     $   (26)     $   833
      Depreciation, depletion
      and amortization         1,410            302          45        1,757
      Future income taxes        271             13         (19)         265
      Other                     (160)             9           -         (151)
    -------------------------------------------------------------------------
    Cash Flow from
     Continuing Operations     2,330            374           -        2,704
    Cash Flow from Discontinued
     Operations                   19             16           -           35
    -------------------------------------------------------------------------
    Cash Flow                  2,349            390           -        2,739
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash Flow per Common Share
     from Continuing Operations
      Basic                                                          $  5.70
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                                                        $  5.59
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash Flow per Common Share
      Basic                                                          $  5.78
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                                                        $  5.66
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    >>

                             EnCana Corporation
            Notes to Pro Forma Consolidated Financial Statements
                             September 30, 2002
                                 (Unaudited)


    1. Basis of Presentation

    These unaudited Pro Forma Consolidated Statement of Earnings and
Consolidated Statement of Cash Flow have been prepared for information
purposes using information contained in the following:

    (a) EnCana's unaudited consolidated financial statements for the nine
        months ended September 30, 2002
    (b) AEC's unaudited consolidated financial statements for the three
        months ended March 31, 2002.

    The pro forma adjustments include adjustments for financial statement
presentation of segmented financial information. To be consistent with
EnCana's segmented presentation, revenues associated with AEC's purchased gas
activity have been reclassified from Upstream revenue.
    All pro forma adjustments related to the purchase price allocation have
been based upon the Business Combination information disclosed in Note 3 of
the September 30, 2002 unaudited Consolidated Financial Statements of EnCana
and assume that the transaction occurred on January 1, 2002.
    Pro forma adjustments made in the unaudited Consolidated Statement of
Earnings and unaudited Consolidated Statement of Cash Flow relate to (i) the
recording of interest expense on the Capital Securities of AEC, (ii) the
recording of Depreciation, depletion and amortization on the increase in the
carrying value of Capital Assets resulting from the acquisition which has been
allocated to capital assets that are subject to depreciation, depletion and
amortization and (iii) the recording of the future income tax benefits related
to these additional expenses.
    These unaudited Pro Forma Consolidated Financial Statements may not be
indicative of the results that actually would have occurred if the events
reflected therein had been in effect on the dates indicated or of the results
that may be obtained in the future.

For further information:
Investor contact:

EnCana Corporate Development:
Sheila McIntosh
Senior Vice-President
Investor Relations
(403) 645-2194

Greg Kist
Manager
Investor Relations
(403) 645-4737

Media contact:
Alan Boras
Manager
Media Relations
(403) 645-4747

ECA stock price

TSX $14.27 Can -0.540

NYSE $11.11 USD -0.510

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