Encana Reports JV to Develop Duvernay Lands, Phoenix Duvernay Gas to Gain 49.9% Stake in Encana for C$2.18B

Encana Corporation ECA (Encana) has entered into a joint venture arrangement with Phoenix Duvernay Gas (Phoenix), a wholly owned subsidiary of PetroChina, to explore and develop Encana's extensive undeveloped Duvernay land holdings in west-central Alberta. Under the terms of the agreement, Phoenix will gain a non-controlling 49.9% interest in Encana's approximately 445,000 acres in the Duvernay play for total consideration of C$2.18 billion. At closing C$1.18 billion was paid to Encana and C$1.0 billion is payable over the next four years in the form of a carry of half of Encana's share of development capital. During this period, the joint venture partners plan to invest a total of C$4.0 billion in new drilling, completion and processing facilities. Encana estimates that the Duvernay joint venture lands contain about 9 billion barrels of oil equivalent petroleum initially-in-place. Encana remains the operator of the joint venture with its 50.1% working interest. "Phoenix's investment demonstrates the tremendous value that Encana has created in this early life liquids rich play, and enables us to accelerate the pace at which the full production potential of our Duvernay lands can be achieved," says Randy Eresman, Encana President & CEO. "A transaction of this magnitude keeps us on track to create a more diversified commodity portfolio and maintain our balance sheet strength. It is a strong endorsement of Encana's position as a reliable long term partner." Encana has drilled nine wells into the Duvernay, has five producing wells and currently has two rigs actively drilling additional wells. With the formation of this joint venture, Encana expects to more than double its planned pace of development in the Duvernay play beginning early in 2013.