Encana generates second quarter cash flow of US$1.1 billion, or $1.47 per share

Encana Corporation (TSX, NYSE: ECA) delivered strong operational
performance and solid financial results in the second quarter of 2011,
growing natural gas and liquids production by 4 percent per share from
the second quarter in 2010. Cash flow was US$1.1 billion, or $1.47 per
share. Operating earnings were $166 million, or 22 cents per share. As a
result of commodity price hedging in the second quarter, Encana's cash
flow was $131 million, after tax, or 18 cents per share, higher than
what the company would have generated without its commodity price
hedging program. Second quarter total production was approximately 3.46
billion cubic feet equivalent per day (Bcfe/d), up 111  million cubic
feet equivalent per day (MMcfe/d) from the same quarter in 2010.

'Encana delivered another quarter of strong operating performance and
achieved solid cash flow and operating earnings in the face of natural
gas prices that remain at levels that we believe are unsustainably low
in the long term. We are on track to meet our annual guidance for cash
flow and production, which is expected to grow between 5 and 7 percent
per share in 2011. We remain firmly focused on being among the
lowest-cost producers in the natural gas industry, diligently applying
capital discipline, risk management and increased operational
efficiencies in all of our decision making,? said Randy Eresman,
President & Chief Executive Officer.

Pursuing cost savings through operating efficiencies and supply chain
optimization

'We have adapted to this prolonged period of soft natural gas prices by
taking meaningful steps and applying advanced technologies to manage
costs over the long term as we pursue margin maximization on all of the
natural gas that we produce. On our Haynesville resource play hubs, we
have reduced well drilling times in the last year by 20 percent to
40  days, and a number of wells this year have been drilled in 35 days.
To counter the high demand and inflationary rates for well completion
equipment, we have established long-term, efficiency-based contracts
with four new, dedicated completions crews. In addition, by applying
effective logistics management and leveraging Encana′s demand, we have
reduced our cost of commodities by self-sourcing steel, sand and fuel.
These are proactive cost management programs that we expect will result
in significant and ongoing cost savings. Our integrated supply chain
approach also helps eliminate bottlenecks and optimize cycle times. We
now have 15 rigs fuelled by natural gas, about one-third of our current
drilling complement, generating fuel savings of between $300,000 and $1
million per rig per year, depending on the rig′s size and fuel system.
While industry cost inflation this year is expected to average about
10  percent, we expect our inflation rate to average approximately half
that level ? which we expect will be more than offset by improvements in
efficiencies,? Eresman said.

Encana establishes sizeable positions in two promising liquids rich
plays ? Duvernay and Tuscaloosa

In keeping with the company′s first-mover strategy of quietly assembling
meaningful land positions to capture large resource opportunities,
Encana has established two more sizable land positions in prospective
liquids rich plays. In western Alberta, the company has accumulated more
than 365,000 net acres in the Duvernay play, where preliminary drilling
results by Encana and other operators show significant potential. Two
more Duvernay exploration wells are planned for this year. In
Mississippi and Louisiana, Encana has captured more than 250,000 net
acres of the Tuscaloosa marine shale lands and the company plans to
evaluate the play′s potential this year.

'Both of these plays are in their early days, but we are encouraged by
our exploration results to date. Duvernay and Tuscaloosa are just two of
a handful of exciting opportunities that we are pursuing on the more
than 2.1 million net acres we hold with strong potential for liquids
production. The Niobrara formation in Colorado and the Collingwood shale
in Michigan, plus our well-established land positions in the Alberta
Deep Basin and the Montney formation in Alberta and British Columbia,
provide us with a diverse and promising portfolio of prospective
opportunities to grow liquids production over the long term,? Eresman
said.

Several divestiture and joint venture initiatives moving forward

Encana′s non-core divestiture program is well underway towards achieving
the company′s 2011 net divestitures goal of between $1 billion and $2
billion. Encana is actively engaged with a number of parties in a
competitive process to divest of non-core midstream and upstream assets
in Canada and the U.S. ? transactions that include the northern portion
of Encana′s Greater Sierra resource play, midstream assets in the
Cutbank Ridge resource play which straddles the British Columbia-Alberta
border, the company′s interest in the Cabin Gas Plant in Horn River and
midstream assets in the Piceance basin of Colorado. In its joint venture
initiatives to accelerate the value recognition of its enormous resource
potential, Encana is also pursuing investment partners in its
undeveloped Horn River lands and producing properties in the south
portion of Greater Sierra. In addition, competitive marketing of joint
venture opportunities on Encana′s extensive undeveloped lands in its
Cutbank Ridge resource play will commence this summer. Proceeds from
these planned transactions are expected to supplement 2011 cash flow
generation in the current low price environment and strengthen the
company′s balance sheet, providing financial flexibility going into 2012.

Deep Panuke project gearing up to begin production in fourth quarter

After sailing from its Abu Dhabi construction site in the Middle East,
the production field centre (PFC) for Encana′s Deep Panuke natural gas
development offshore Nova Scotia arrived in the port of Mulgrave on the
Strait of Canso in late June. Crews are completing pre-commissioning
work before the PFC is towed to the field location for installation
about 250  kilometres southeast of Halifax. Deep Panuke is expected to
deliver its first natural gas to market in the fourth quarter of 2011,
with production ramping up to about 200 million cubic feet per day
(MMcf/d). Offshore work this fall includes commissioning of all the
operational systems, hooking up the four production wells to the PFC and
connecting production facilities to the 176  kilometre pipeline that will
deliver natural gas to shore at Goldboro, Nova Scotia.

'Our Deep Panuke project is gearing up to begin delivering clean natural
gas to prime markets along the Eastern seaboard of North America,? said
Michael Graham, Encana′s Executive Vice-President & President, Canadian
Division.

Natural gas hedges help protect cash flow generation

For the next 18 months, Encana has about half of its expected production
hedged at attractive prices ? about 1.8 billion cubic feet per day
(Bcf/d) at an average NYMEX price of $5.75 per thousand cubic feet (Mcf)
for the last half of 2011 and approximately 2.0 Bcf/d of expected 2012
natural gas production at an average NYMEX price of about $5.80 per Mcf.

'Our risk management programs increase the certainty of our cash flow
generation and help ensure stability for our capital programs and
dividend payments ? prudent measures that continue to underpin Encana′s
financial strength,? Eresman said.

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.
Prior to 2011, 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.
Additional supplemental information will be posted on Encana′s website.
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.

Second Quarter 2011 Highlights

Financial

• 
  Cash flow per share of $1.47, or $1.1 billion
  
• 
  Operating earnings per share of 22 cents, or $166 million
  
• 
  Net earnings per share of 21 cents, or $176 million
  
• 
  Capital investment, excluding acquisitions and divestitures, of $1.1
  billion
  
• 
  Realized natural gas prices of $5.09 per Mcf and realized liquids
  prices of $92.66 per barrel (bbl). These prices include realized
  financial hedges
  
• 
  At the end of the quarter, debt to capitalization was 33 percent, debt
  to debt adjusted cash flow was 1.9 times and debt to adjusted EBITDA
  was 2.0 times
  
• 
  Paid dividend of 20 cents per share
  

Operating

• 
  Total production of 3.46 Bcfe/d
  
• 
  Natural gas production of 3.31 Bcf/d
  
• 
  NGLs and oil production of about 24,300 barrels per day (bbls/d)
  
• 
  Operating and administrative costs were $1.01 per thousand cubic feet
  equivalent (Mcfe)
  

Strategic Developments

• 
  Encana outlined plans to offer a variety of joint venture
  opportunities for portions of its undeveloped Montney resources in
  Cutbank Ridge and, separately, to examine a transaction with respect
  to midstream pipeline and processing assets in the area.
  
• 
  Encana Oil & Gas (USA) Inc., a subsidiary of Encana, completed an
  upstream joint-venture development agreement with Northwest Natural
  Gas Company, an Oregon natural gas distributor, which will result in
  Northwest Natural investing about $250 million over the next five
  years to earn a working interest in certain sections of Encana′s Jonah
  field in Wyoming.
  
• 
  Divested non-core assets in North America for total proceeds of
  approximately $43 million and acquired approximately $151 million of
  upstream assets, for net acquisitions of about $108 million.
  

1 Cash flow and operating earnings are non-GAAP measures as defined in
Note 1 on Page 6.

1 Thousand barrels per day

Second quarter total production up 4 percent per share

Total second quarter production was 3.46 Bcfe/d, up 4 percent per share
from 3.34 Bcfe/d in the second quarter of 2010. Natural gas production
was 3.31 Bcf/d, up 3 percent per share year over year. Canadian Division
production increased 9  percent year over year to about 1.53 Bcfe/d, led
by Cutbank Ridge, up about 90 MMcfe/d to 535 MMcfe/d, as well as strong
growth in coalbed methane (CBM), which was up 50 MMcfe/d from the second
quarter of 2010 to 476 MMcfe/d. USA Division production was down 1
percent to 1.92 Bcfe/d compared to the second quarter of 2010, largely
because results in the second 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 35  MMcfe/d lower due to net divestitures. Production decreases
were partially offset by strong growth in Haynesville where production
grew 89 percent to 487 MMcfe/d from 258 MMcfe/d in the second quarter of
2010.

Canadian Division capital investment in the second quarter was $468
million, down from $489 million a year earlier. USA Division capital
investment was $618 million, up from $594 million in the second quarter
of 2010.

Production from key resource plays

1 2010 and 2009 results have been restated to reflect a realignment of
key resource play areas.

1 Realized prices include the impact of financial hedging.

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

As a result of commodity price hedging in the second quarter, Encana's
before-tax cash flow was $196 million higher than what the company would
have generated without its hedging program. Since 2006, Encana's
commodity price hedging program has resulted in about $7.7 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 remainder of
2011

Encana continues to manage natural gas price risks through its commodity
price hedges. As of June 30, 2011, Encana has hedged approximately 1.8
Bcf/d, about 50 percent of expected July to December 2011 natural gas
production, at an average NYMEX price of $5.75 per Mcf. In addition,
Encana has hedged approximately 2.0 Bcf/d of expected 2012 natural gas
production at an average NYMEX price of $5.80 per Mcf and 405 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 June 30, 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 September 30, 2011 to common shareholders of
record as of September 15, 2011. Based on the July 20, 2011 closing
share price on the New York Stock Exchange of $31.55, this represents an
annualized yield of about 2.5 percent.

Guidance

Encana′s corporate guidance is unchanged from the most recent update
published June 21, 2011.

Financial strength

Encana maintains a strong balance sheet.  At June 30, 2011,  approximately
90 percent of its outstanding debt was composed of fixed-rate debt with
an average remaining term of about 12  years. At June 30, 2011, Encana
had $5.2 billion of committed revolving bank credit facilities, of which
$4.4 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 June
30, 2011, the company′s debt to capitalization ratio was 33 percent. The
company′s debt to debt adjusted cash flow was 1.9 times and debt to
adjusted EBITDA was 2.0 times, on a trailing 12-month basis.

CONFERENCE CALL TODAY

11 a.m. Mountain Time (1 p.m. Eastern Time)

A conference call and webcast to discuss the results will be held for
the investment community today, Thursday, July 21, 2011, beginning at
11:00 a.m.MT (1:00 p.m. ET). To participate, please dial (888)
231-8191 (toll-free in North America) or (647) 427-7450 approximately 10
minutes prior to the conference call. An archived recording of the call
will be available from approximately 3:00 p.m. ET on July 21 until
midnight July 28, 2011 by dialing (800)  642-1687 or (416) 849-0833 and
entering passcode 27940937.

A live audio webcast of the conference call will also be available via
Encana′s website, www.encana.com,
under Investors/Presentations & events. The webcast will be archived for
approximately 90 days.

NOTE 1: Non-GAAP measures

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

• 
  Cash flow is a non-GAAP measure defined as cash from operating
  activities excluding net change in other assets and liabilities, and
  net change in non-cash working capital. 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 to 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. EBITDA is defined as earnings
  before interest, taxes, depreciation and amortization.
  
• 
  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 do not have standardized meaning prescribed by IFRS and
are therefore unlikely to be comparable to similar measures provided by
other issuers. 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 cost savings from various cost management programs
of the company; expected inflation rate for the company; expectation to
increase liquids production over the next few years and in the long
term, including possible opportunities from Duvernay, Tuscaloosa and
other liquids rich plays; ability to meet 2011 net divestitures goal,
including the projected assets that will be divested and the expectation
for these transactions to supplement cash flow in 2011; ability to
attract joint venture partners and third party capital; expected date of
first natural gas at Deep Panuke; success of risk management and hedging
strategies; number of wells to be drilled in various resource and
emerging plays; estimated increase in natural gas demand from
transportation, 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; 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; and expectation of a price recovery in
natural gas. 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 or attract third party capital;
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,
or by contacting:

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