Encana achieves 2011 operating targets 2012 capital investment focused on liquids exploration and development, minimizing dry gas investment

Encana Corporation (TSX, NYSE: ECA) achieved its core 2011 financial and
operating targets, generating cash flow of US$4.2 billion, or $5.66 per
share, and total production of 3.5 billion cubic feet equivalent per day
(Bcfe/d), a 5 percent increase from 2010. Operating earnings were $398
million, or 54 cents per share. In 2011, the company also significantly
expanded natural gas liquids (NGLs) and oil growth initiatives on two
fronts: the company continued to assemble a diverse portfolio of
potential liquids-rich plays across North American basins where it is
conducting extensive exploration, and it advanced NGLs extraction plans
at three Canadian natural gas plants. Exploration and development
drilling in 2011 added proved reserves of 2.3 trillion cubic feet
equivalent (Tcfe) of natural gas and liquids resulting in a production
replacement ratio of 180 percent. In 2011, Encana divested $2.1 billion
in non-core assets and invested $515 million in acquiring prospective
liquids-rich lands, resulting in net divestitures of $1.6 billion.
Encana reports in U.S. dollars unless otherwise noted.

Strong performance despite many challenges

'We just
completed one of our best operational years ever, hitting our targets
for cash flow and production which offset lower prices and a significant
delay to the start-up of our Deep Panuke production facility offshore
Nova Scotia. We grew our resource base and replaced 180 percent of our
production. We continued to make strong gains in operational
efficiencies by expanding and optimizing our resource play hub
developments and the long-reach horizontal wells they employ. Supported
by our risk management program, we accomplished what we set out to do,
all in a difficult natural gas market and very competitive service
sector,? said Randy Eresman, Encana′s President & Chief Executive
Officer.

'Our operational successes reinforce our industry leadership in
delivering low-cost production, however, those accomplishments have
largely been overshadowed by the oversupply of natural gas, which, in
turn, has resulted in a significant reduction in futures prices for
North American natural gas contracts. Although a litany of factors has
caused the oversupply, it is abundantly clear that a continued reduction
of drilling activity will be required to restore market balance. For the
industry as a whole, near-term natural gas prices are at levels below
what it costs to add most new production, and in some places, may even
be below what it costs to produce from existing wells. Although we
continue to believe that the long-term future for natural gas remains
promising, until we see signs of a sustainable recovery in natural gas
prices, we will be reducing our pace of natural gas development and
slowing down production from some of our natural gas wells to preserve
value. Our 2012 budget reflects these actions, as well as our target to
maintain financial strength and flexibility by balancing capital
investment spending plans with forecasted cash flow less anticipated
dividends,? Eresman said.

Reducing dry gas production

Encana′s 2012 capital investment
plan of $2.9 billion represents a decrease of about 37 percent from 2011
levels. The plan is designed to minimize investment in dry natural gas,
maintain operational flexibility and accelerate investment in
prospective oil and liquids-rich natural gas plays, which over time will
create commodity and cash flow diversification.

'Our forecast 2012 cash flow includes our strong natural gas hedge
position, growing oil and natural gas liquids production, as well as a
reduction in natural gas production, which is expected to reduce North
America′s supply by up to 600 million cubic feet of gas per day
(MMcf/d), about half due to lower capital investment and half from
shutting in production. Our reduced capital investment in dry natural
gas programs is expected to lower natural gas production to about 3.1
billion cubic feet per day (Bcf/d), a decrease of about 250 MMcf/d from
2011 levels. In addition, we are immediately taking action to slow down
or shut in production from existing well bores ?equaling an
additional ?250 MMcf/d. ?The duration of our voluntary reductions ?will be
subject to a number of factors, including a recovery in prices, and
therefore is uncertain at this time. The combined total natural gas
volume reduction would remove about 600 MMcf/d off the market when
royalty volumes are also taken into account,? Eresman said.

Cutbank Ridge Partnership agreement helps recognize value on a slice
of Encana′s vast resource potential

'Earlier today we announced
our Cutbank Ridge partnership agreement with Mitsubishi Corporation. The
Japanese global integrated business enterprise is investing C$2.9
billion for a 40 percent interest in the Cutbank Ridge Partnership,
which holds about 409,000 net acres of our undeveloped Montney natural
gas lands in British Columbia. Encana will own 60 percent and Mitsubishi
will own 40 percent of the Partnership. Mitsubishi will pay
approximately C$1.45 billion on closing, which is expected to occur
later this month, and Mitsubishi will invest approximately C$1.45
billion in addition to its 40 percent of the Partnership′s future
capital investment for a commitment period, which is expected to be
about five years, thereby reducing Encana′s capital funding commitments
to 30 percent of the total expected capital investment over that period.
This investment recognizes the enormous value contained in a portion of
our resource potential, and it is another validation of the quality of
our land base,? Eresman said.

'As always, we are focused on improving returns over the long term to
shareholders and the transaction we've announced with Mitsubishi is just
another illustration of how we are achieving this objective. In a normal
price environment, this transaction would have accelerated our company's
overall pace of development as a result of the increased capital
spending profile on these natural gas assets. However, in this lower
price environment, Encana plans to more than offset the transaction′s
near-term impact on North American natural gas production oversupply by
reducing spending and production across its natural gas portfolio,?
Eresman said.

Encouraging liquids development and exploration programs ? including
several promising new plays

Approximately $1.5 billion, or more
than 55 percent, of Encana′s projected 2012 upstream capital investment
is expected to be directed towards development, exploration and
delineation drilling on the company′s 2.5 million acres of prospective
liquids-rich plays. This includes well-established plays such as Cutbank
Ridge and Bighorn, as well as several promising new liquids plays from
British Columbia to Louisiana, where we expect to drill a further 40
assessment wells by mid-year. This exploration program is already
delivering encouraging results even though it is at a relatively early
stage.

Reduced and highly focused, value-retention investments in natural gas

Most
of the company′s forecast of approximately $1.2 billion of upstream
capital investments in dry natural gas is directed to completing work on
previously initiated drilling and the execution of drilling programs
with joint-venture partners ? often attractively leveraged by the
partner′s incremental funding arrangements. The remaining investment is
largely directed ?towards preserving substantial value already identified
by drilling success. These investments are either economic within the
company′s price hedging arrangements or they preserve substantial value
by offering attractive future growth opportunities when more favourable
market conditions warrant. Drilling directed at dry natural gas
prospects is expected to decline ?over the course of the year, and the
company′s gas-directed rig count is expected to end the year
substantially lower than at the start of the year.

Financial strength and flexibility

Encana enters 2012 in
strong shape operationally and financially. After the close of the
Cutbank Ridge Partnership transaction, Encana expects to have more than
$3 billion in cash and cash equivalents on its balance sheet.

'During this extended period of low natural gas prices, Encana plans to
conserve most of the additional financial flexibility provided by our
Cutbank Ridge Partnership transaction and other previously announced
transactions. The planned level of capital spending will create enhanced
financial flexibility and liquidity while we target higher financial
returns and the maintenance of our investment grade credit ratings,?
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.The
company′s audited annual consolidated financial statements for the year
ended December 31, 2011 and comparative information have been prepared
in accordance with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board.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. The term liquids is used to represent oil, NGLs and
condensate.The term liquids-rich is used to represent natural
gas streams with associated liquids volumes. Unless otherwise specified
or the context otherwise requires, reference to Encana or to the company
includes reference to subsidiaries of and partnership interests held by
Encana Corporation and its subsidiaries.

Encana 2011 Highlights

Financial

• 
  Cash flow of $4.2 billion, or $5.66 per share
  
• 
  Operating earnings of $398 million, or 54 cents per share
  
• 
  Net earnings of $128 million, or 17 cents per share
  
• 
  Capital investment, excluding acquisitions and divestitures, of about
  $4.6 billion
  
• 
  Net divestitures of $1.6 billion
  
• 
  Realized natural gas prices of $4.96 per Mcf and realized liquids
  prices of $85.36 per barrel (bbl). These prices include realized
  financial hedges
  
• 
  Debt to capitalization at year end was 33 percent, debt to debt
  adjusted cash flow was 1.8 times and debt to adjusted EBITDA was 1.9
  times
  
• 
  Paid dividends of 80 cents per share
  

Operating

• 
  Total production of 3.5 Bcfe/d
  
• 
  Natural gas production of 3.3 Bcf/d
  
• 
  NGLs and oil production of about 24,000 barrels per day (bbls/d)
  
• 
  Operating and administrative costs of $1.08 per thousand cubic feet
  equivalent (Mcfe)
  

Reserves

• 
  Proved reserves at year end of 14.2 Tcfe
  
• 
  Added about 2.3 Tcfe of proved reserves before acquisitions and
  divestitures, compared to production of 1.3 Tcfe, for a production
  replacement of about 180 percent
  

Strategic Developments

• 
  Agreed to sell two Cutbank Ridge natural gas processing plants for an
  aggregate purchase price of approximately C$920 million, subject to
  customary adjustments. The sale closed on February 9, 2012
  
• 
  Completed planned divestitures for total proceeds of approximately
  $891 million, including the Cabin natural gas processing plant in
  British Columbia, the Fort Lupton natural gas processing plant in
  Colorado and the South Piceance natural gas gathering assets in
  Colorado
  
• 
  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
  
• 
  Acquired land and property, a significant portion of which was
  potential liquids-rich acreage, for approximately $515 million
  
• 
  Entered into deep cut processing arrangements, which will allow Encana
  to extract additional NGLs volumes from its natural gas streams
  starting in 2012
  
• 
  Divested the company's North Texas natural gas producing assets in the
  Fort Worth Basin located in the Barnett Shale play for approximately
  $975 million
  
• 
  Completed an upstream joint-venture development agreement with
  Northwest Natural Gas Company, which is expected to 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
  
• 
  Entered into an agreement to become the 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 will 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
  
• 
  Added four compressed natural gas fueling stations, one stationary and
  four mobile liquefied natural gas stations; deployed 14 natural gas
  powered drilling rigs; and converted 184, or about 15 percent, of the
  company′s fleet vehicles to natural gas, all part of a commitment to
  support increased use of natural gas.
  

Net earnings impacted by impairments

In the fourth quarter
of 2011, Encana′s net earnings were impacted by a non-cash ?asset
impairment of $854 million after tax, compared with $371 million after
tax for the same quarter in 2010 triggered by lower forecasted natural
gas prices and a change in future development plans.

Applying natural gas expertise to build a meaningful portfolio of
potential liquids-rich resource plays

Over the past decade,
Encana has developed an industry-leading portfolio of natural gas
resource plays by employing a highly disciplined methodology. The
company′s five-step resource play process involves assembling and
exploring a large land base, piloting wells to unlock the technical
barriers, demonstrating commerciality through repeatable technical
success, driving down costs with manufacturing precision and optimizing
plays through continuous improvement. Encana is now applying its same
resource play skills, technologies and execution methodology to grow its
oil and NGLs production. Encana defines a key natural gas resource play
as one with more than 1 trillion cubic feet (Tcf) of anticipated
recoverable reserves and anticipated production capacity of more than
200 MMcf/d. Five years ago, three of Encana′s key natural gas resource
plays ? Cutbank Ridge, CBM and Haynesville - were producing only about
365 MMcf/d. Today, these plays combined produce about 1.6 Bcf/d, more
than a four-fold increase.

With extensive exploration underway on several prospective liquids-rich
plays, covering more than 2.5 million net acres of land, Encana is
looking to develop three to four new key liquids resource plays, from
this current inventory of prospective lands, replicating its natural gas
resource play success. On a rough equivalent basis, each key liquids
resource play would be expected to have about 100 million barrels
(MMbbls) of recoverable reserves and be capable of producing 20,000
bbls/d. When combined with the company′s liquids production target from
expanded deepcut of about 80,000 bbls/d by 2015, this growth objective
would provide Encana with a sizeable liquids production stream that
represents a meaningful step towards product and revenue diversification.

Exploration and liquids portfolio update ? promising results in
Tuscaloosa Marine Shale

In the Tuscaloosa Marine Shale, where
Encana has about 290,000 net acres straddling the Mississippi and
Louisiana border, Encana recently completed two wells. The first well,
with five effective completions stages, was a completion of a well
drilled by a previous operator. Its production averaged 330 bbls/d of
oil production in its first month. The company′s second well, with a
horizontal lateral length of approximately 5,000 feet drilled and
completed by Encana, had first-month, light sweet oil production, which
receives a premium to WTI, averaging approximately 700 bbls/d from 17
completed stages. Up to another six wells are planned for the first half
of the year and Encana will assess further activity based on the results.

Michigan shale geology parallels properties of Ohio Utica shale

In
Michigan, where Encana is targeting the combined Utica and Collingwood
formations, the company holds about 430,000 net acres. In 2011, Encana
drilled three wells into the Utica/Collingwood. Geological analysis of
the shale cores indicates that the Michigan play has very similar
properties to the Utica shale in Ohio.

One of these Michigan wells achieved ?a 7,500-foot horizontal lateral
length and produced about 6.5 ?MMcf/d ?of natural gas during its first
seven-day sales period, while the second well achieved a 5,300-foot
horizontal lateral length and produced about 3.1 ?MMcf/d during its first
seven-day sales period. Our analysis indicates recoveries of about 90
bbls of NGLs per MMcf of natural gas production, with small amounts of
lease condensate.

'It is early days, but we are excited by our results to date, which show
the Tuscaloosa to be a substantive oil system and Utica/Collingwood
shale to hold strong liquids-rich potential. Our teams have made
substantive progress in unlocking the commercial potential of these
plays,? said Jeff Wojahn, Executive Vice-President & President, USA
Division.

Drilling underway in other emerging plays

In the San Juan
Basin, which is located largely in the northwest corner of New Mexico,
Encana controls about 130,000 net acres and is completing the first and
drilling the second of a five-well exploration program. Results are
expected over the next six months.

In the DJ Basin Niobrara Wattenberg field in Colorado, Encana holds
about 48,000 net acres and has drilled five wells with horizontal
lateral of between 4,100 and 4,500 feet with up to 17 completed stages.
The 30-day production rate was between 260 bbls/d and 540 bbls/d of oil
and between 100 bbls/d and 200 bbls/d of NGLs. Another 10 gross wells
are planned for 2012. Encana has identified nearly 200 drilling
locations on its existing lands in the play.

Also in Colorado, Encana has six wells planned in 2012 for Piceance
Niobrara/Mancos where the company holds about 240,000 net acres within
the identified potential liquids-rich area of the play.

Meaningful and promising land positions established in Eaglebine and
Mississippi Lime

In the Eaglebine play in East Texas where
Encana holds a legacy land position, the company controls more than
45,000 net acres and has drilled its first well with a horizontal
lateral of 5,300 feet. The well had initial 30-day production of about
230 bbls/d of oil. Five more wells are planned for the first half of
2012. The company continues to build its position in the Mississippi
Lime in Oklahoma and Kansas, where it currently holds the rights to
about 140,000 net acres with six to eight wells planned for 2012.

Early Duvernay wells flowing significant condensate volumes, more
wells planned

In the Alberta Duvernay, Encana has about 375,000
net acres. The company drilled two horizontal wells of approximately
3,600 feet lateral length and one vertical well into the play in 2011.
Two of the wells are located in the north portion of the play in the
Kaybob area while the third well is located in the south in the
Willesden Green area.

'Duvernay results continue to be very encouraging with wells delivering
significant volumes of condensate and NGLs, in-line with how other
industry wells have performed. We are planning to accelerate our pace of
evaluation in 2012 ? at least another five wells in the first half of
2012,? said Mike McAllister, Executive Vice-President & Acting
President, Canadian Division.

Natural gas liquids extraction advancing at Musreau plant in Alberta

The
second component of Encana′s liquids-growth initiatives is a significant
expansion of NGLs extraction from the company′s liquids-rich natural gas
production in Western Canada. In 2011, Encana negotiated supply
agreements that will see midstream processors make substantial
investments in three Alberta natural gas plants to expand NGLs
extraction. The first of these initiatives ? the Musreau plant ? is now
on-stream and is expected to ramp up in March 2012 to about 5,000 bbls/d
of NGLs extraction capacity. With a similar approach, Encana expects to
grow NGLs production from its existing natural gas developments in
Western Canada by about 55,000 bbls/d by 2015. This is expected to take
the company′s total liquids production for the same time period from the
current production level of about 24,000 bbls/d to about 80,000 bbls/d,
excluding the potential impact from new liquids-focused plays.

Deep Panuke natural gas development expected to begin production
mid-year

First natural gas production from Encana′s Deep Panuke
development project offshore Nova Scotia is expected in mid-year 2012.
Encana continues to work with its third-party contractor to complete the
final stages of preparation for start-up of the four wells. Production
rates from Deep Panuke are anticipated to ramp up exceeding 200 MMcf/d,
providing a new supply of natural gas to the northeast market of the U.S.

Key resource plays continue to perform well

Total production
in 2011 was about 3.5 Bcfe/d, up about 5 percent from about 3.3 Bcfe/d
in 2010. Natural gas production increased about 5 percent to 3.33 Bcf/d,
while liquids production volumes were also up about 5 percent year over
year.

The Canadian Division grew its natural gas production in 2011 by 10 per
cent to 1.45 Bcf/d from 2010 volumes and grew its liquids production by
about 10 percent to about 14,500 bbls/d compared to 2010.

In the USA Division, natural gas production in 2011 was up about 1
percent to 1.88 Bcf/d compared to the same period in 2010. Growth was
led by an almost 80 percent increase in production from the Haynesville
resource play in Louisiana. Liquids production of about 9,500 bbls/d
decreased about 2 percent from 2010.

Encana invested more than $2.0 billion in capital in 2011 in the
Canadian Division, focusing on developing its key resource plays. In the
USA Division, capital investment of about $2.4 billion was focused
mainly on further developing the Haynesville and Piceance key resource
plays.

Encana replaces 180 percent of 2011 production

In 2011,
Encana′s proved reserves additions, before acquisitions and
divestitures, of 2.3 Tcfe replaced 180 percent of its production.
Company divestitures included about 1.2 Tcfe of proved reserves,
resulting in a slight decrease of total proved reserves to about 14.2
Tcfe. Strong reserves additions were from a number of Encana′s key
resources plays, in particular from the Haynesville and the Montney
formation in Cutbank Ridge, which contributed proved reserves additions
of 0.8 Tcfe and 0.5 Tcfe respectively. Encana added about 54 MMbbls of
proved oil and NGLs in 2011, resulting in proved liquids reserves of 133
MMbbls, a net increase of 43 percent from the end of 2010. At December
31, 2011, proved undeveloped reserves as a percentage of total proved
reserves were 48 percent. All proved undeveloped reserves are scheduled
to be converted to proved developed reserves within the next five years.

Encana reports proved reserves based on a forecast or business case
basis. In 2010, the company expanded how it reports on its estimates of
reserves and resources and published estimates of proved, probable and
possible reserves as well as all categories of economic contingent
resources. Economic contingent resources fall into three categories: low
estimate (1C), best estimate (2C) and high estimate (3C). The three
classifications of contingent resources have the same degree of
technical certainty as the corresponding reserves categories. In
determining their economic viability, the same commodity price
assumptions are applied as estimating proved, probable and possible
reserves. Contingent resources are not yet commercial due to
contingencies such as the timing and pace of development, or the need
for additional infrastructure. The low estimate is the most conservative
category and carries with it the greatest degree of confidence ? 90
percent ? that these resources will be recovered.

At year end 2011, Encana′s low estimate economic contingent resources
increased 25 percent to about 25 Tcfe, while best estimate economic
contingent resources increased 11 percent to about 41 Tcfe. Encana′s
estimated volumes of reserves and economic contingent resources are
outlined in the table below. On its proved reserves and low estimate
economic contingent resources alone, the company has about 25,000 net
drilling locations. Under the company′s best estimate for reserves and
economic contingent resources, which includes two additional categories,
the net drilling location count is estimated to increase to
approximately 35,000 locations.

Encana once again retained Independent Qualified Reserves Evaluators
(IQREs) to conduct a full evaluation of not only the company′s reserves,
but also its economic contingent resources. For information on reserves
reporting protocols see Note 2 on page 10. Additional information on key
resource play reserves, economic contingent resources and price
assumptions is available at Encana′s website, www.encana.com,
under Investors/Financial information.

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

As a result of commodity price hedging for
the year ended 2011, Encana's before-tax cash flow was higher than what
the company would have generated without its hedging program. Encana′s
realized hedging gains for 2011 were $948 million before tax compared to
gains of about $1.2 billion before tax for 2010.

Since 2006, Encana's commodity price hedging program has resulted in
about $8.3 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 to
provide greater certainty to cash flow generation, which adds stability
to the funding of ongoing capital investment.

About 65 percent of expected natural gas production hedged for 2012

Encana
continues to manage natural gas price risks through its commodity price
hedges. As of December 31, 2011, Encana has hedged approximately 2 Bcf/d
of expected 2012 natural gas production at an average NYMEX price of
$5.80 per Mcf. In addition, Encana has hedged approximately 505 MMcf/d
of expected 2013 natural gas production at an average NYMEX price of
about $5.24 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 at December 31, 2011 are presented in
Note 22 to the audited annual consolidated financial statements for the
year ended December 31, 2011.

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 March 30, 2012 to common shareholders of record as of
March 15, 2012. Based on the February 16, 2012 closing share price on
the New York Stock Exchange of $20.23, this represents an annualized
yield of about 4 percent.

2012 transition to U.S. GAAP financial reporting

In April
2012, Encana will report its first quarter financial results in
accordance with U.S. Generally Accepted Accounting Principles (GAAP).
U.S. GAAP financial results provide information that is more directly
comparable with U.S. peer companies. Reconciliations from IFRS to U.S.
GAAP will be included in Note 27 to Encana′s audited annual consolidated
financial statements for the year ended December 31, 2011. Summary
information will also be provided in the U.S. Generally Accepted
Accounting Principles section of the Management′s Discussion and
Analysis for the year ended December 31, 2011.

Organizational changes

On February 7, 2012, Mike Graham,
Executive Vice-President & President, Canadian Division resigned from
the company. Mike McAllister, Executive Vice-President & Senior
Vice-President, Canadian Division, is serving as Acting President,
Canadian Division.

Public offering completed for $1.0 billion in unsecured notes

In
2011, Encana completed a public offering of senior unsecured notes in
the United States in two series totaling $1.0 billion. Encana also
renewed committed revolving bank credit facilities in Canada and the
U.S. totaling $4.9 billion.

Encana 2012 guidance

Encana′s corporate guidance for 2012 is
posted on the company′s website at www.encana.com.

Financial strength

Encana maintains a strong balance sheet. ?At December 31, 2011, 100
percent of its outstanding debt was composed of fixed-rate debt with an
average remaining term of about 13 ?years. At December 31, 2011, Encana
had approximately $4.9 billion of unused committed revolving bank credit
facilities.

Encana is focused on maintaining investment grade credit ratings,
capital discipline and financial flexibility. The company monitors a
variety of financial metrics in managing its capital structure. At
December 31, 2011, the company′s debt to capitalization ratio was 33
percent. The company′s debt to debt adjusted cash flow was 1.8 times and
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.
  
• 
  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, debt to
  adjusted EBITDA and debt to debt adjusted cash flow are three ratios
  that management monitors as indicators of the company′s overall
  financial strength.
  
• 
  Adjusted EBITDA is a non-GAAP measure defined as trailing 12-month 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, impairments and unrealized hedging gains and
  losses. Debt adjusted cash flow is a non-GAAP measure defined as cash
  flow on a trailing 12-month basis excluding interest expense after tax.
  

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.

NOTE 2: Reserves reporting information

Encana′s disclosure
of reserves data is in accordance with Canadian securities regulatory
requirements. Encana′s 2011 disclosure includes proved and probable
reserves quantities before and after royalties employing forecast prices
and costs in accordance with Canadian protocol. Reserves disclosure
employing U.S. protocol uses SEC constant prices and costs on proved
reserves on an after-royalties basis. Reserves disclosure under both
Canadian and U.S. protocols will be available in the Annual Information
Form, which the company anticipates filing later this month.

For all reserves estimates highlighted in this news release, Encana has
used Henry Hub forecast prices of $3.80 per MMBtu for 2012, $4.50 per
MMBtu for 2013, $5.00 per MMBtu for 2014, $5.50 per MMBtu for 2015,
$6.00 per MMBtu for 2016, then increasing to $7.17 per MMBtu by 2021 and
escalating 2 percent per year thereafter.

Encana Corporation

Encana is a leading North American energy
producer that is focused on growing its strong portfolio of diverse
resource plays producing natural gas, oil and natural gas liquids. 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.

RESERVES METRICS DEFINITIONS

Production replacement is
calculated by dividing reserves additions by production in the same
period. Reserves additions over a given period, in this case 2011, are
calculated by summing extensions and discoveries and revisions. Reserves
additions exclude acquisitions and divestitures. Proved reserves added
in 2011 included both developed and undeveloped quantities. Additions to
Encana′s proved undeveloped reserves were consistent with Encana′s
resource play focus. The company estimates that 100 percent of its
proved undeveloped reserves will be developed within the next five
years. Many performance measures exist; all measures have limitations
and historical measures are not necessarily indicative of future
performance.

ADVISORY REGARDING RESERVES AND OTHER RESOURCES INFORMATION ? Reserves
are the estimated remaining quantities of oil and natural gas and
related substances anticipated to be recoverable from known
accumulations, from a given date forward, based on: analysis of
drilling, geological, geophysical and engineering data, the use of
established technology, and specified economic conditions, which are
generally accepted as being reasonable. Proved reserves are those
reserves which can be estimated with a high degree of certainty to be
recoverable. It is likely that the actual remaining quantities recovered
will exceed the estimated proved reserves. Probable reserves are those
additional reserves that are less certain to be recovered than proved
reserves. It is equally likely that the actual remaining quantities
recovered will be greater or less than the sum of the estimated proved
plus probable reserves. Possible reserves are those additional reserves
that are less certain to be recovered than probable reserves. It is
unlikely that the actual remaining quantities recovered will exceed the
sum of the estimated proved plus probable plus possible reserves.

The estimates of economic contingent resources contained in this news
release are based on definitions contained in the Canadian Oil and Gas
Evaluation Handbook. Contingent resources do not constitute, and should
not be confused with, reserves. Contingent resources are defined as
those quantities of petroleum estimated, on a given date, to be
potentially recoverable from known accumulations using established
technology or technology under development, but which are not currently
considered to be commercially recoverable due to one or more
contingencies. Economic contingent resources are those contingent
resources that are currently economically recoverable. In examining
economic viability, the same fiscal conditions have been applied as in
the estimation of reserves. There is a range of uncertainty of estimated
recoverable volumes. A low estimate is considered to be a conservative
estimate of the quantity that will actually be recovered. It is likely
that the actual remaining quantities recovered will exceed the low
estimate, which under probabilistic methodology reflects a 90 percent
confidence level. A best estimate is considered to be a realistic
estimate of the quantity that will actually be recovered. It is equally
likely that the actual remaining quantities recovered will be greater or
less than the best estimate, which under probabilistic methodology
reflects a 50 percent confidence level. A high estimate is considered to
be an optimistic estimate. It is unlikely that the actual remaining
quantities recovered will exceed the high estimate, which under
probabilistic methodology reflects a 10 percent confidence level.

There is no certainty that it will be commercially viable to produce any
portion of the volumes currently classified as economic contingent
resources. The primary contingencies which currently prevent the
classification of Encana's disclosed economic contingent resources as
reserves include the lack of a reasonable expectation that all internal
and external approvals will be forthcoming and the lack of a documented
intent to develop the resources within a reasonable time frame. Other
commercial considerations that may preclude the classification of
contingent resources as reserves include factors such as legal,
environmental, political and regulatory matters or a lack of markets.

The estimates of various classes of reserves (proved, probable,
possible) and of contingent resources (low, best, high) in this news
release represent arithmetic sums of multiple estimates of such classes
for different properties, which statistical principles indicate may be
misleading as to volumes that may actually be recovered. Readers should
give attention to the estimates of individual classes of reserves and
contingent resources and appreciate the differing probabilities of
recovery associated with each class.

In this news release, certain 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: achieving 2012 capital investment focused on liquids
exploration and development, minimizing dry gas investment, including
expanding NGLs extraction capacities, expected volume and percentage
reduction of natural gas market supply and production in 2012, expected
success of resource play hub development, projection for 2012 capital
investment to equal cash flow forecast minus anticipated dividends,
prospects to generate oil and liquids reserves and production from
several new plays and other plays, including number of wells to be
drilled and the expectation to develop three to four key liquids
resource plays from current land inventory over the next three years and
the expected recoverable reserves and production from the same,
completion of transaction agreements with Mitsubishi, including
potential terms, closing date, amount of investments, funding commitment
and development of otherwise undeveloped natural gas properties,
estimated amount of cash on balance sheet after closing of the
partnership agreement with Mitsubishi, expectation to report first
quarter 2012 financial results in accordance with U.S. GAAP, estimates
of reserves, economic contingent resources and estimated number of net
drilling locations, including per key resource play, the forecast prices
used to generate estimates, and expectation to convert proved
undeveloped reserves to proved developed reserves within the next five
years, expected closing dates of and proceeds from certain divestitures,
achieving NGLs extraction target by 2015, including expected on-stream
date of the extraction capacity expansion at the Musreau plant,
achieving diversification to balance revenues between natural gas and
liquids production, achieving successful exploration and development
results in Tuscaloosa, Utica/Collingwood, San Juan basin, DJ Basin
Niobrara, Alberta Duvernay, Eaglebine, Mississippi Lime and Piceance
Niobrara/Mancos areas, the effect of the company′s risk management
program, including the impact of commodity price hedges, projections
contained in the 2012 Corporate Guidance (including but not limited to
estimates of cash flow, including per share, natural gas and oil and
NGLs production, capital investment and its allocation, net
divestitures, and estimated 2012 sensitivities of cash flow and
operating earnings), expected first natural gas production at Deep
Panuke and expected production rate, the flexibility of capital spending
plans and the sources of funding therefore, ability to maintain
investment grade credit rating and monitor future debt to debt adjusted
cash flow, debt to adjusted EBITDA and debt to capitalization ratios,
estimated reserve life index, expected average future development costs
associated with proved undeveloped reserves, expected 2012 percentage
decline of natural gas production and percentage growth of liquids
production, estimated capital spending, exploration, and development in
various plays and anticipated production from the same, expectation to
increase demand and create markets for natural gas and success of the
company′s initiatives, expected online date, export capacity and phases
of the Kitimat LNG export facility, including achieving an uplift in
natural gas price, and expectation for long-term future for 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: volatility of, and assumptions regarding
natural gas and liquids prices, including substantial or extended
decline of the same; assumptions based upon the company′s current
guidance; fluctuations in currency and interest rates; risk that the
company may not conclude divestitures of certain assets or other
transactions (including third-party capital investments, farm-outs or
partnerships, which Encana may refer to from time to time as 'joint
ventures?) as a result of various conditions not being met; product
supply and demand; market competition; risks inherent in the company′s
and its subsidiaries′ marketing operations, including credit risks;
imprecision of reserves 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, including future net revenue
estimates; 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 acquire or find additional reserves; hedging activities
resulting in realized and unrealized losses; business interruption and
casualty losses; risk of the company not operating all of its properties
and assets; counterparty risk; downgrade in credit rating and its
adverse effects; liability for indemnification obligations to third
parties; variability of dividends to be paid; 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. 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.

Assumptions with respect to forward-looking information regarding
expanding Encana′s oil and NGLs production and extraction volumes are
based on existing expansion of natural gas processing facilities in
areas where Encana operates and the continued expansion and development
of oil and NGL production from existing properties within its asset
portfolio.

Forward-looking information respecting anticipated 2012 cash flow for
Encana is based upon achieving average production for 2012 of between
2.8 Bcf/d and 3.1 Bcf/d of natural gas and 28,000 bbls/d of liquids,
commodity prices for natural gas and liquids based on NYMEX $3.25 per
Mcf and WTI of $95 per bbl, an estimated U.S./Canadian dollar foreign
exchange rate of $1.00 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 hereof and, except as required by law,
Encana undertakes no obligation to update publicly or revise any
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