Encana generates first quarter cash flow of US$955 million, or $1.29 per share

Encana Corporation (TSX, NYSE: ECA) delivered solid cash flow and grew
natural gas production by 4 percent per share in the first quarter of
2011. Cash flow was US$955 million, or $1.29 per share down 17 percent
largely due to lower natural gas prices compared to the first quarter of
2010. As a result of commodity price hedging in the first quarter,
Encana's cash flow was $138 million, after tax, or 19 cents per share,
higher than what the company would have generated without its commodity
price hedging program. First quarter total production was approximately
3.34 billion cubic feet equivalent per day (Bcfe/d), up about 70 million
cubic feet equivalent per day (MMcfe/d), or about 4 percent per share,
from the same quarter in 2010.

'Encana continued to generate solid cash flow and strong operating
performance in the first quarter of 2011. With production averaging
about 3.34 Bcfe/d, we are on track to meet our guidance of between 3.475
Bcfe/d and 3.525 Bcfe/d for 2011. Cash flow of $955 million, while down
19 percent from the first quarter of 2010 when natural gas prices were
higher, is on target. Our cash flow generation continues to benefit from
Encana′s strong price hedging and steady production growth,? said Randy
Eresman, President & Chief Executive Officer. 'Our focus remains firmly
on being among the lowest-cost producers in the natural gas industry by
keeping capital discipline, risk management and increased operational
efficiencies central to our financial and operational decision making.
Encana′s financial position is healthy; our balance sheet remains robust
and we plan to continue our risk management program to help reduce the
risk in our cash flow projection.

'Our strategy is focused on high-growth, low-cost, margin maximization,
and it′s working well. This year our supply cost, which represents the
NYMEX natural gas price that delivers a return equal to our cost of
capital, is expected to average $3.70 per thousand cubic feet equivalent
(Mcfe) ? down 25 percent in the past three years. We expect this
downward cost trend to continue as we target an average supply cost of
about $3 per Mcfe for development of all our key resource plays. We
expect to achieve this through further efficiency gains as we advance
the design and development of our resource play hubs and continuously
high-grade our portfolio. While we have the resources and the drilling
inventory to accelerate our development pace, we will not grow at any
cost. Our 2011 growth rate is aligned with our projected cash flow
generation capacity during this period when natural gas prices remain at
levels that we believe are unsustainably low. We are also attracting
third-party investment to help unlock value from our large inventory of
undeveloped reserves and resources. All the while, we remain focused on
capital discipline as we invest in short- and long-term growth
opportunities in pursuit of sustainable, long-term increases in the net
asset value of every Encana share,? Eresman said.

Encana ramps up development and exploration of its extensive 1.7
million acres of oil and natural gas liquids lands

With oil
and natural gas liquids (NGLs) commanding a significant energy price
premium over natural gas, in the past year Encana has sharpened its
focus on accelerating oil and NGLs production from its extensive
liquids-rich lands ? now covering more than 1.7 million acres in Canada
and the U.S.

'We have redirected a portion of our capital investment to oil and
natural gas liquids development and exploration. We are building
facilities to extract more liquids from our high energy-content natural
gas streams at several of our natural gas processing plants. We are
drilling liquids-prone targets on our existing lands, expanding
developments into liquids-rich areas, exploring for oil, and acquiring
large and significant positions in highly-prospective liquids-rich
lands. The capital investment associated with these multiple initiatives
is expected to represent about $1 billion in 2011,? Eresman said.

Liquids-prone lands extend from Montney to Duvernay, Niobrara, Mancos
and Collingwood

In recent months, Encana has assembled about
190,000 net acres in the Simonette and Kaybob areas of the Duvernay
shale in Alberta, adding to its existing 380,000 net acres of
liquids-rich lands in the Alberta Deep Basin and 495,000 net acres in
the Montney in Alberta and British Columbia. In Colorado, Encana holds
about 240,000 net acres in the Piceance and Denver-Julesburg (DJ) basins
where the company has identified liquids potential in the Niobrara and
Mancos shales. In Michigan this year, Encana plans to expand evaluation
drilling on its 425,000 net acres in the Collingwood shale.

'Initial drilling results and indications in each of these
highly-prospective formations show promise as we step up our evaluation
and identification of the liquids potential. Our multi-pronged approach
to boosting liquids production from our liquids-rich assets has the
potential, over the next few years, to deliver substantial volumes of
NGLs production,? Eresman said.

Encana offers Horn River and Greater Sierra joint venture and
acquisition opportunities in northeast B.C.

Expanding its
ongoing plan to attract third-party capital, Encana has initiated
processes to attract additional joint venture partners on selected
assets in the Horn River basin and its Greater Sierra lands. Encana is
also offering an acquisition opportunity for a portion of its producing
Greater Sierra resource play. Encana′s joint-venture investment strategy
is aimed at accelerating value recognition of the company′s enormous
resource potential. This new joint venture initiative builds on previous
announcements of a farm-out agreement with Kogas Canada Ltd., a
subsidiary of Korea Gas Corporation, in the Horn River and Montney
formations and a planned joint venture and acquisition by PetroChina
International Investment Company Limited of a 50 percent interest in
Encana′s Cutbank Ridge business assets. RBC Capital Markets and
Jefferies & Company, Inc. have been retained by Encana to conduct the
potential joint venture and divestiture processes on the Horn River and
Greater Sierra assets.

Natural gas economy gaining traction

Encana′s natural gas
economy team continues to make progressive steps that help demonstrate
the economic and environmental benefits of expanding natural gas use
across North America. In addition to the launch of Encana′s new mobile
liquefied natural gas fueling stations announced earlier this month,
Encana expects to have opened five compressed natural gas stations and
is targeting the conversion of about 150 of its fleet vehicles to
natural gas by the end of 2011. Greater use of natural gas for
transportation is gaining traction across the U.S. where more than 22
states and the federal government have initiated or passed legislation
that supports purchase of home fueling systems, the construction of
fueling stations and conversion or manufacture of trucks and cars to run
on natural gas. Most recently, U.S. Congress, in a bi-partisan
initiative, introduced the New Alternative Transportation to Give
Americans Solutions legislation (NAT GAS Act of 2011), which is aimed at
extending and expanding tax credits for more natural gas vehicles and
fueling stations.

IMPORTANT INFORMATION

Encana reports in U.S. dollars
unless otherwise noted.Production, sales and reserves estimates
are reported on an after-royalties basis, unless otherwise noted. Per
share amounts for cash flow and earnings are on a diluted basis.As
of January 1, 2011, Encana prepares its interim consolidated financial
statements and comparative information in accordance with International
Financial Reporting Standards (IFRS) 1, 'First-time Adoption of
International Financial Reporting Standards?, and with International
Accounting Standard 34, 'Interim Financial Reporting,? as issued by the
International Accounting Standards Board. Previously, Encana′s financial
statements were prepared in accordance with Canadian generally accepted
accounting principles (previous GAAP). Reconciliations between previous
GAAP and IFRS financial information can be found in the consolidated
financial statements available on the company′s website at www.encana.com.Encana defines supply cost as the flat NYMEX natural gas price that
yields an internal rate of return of 9 percent after tax, and does not
include land costs.

First Quarter 2011 Highlights

Financial

• 
  Cash flow per share of $1.29, or $955 million
  
• 
  Operating earnings per share of 2 cents, or $15 million
  
• 
  Net earnings per share of 11 cents, or $78 million
  
• 
  Capital investment, excluding acquisitions and divestitures, of $1.29
  billion
  
• 
  Realized natural gas prices of $5.00 per thousand cubic feet (Mcf) and
  realized liquids prices of $80.70 per barrel (bbl). These prices
  include realized financial hedges
  
• 
  At the end of the quarter, debt to capitalization was 32 percent and
  debt to debt-adjusted cash flow was 1.8 times. Excluding the impact of
  unrealized hedging gains and losses, debt to adjusted EBITDA was 1.9
  times
  
• 
  Paid dividend of 20 cents per share
  

Operating

• 
  Total production of 3.34 Bcfe/d
  
• 
  Natural gas production of 3.20 billion cubic feet per day (Bcf/d)
  
• 
  NGLs and oil production of about 23,000 barrels per day (bbls/d)
  
• 
  Operating and administrative costs were $1.41 per Mcfe, or $1.02 per
  Mcfe, excluding long-term incentive costs and foreign exchange
  

Strategic Developments

• 
  Signed a Co-operation Agreement with PetroChina International
  Investment Company Limited, a subsidiary of PetroChina Company
  Limited, that would see PetroChina pay C$5.4 billion to acquire a 50
  percent interest in Encana′s Cutbank Ridge business assets in British
  Columbia and Alberta. The transaction remains subject to regulatory
  approval by Canadian and Chinese authorities, due diligence and the
  negotiation and execution of various transaction agreements, including
  the joint venture agreement
  
• 
  Announced and completed an agreement to acquire a 30 percent interest
  in the planned Kitimat liquefied natural gas (LNG) export terminal,
  located on the west coast of central British Columbia, and the
  associated natural gas pipeline
  
• 
  Encana Oil & Gas (USA) Inc., a subsidiary of Encana Corporation,
  agreed to and completed the sale of its Fort Lupton natural gas
  processing plant in Colorado to Western Gas Partners, LP for proceeds
  of approximately $300  million, resulting in a gain on divestiture of
  approximately $128 million, before tax
  
• 
  Encana announced that Encana Natural Gas Inc., a subsidiary, entered
  into an agreement to become sole LNG fuel supplier to Heckmann Water
  Resources, which provides water handling services to Encana and other
  companies in the Haynesville resource play in Louisiana. The agreement
  would see Encana′s new LNG fueling stations provide mobile fueling
  services to Heckmann′s newly-ordered fleet of 200 LNG heavy-duty
  trucks, which will be the largest fleet of LNG trucks in North America
  
• 
  Divested non-core assets in North America for total proceeds of
  approximately $397 million and acquired approximately $266 million of
  upstream assets, for net divestitures of about $131 million.
  

Natural gas production growth led by strong performance in emerging
shale plays

Total first quarter production was 3.34 Bcfe/d, up
4 percent per share from 3.27 Bcfe/d in the first quarter of 2010.
Canadian Division production increased 18 percent year over year to
about 1.48 Bcfe/d, led by Cutbank Ridge, up 40  percent, as well as
strong advancements in the emerging Horn River resource play in British
Columbia, which grew to 70 MMcfe/d from 11 MMcfe/d a year earlier. USA
Division production decreased 8 percent to 1.86 Bcfe/d from the first
quarter of 2010, largely because results in the first quarter of 2010
were affected by production volumes brought back on stream that had been
shut in and curtailed in 2009 due to low prices. Also, USA Division
production was about 85  MMcfe/d lower due to net divestitures.
Production decreases were partially offset by strong growth in
Haynesville where production grew 118 percent to 412 MMcfe/d from 189
MMcfe/d in the first quarter of 2010.

Canadian Division capital investment in the first quarter was $625
million, up from $545 million a year earlier. USA Division capital
investment was $643 million, up from $474 million in the first quarter
of 2010. The capital investment increases were due mainly to added
investment in developing the Texas, Piceance, CBM and Haynesville
resource plays.

Key resource play realignment

As Encana continues to
sharpen its focus on resource plays, a greater proportion of total
production is included in its key resource plays ? the core value
creation assets in the company′s portfolio. As a result, Encana has
realigned the producing assets contained in some of its resource plays
and the most noted adjustment is the merger of the East Texas and Fort
Worth resource plays into the Texas resource play. Other adjustments
have been made to reflect additional incremental realignment of Encana′s
key resource plays, which now make up about 97 percent of the company′s
total production.

Focus shifts to resource play hub activities in Haynesville resource
play

Encana continues to advance its industry-leading resource
play hub model which helps to expedite natural gas development and
optimize efficiencies by enabling the drilling of numerous horizontal
wells, each containing multiple completion stages, from a single pad
location, which results in a lower environmental impact. In the
Haynesville, Encana is shifting its focus from lease retention drilling
to expanding and optimizing its resource play hub activities, an
advancement that includes seeking regulatory approvals for longer
laterals and building on its low-cost completions program. In the first
quarter of 2011, the shift to resource play hub activity resulted in
about a 25  percent reduction in drilling costs from a lease retention
program. Further cost reductions are expected through the deployment
this year of fit-for-purpose pumping equipment and service supply
agreements.

Encana's risk management program continues to generate strong revenue
and stabilize cash flow

As a result of commodity price hedging
in the first quarter, Encana's before-tax cash flow was $205 million
higher than what the company would have generated without its hedging
program. In the past five years, Encana's commodity price hedging
program has resulted in about $7.3 billion of before-tax cash flow in
excess of what would have been generated had the company not implemented
a commodity price hedging program. Encana hedges the price on a portion
of its production in order to reduce the risk of lower prices and to
provide greater certainty to cash flow generation, which adds stability
to the funding of ongoing capital investment.

About 50 percent of natural gas production hedged for remaining nine
months of 2011

Encana continues to manage natural gas price
risks through its commodity price hedges. As of March 31, 2011, Encana
has hedged approximately 1.8 Bcf/d, about 50 percent, of expected April
to December 2011 natural gas production, at an average NYMEX price of
$5.75 per Mcf. In addition, Encana has hedged approximately 1.8 Bcf/d of
expected 2012 natural gas production at an average NYMEX price of about
$5.87 per Mcf and approximately 395 MMcf/d of expected 2013 natural gas
production at an average price of $5.29 per Mcf.

Encana continually assesses its hedging needs and the opportunities
available prior to establishing its capital program for the upcoming
year. Risk management positions as at March 31, 2011 are presented in
Note 17 to the unaudited Interim Consolidated Financial Statements.

Corporate developments

Quarterly dividend of 20 cents per share declared

Encana′s
Board of Directors has declared a quarterly dividend of 20 cents per
share payable on June 30, 2011 to common shareholders of record as of
June 15, 2011. Based on the April 19, 2010 closing share price on the
New York Stock Exchange of $32.66, this represents an annualized yield
of about 2.5 percent.

Guidance updated on key resource plays

Encana has posted
additional reference information on each of its key resource plays on
its website. The company′s 2011 corporate guidance is posted on www.encana.com.

Normal Course Issuer Bid

On December 8, 2010, Encana
announced it had received approval  to renew  the company's Normal Course
Issuer Bid (NCIB) from the Toronto Stock Exchange.  Under the renewed
bid, Encana may purchase for cancellation up to  36.8  million common
shares, representing about 5  percent of the
approximately  736  million  common  shares issued and outstanding as at
November 30, 2010. During the first quarter of 2011, Encana did not
purchase any of its common shares.

Financial strength

Encana maintains a strong balance sheet.  At March 31,
2011,  approximately 96 percent of its outstanding debt was composed of
fixed-rate debt with an average remaining term of 12.3  years. At March
31, 2011, Encana had $5.2 billion of committed revolving bank credit
facilities, of which $4.8 billion remains unused. Encana is focused on
maintaining investment grade credit ratings, capital discipline and
financial flexibility. The company stewards its financial position to a
variety of metrics. At March 31, 2011, the company′s debt to
capitalization ratio was 32 percent. The company′s debt to debt-adjusted
cash flow was 1.8 times and debt to adjusted EBITDA was 2.2 times, on a
trailing 12-month basis, primarily due to the low natural gas prices
experienced during the past 12 months. Excluding the impact of
unrealized hedging gains and losses, the company′s debt to adjusted
EBITDA was 1.9 times.

NOTE 1: Non-GAAP measures

This news release contains
references to non-GAAP measures as follows:

• 
  Cash flow is a non-GAAP measure defined as cash from operating
  activities excluding net change in other assets and liabilities, and
  net change in non-cash working capital. Free cash flow is a non-GAAP
  measure that Encana defines as cash flow in excess of capital
  investment, excluding net acquisitions and divestitures, and is used
  to determine the funds available for other investing and/or financing
  activities. Debt-adjusted cash flow is a non-GAAP measure defined as
  cash flow before interest expense net of tax.
  
• 
  Operating earnings is a non-GAAP measure defined as net earnings
  excluding non-recurring or non-cash items that management believes
  reduces the comparability of the company's financial performance
  between periods. These after-tax items may include, but are not
  limited to, unrealized hedging gains/losses, exploration and
  evaluation expenses, impairments and impairment reversals,
  gains/losses on divestitures, foreign exchange gains/losses and the
  effect of changes in statutory income tax rates.
  
• 
  Capitalization is a non-GAAP measure defined as current and long-term
  debt plus shareholders′ equity. Debt to capitalization and debt to
  adjusted EBITDA are two ratios that management uses as measures of the
  company′s overall financial strength to steward the company′s overall
  debt position.
  
• 
  Adjusted EBITDA is a non-GAAP measure defined as net earnings before
  gains or losses on divestitures, income taxes, foreign exchange gains
  or losses, interest, accretion of asset retirement obligation,
  depreciation, depletion and amortization, exploration and evaluation
  expenses and impairments.
  

These measures have been described and presented in this news release in
order to provide shareholders and potential investors with additional
information regarding Encana′s liquidity and its ability to generate
funds to finance its operations.

Encana Corporation

Encana is a leading North American
natural gas producer that is focused on growing its strong portfolio of
natural gas resource plays in key basins from northeast British Columbia
to Texas and Louisiana. By partnering with employees, community
organizations and other businesses, Encana contributes to the strength
and sustainability of the communities where it operates. Encana common
shares trade on the Toronto and New York stock exchanges under the
symbol ECA.

ADVISORY REGARDING OIL AND GAS INFORMATION ? In this news
release, certain crude oil and NGLs volumes have been converted to cubic
feet equivalent (cfe) on the basis of one barrel (bbl) to six thousand
cubic feet (Mcf). Cfe may be misleading, particularly if used in
isolation. A conversion ratio of one bbl to six Mcf is based on an
energy equivalency conversion method primarily applicable at the burner
tip and does not represent value equivalency at the well head.

ADVISORY REGARDING FORWARD-LOOKING STATEMENTS ? In the interests
of providing Encana shareholders and potential investors with
information regarding Encana, including management′s assessment of
Encana′s and its subsidiaries′ future plans and operations, certain
statements contained in this news release are forward-looking statements
or information within the meaning of applicable securities legislation,
collectively referred to herein as 'forward-looking statements.?
Forward-looking statements in this news release include, but are not
limited to: expected reduction in average supply cost in all key
resource plays; possible joint venture opportunity with PetroChina and
its affiliates and the impact of such transaction; ability to attract
other joint venture partners and third party capital; estimates to
increase NGLs production over the next few years; number of wells to be
drilled in various resource and emerging plays; anticipated first gas
from Deep Panuke; estimated increase in natural gas demand from
transportation and power generation and exports of liquefied natural gas
to new markets; expected efficiencies to be generated by resource play
hub approach; potential of emerging plays; success of risk management
and hedging strategies; projections contained in 2011 guidance
(including estimates of cash flow per share, upstream operating cash
flow, natural gas and NGLs production, growth per share, capital
investment, net divestitures, and operating costs); anticipated crude
oil and natural gas prices; target debt to capitalization, debt to
debt-adjusted cash flow and debt to adjusted EBITDA ratios; potential
dividends; 2011 updated corporate guidance for each of the company′s key
resource plays; ability to maintain investment grade credit ratings and
strong liquidity position; projected share purchases under Encana′s NCIB
program and expectation that cumulative natural gas production over the
next eight to 10 years will be exposed to weighted average NYMEX gas
price of $6.00 per million Btu and generate a 35 percent half cycle rate
of return. Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the plans,
intentions or expectations upon which they are based will occur. By
their nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties, both general and specific,
that contribute to the possibility that the predictions, forecasts,
projections and other forward-looking statements will not occur, which
may cause the company′s actual performance and financial results in
future periods to differ materially from any estimates or projections of
future performance or results expressed or implied by such
forward-looking statements. These assumptions, risks and uncertainties
include, among other things: the risk that the company may not conclude
potential joint venture arrangements with PetroChina, their affiliates
or others; volatility of and assumptions regarding commodity prices;
assumptions based upon the company′s current guidance; fluctuations in
currency and interest rates; product supply and demand; market
competition; risks inherent in the company′s and its subsidiaries′
marketing operations, including credit risks; imprecision of reserves
and resources estimates and estimates of recoverable quantities of
natural gas and liquids from resource plays and other sources not
currently classified as proved, probable or possible reserves or
economic contingent resources; marketing margins; potential disruption
or unexpected technical difficulties in developing new facilities;
unexpected cost increases or technical difficulties in constructing or
modifying processing facilities; risks associated with technology; the
company′s ability to replace and expand gas reserves; its ability to
generate sufficient cash flow from operations to meet its current and
future obligations; its ability to access external sources of debt and
equity capital; the timing and the costs of well and pipeline
construction; the company′s ability to secure adequate product
transportation; changes in royalty, tax, environmental, greenhouse gas,
carbon, accounting and other laws or regulations or the interpretations
of such laws or regulations; political and economic conditions in the
countries in which the company operates; terrorist threats; risks
associated with existing and potential future lawsuits and regulatory
actions made against the company; and other risks and uncertainties
described from time to time in the reports and filings made with
securities regulatory authorities by Encana. Although Encana believes
that the expectations represented by such forward-looking statements are
reasonable, there can be no assurance that such expectations will prove
to be correct. Readers are cautioned that the foregoing list of
important factors is not exhaustive. Forward-looking statements with
respect to anticipated production, reserves and production growth,
including over five years or longer, are based upon numerous facts and
assumptions, including a projected capital program averaging
approximately $6 billion per year that underlies the long-range plan of
Encana, which is subject to review annually and to such revisions for
factors including the outlook for natural gas commodity prices and the
expectations for capital investment by the company achieving an average
rate of approximately 2,500 net wells per year, Encana′s current net
drilling location inventory, natural gas price expectations over the
next few years, production expectations made in light of advancements in
horizontal drilling, multi-stage well completions and multi-well pad
drilling, the current and expected productive characteristics of various
existing and emerging resource plays, Encana′s estimates of proved,
probable and possible reserves and economic contingent resources,
expectations for rates of return which may be available at various
prices for natural gas and current and expected cost trends. In
addition, assumptions relating to such forward-looking statements
generally include Encana′s current expectations and projections made in
light of, and generally consistent with, its historical experience and
its perception of historical trends, including the conversion of
resources into reserves and production as well as expectations regarding
rates of advancement and innovation, generally consistent with and
informed by its past experience, all of which are subject to the risk
factors identified elsewhere in this news release.

Forward-looking information respecting anticipated 2011 cash flow for
Encana is based upon achieving average production of oil and gas for
2011 of between 3.475 Bcfe/d and 3.525 Bcfe/d, commodity prices for
natural gas of NYMEX $4.50 - $5/Mcf, commodity prices for crude oil of
(WTI)  $85 - $95 per bbl and an estimated U.S./Canadian dollar foreign
exchange rate of $0.95 - $1.05 and a weighted average number of
outstanding shares for Encana of approximately 736 million.

Furthermore, the forward-looking statements contained in this news
release are made as of the date of this news release, and, except as
required by law, Encana does not undertake any obligation to update
publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise. The
forward-looking statements contained in this news release are expressly
qualified by this cautionary statement.

Further information on Encana Corporation is available on the company′s
website, www.encana.com.

FOR FURTHER INFORMATION:

Investor
contacts:

Ryder McRitchie

Vice-President, Investor
Relations

(403) 645-2007

Lorna Klose

Manager,
Investor Relations

(403) 645-6977

Media contacts:

Alan
Boras

Vice-President, Media Relations

(403) 645-4747

Carol
Howes

Manager, Media Relations

(403) 645-4799