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Diplomats: North Korea coming off terror blacklist- The United States is ready to drop North Korea from a terrorism blacklist, the Associated Press has learned, in the latest attempt by the administration to salvage a nuclear deal with Pyongyang before President Bush's term ends.
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Obama fundraiser, convicted of fraud, spills beans- Jailed political fundraiser Antoin "Tony" Rezko, the Chicago real estate developer who helped launch Barack Obama on his political career, is whispering secrets to federal prosecutors about corruption in Illinois and the political fallout could be explosive.
US controls bird flu vaccines over bioweapon fears- When Indonesia's health minister stopped sending bird flu viruses to a research laboratory in the U.S. for fear Washington could use them to make biological weapons, Defense Secretary Robert Gates laughed and called it "the nuttiest thing" he'd ever heard.
Austrian rightist leader Joerg Haider dead at 58- Austrian politician Joerg Haider, whose far-right rhetoric at times sounded sympathetic to the Nazis and contemptuous of Jews - and at one point led to months of international isolation for the Alpine republic - died early Saturday in a car accident. He was 58.
Larry Hagman excited about 30th `Dallas' reunion- Larry Hagman was reluctant to be on a new TV show called "Dallas" when he first read the script in the late 1970s, figuring there wouldn't be any money in it.
Japanese businessman in murder plot found dead- A Japanese businessman accused of conspiring to have his wife murdered 27 years ago in Los Angeles has been found dead in an apparent suicide, less than 24 hours after he set foot in the continental United States to answer to the charges.
Dice-K pitches Red Sox over Rays in ALCS opener- Daisuke Matsuzaka's brilliant escape act bewildered Tampa Bay and put the Boston Red Sox on top in the AL championship series.
EnCana generates first quarter cash flow of US$2.4 billion, or $3.17 per share - up 41 percent
CALGARY
(Map)
-
"EnCana achieved outstanding operational and financial results during the
first quarter putting the company well on track to achieve its 2008 forecast.
These results continue to reinforce the strong value-generating capability of
our sustainable, low-risk resource play strategy. EnCana has assembled an
extensive portfolio of unconventional assets and our teams have a demonstrated
track record of disciplined execution excellence while maintaining a focus on
cost management," said
"Our resource plays continue to deliver excellent performance, driven by
our industry-leading positions in plays such as the Deep Bossier formation of
First Quarter 2008 Highlights
-----------------------------
(all year-over-year comparisons are to the first quarter of 2007)
Financial
- Cash flow increased 41 percent to $3.17 per share, or $2.4 billion
- Operating earnings were up 28 percent to $1.39 per share, or
$1.0 billion
- Net earnings of 12 cents per share were down 81 percent to
$93 million, primarily due to an unrealized mark-to-market loss on
risk management activities of $737 million after-tax
- Operating cash flow generated from the integrated oil business
totalled $170 million, comprised of $77 million from the upstream
operations, a 64 percent increase due to strong field prices, and
$93 million from the downstream business, a decrease of 15 percent,
due to weaker refining margins
- Capital investment was in line with guidance. It was up 25 percent to
$1.85 billion, primarily due to drilling a higher percentage of deep
and longer reach wells
- Free cash flow increased $271 million to $540 million (free cash flow
is defined in Note 1 on page 8)
- Realized natural gas prices were up 11 percent to $8.02 per thousand
cubic feet (Mcf) and realized liquids prices increased 63 percent to
$69.59 per barrel (bbl). These prices include financial hedges
- EnCana purchased 4.6 million shares at an average share price of
$66.80 under the Normal Course Issuer Bid, for a total cost of
$311 million
- Capital investment, operating expenses, administrative expenses and
depreciation, depletion and amortization (DD&A) expense increased as
a result of a 17 percent increase in the average value of the
Canadian dollar versus the U.S. dollar
- Quarterly dividend doubled to 40 cents per share
Operating - Upstream
- Key resource play production was up 17 percent, with an 18 percent
increase in natural gas production and oil production up 10 percent
- Total natural gas production increased 10 percent to 3.7 billion
cubic feet per day (Bcf/d), up 14 percent per share
- Oil and natural gas liquids (NGLs) production increased 5 percent to
137,000 barrels per day (bbls/d), up 9 percent per share
- Integrated oil production grew 26 percent to 29,400 bbls/d at Foster
Creek and Christina Lake
- Operating and administrative costs of $1.53 per thousand cubic feet
equivalent (Mcfe), up 28 percent primarily due to higher long-term
incentive costs as a result of a higher share price, as well as an
appreciation of the value of the Canadian dollar compared to the U.S.
dollar
Operating - Downstream
- Refined products averaged 435,000 bbls/d (217,500 bbls/d net to
EnCana), down 5 percent due to a scheduled turnaround at the Wood
River refinery in March, 2008
- Refinery crude utilization of 90 percent or 408,000 bbls/d crude
throughput (204,000 bbls/d net to EnCana), down 6 percent primarily
due to the Wood River turnaround
Natural gas production on track with 2008 forecast
Natural gas production increased 10 percent in the first quarter to 3.7
Bcf/d, strongly positioning EnCana to achieve full-year guidance of 3.8 Bcf/d.
Gas production in the U.S. increased 27 percent, benefiting from incremental
volumes from the Deep Bossier acquisition - which doubled EnCana's interest to
100 percent - and drilling programs in the
Integrated oil benefits from production increases and higher oil prices
The integrated oil business generated
EnCana has designated the
"This
IMPORTANT NOTE: Effective January 2, 2007, EnCana established an
integrated oil business with ConocoPhillips, which resulted in EnCana
contributing its interests in Foster Creek and Christina Lake into an
upstream partnership owned 50-50 by the two companies. Production and
wells drilled from 2006 have been adjusted on a pro forma basis to
reflect the integrated oil transaction. Per share amounts for cash flow
and earnings are on a diluted basis. EnCana reports in U.S. dollars
unless otherwise noted and follows U.S. protocols, which report
production, sales and reserves on an after-royalties basis. The company's
financial statements are prepared in accordance with Canadian generally
accepted accounting principles (GAAP).
-------------------------------------------------------------------------
Financial Summary - Total Consolidated
-------------------------------------------------------------------------
(for the three months ended March 31) Q1 Q1 %
($ millions, except per share amounts) 2008 2007 Change
-------------------------------------------------------------------------
Cash flow(1) 2,389 1,752 +36
Per share diluted 3.17 2.25 +41
-------------------------------------------------------------------------
Net earnings 93 497 -81
Per share diluted 0.12 0.64 -81
-------------------------------------------------------------------------
Operating earnings(1) 1,045 850 +23
Per share diluted 1.39 1.09 +28
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings Reconciliation Summary - Total Consolidated
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings 93 497
(Add back losses & deduct gains)
Unrealized mark-to-market hedging gain
(loss), after-tax (737) (423)
Non-operating foreign exchange gain
(loss) after-tax (215) 11
Gain (loss) on discontinuance, after-tax - 59
-------------------------------------------------------------------------
Operating earnings(1) 1,045 850 +23
Per share diluted 1.39 1.09 +28
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Cash flow and operating earnings are non-GAAP measures as defined in
Note 1 on Page 8.
-------------------------------------------------------------------------
Production & Drilling Summary
-------------------------------------------------------------------------
Total Consolidated
-------------------------------------------------------------------------
(for the three months ended March 31) Q1 Q1 %
(After royalties) 2008 2007 Change
-------------------------------------------------------------------------
Natural gas (MMcf/d) 3,733 3,400 +10
-------------------------------------------------------------------------
Natural gas production per 1,000
shares (Mcf) 453 398 +14
-------------------------------------------------------------------------
Oil and NGLs (Mbbls/d) 137 131 +5
-------------------------------------------------------------------------
Oil and NGLs production per 1,000
shares (Mcfe) 100 92 +9
-------------------------------------------------------------------------
Total production (MMcfe/d) 4,557 4,184 +9
-------------------------------------------------------------------------
Total per 1,000 shares (Mcfe) 553 490 +13
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net wells drilled 1,143 1,264 -10
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Key resource play natural gas production up 18 percent in first quarter
First quarter natural gas production from key North American resource
plays increased 18 percent to 3.0 Bcf/d up from 2.6 Bcf/d in the same period
in 2007.
Growth from key North American resource plays
-------------------------------------------------------------------------
Daily Production
------------------------------------------------------
2008 2007 2006
------------------------------------------------------
Resource Play Full Full
(After royalties) Q1 Year Q4 Q3 Q2 Q1 Year
-------------------------------------------------------------------------
Natural gas
(MMcf/d)
Jonah 595 557 612 588 523 504 464
Piceance 372 348 351 354 349 334 326
East Texas 273 143 187 144 139 103 99
Fort Worth 140 124 138 128 124 106 101
Greater Sierra 205 211 221 220 219 186 213
Cutbank Ridge(1) 271 258 283 269 248 232 189
Bighorn(1) 146 126 136 136 122 109 97
CBM 298 259 283 256 245 251 194
Shallow Gas 715 726 727 713 729 735 739
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total natural
gas(1) (MMcf/d) 3,015 2,752 2,938 2,808 2,698 2,560 2,422
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Oil (Mbbls/d)
Foster Creek 27 24 25 26 25 20 18
Christina Lake 2 3 2 3 3 3 3
Pelican Lake 24 23 24 24 23 23 24
Weyburn(2) 14 15 14 15 14 15 15
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total oil
(Mbbls/d)(2) 67 65 65 68 65 61 60
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total
(MMcfe/d)(1,2) 3,417 3,142 3,328 3,210 3,088 2,926 2,782
-------------------------------------------------------------------------
% change from
prior period +2.7 +12.9 +3.7 +4.0 +5.5 +9.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Key resource play production volumes in 2007 and 2006 for Cutbank
Ridge and Bighorn have been restated to include the addition of new
areas and zones that now qualify for key resource play inclusion.
(2) Total key resource play production volumes in 2007 and 2006 have been
restated to include the designation of Weyburn as an oil key resource
play.
Drilling activity in key North American resource plays
-------------------------------------------------------------------------
Net Wells Drilled
------------------------------------------------------
2008 2007 2006
------------------------------------------------------
Resource Play Full Full
Q1 Year Q4 Q3 Q2 Q1 Year
-------------------------------------------------------------------------
Natural gas
Jonah 43 135 23 31 42 39 163
Piceance 83 286 77 72 72 65 220
East Texas 11 35 8 9 11 7 59
Fort Worth 21 75 15 17 29 14 97
Greater Sierra 36 109 27 27 32 23 115
Cutbank Ridge(1) 24 93 11 23 26 33 134
Bighorn(1) 30 62 6 18 10 28 58
CBM 251 1,079 330 323 18 408 729
Shallow Gas 496 1,914 649 608 241 416 1,310
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total gas wells(1) 995 3,788 1,146 1,128 481 1,033 2,885
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Oil
Foster Creek 12 23 6 8 1 8 3
Christina Lake - 3 - 1 2 - 1
Pelican Lake - - - - - - -
Weyburn(2) 9 37 10 9 9 9 35
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total oil
wells(1,2) 21 63 16 18 12 17 39
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total(2) 1,016 3,851 1,162 1,146 493 1,050 2,924
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Key resource play net wells drilled for Cutbank Ridge and Bighorn in
2007 and 2006 have been restated to include the addition of new areas
and zones that now qualify for key resource play inclusion.
(2) Total key resource play net wells drilled in 2007 and 2006 have been
restated to include the designation of Weyburn as an oil key resource
play.
Emerging resource plays update
Montney
EnCana holds 548,000 acres covering the unconventional deep basin
Horn River Basin
EnCana holds more than 216,000 net acres in the Horn River Basin, a shale gas play, located in northeastern B.C. In 2007 EnCana formed a venture with Apache Corporation that resulted in Apache owning a 50 percent interest in the majority of EnCana's lands. EnCana discovered the shale basin in 2003. EnCana and Apache have been the most active drillers in the basin with six gross wells drilled to the end of 2007. In the first quarter of 2008, Apache drilled three earning wells with encouraging initial test results. EnCana is currently drilling and completing four additional wells and results are expected later in the year. Through B.C.'s infrastructure programs, an all-weather road was built into the area, which will allow year-round access. EnCana is encouraged by the Horn River results to date and expects to be able to provide additional information about the play's commercial potential in the upcoming months.
At
-------------------------------------------------------------------------
First quarter 2008 natural gas and oil prices
-------------------------------------------------------------------------
Q1 Q1 %
Natural gas ($/Mcf) 2008 2007 Change
-------------------------------------------------------------------------
NYMEX 8.03 6.77 + 19
EnCana realized gas price(1) 8.02 7.24 + 11
-------------------------------------------------------------------------
Oil and NGLs ($/bbl)
-------------------------------------------------------------------------
WTI 97.82 58.23 + 68
Western Canadian Select (WCS) 76.37 41.77 + 83
Differential WTI/WCS 21.45 16.46 + 30
EnCana realized liquids price(1) 69.59 42.59 + 63
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Chicago 3-2-1 crack spread ($bbl) 7.69 12.90 - 40
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Realized prices include the impact of financial hedging
Price risk management
Risk management positions at
About 40 percent of remaining 2008 expected gas production hedged
EnCana has hedged about 1.6 Bcf/d of expected gas production for the
remainder of the year at an average NYMEX equivalent price of
U.S. Rockies and Canadian basis differential hedges
North American natural gas prices are impacted by volatile pricing
disconnects caused primarily by transportation constraints between producing
regions and consuming regions. These price discounts are called basis
differentials. For 2008, EnCana has hedged 100 percent of its expected U.S.
Rockies basis exposure using a combination of downstream transportation and
basis hedges, including some hedges that are based on a percentage of NYMEX
prices. At
Corporate developments
----------------------
Quarterly dividend of 40 cents per share declared
EnCana's Board of Directors has declared a quarterly dividend of
Dividend Reinvestment Plan
EnCana has established a dividend reinvestment plan (DRIP) for its common
shares. Information on registering for the DRIP is available on the company's
website at www.encana.com under Investor Relations - Shareholder Information -
Dividend Reinvestment Plan. Shareholders that register for the DRIP by
Normal Course Issuer Bid
In the first quarter of 2008, EnCana purchased for cancellation 4.6
million common shares at an average share price of
Foreign Exchange
The average U.S./Canadian dollar exchange rate increased 17 percent to
EnCana invests in environmental innovation and numerous energy efficiency
initiatives
EnCana is undertaking a number of environmental initiatives in 2008.
Through EnCana's Energy Efficiency Initiative, which is in its second year,
the company has budgeted to provide up to
Financial strength
------------------
EnCana maintains a strong balance sheet, targeting a net
debt-to-capitalization ratio between 30 and 40 percent and a net
debt-to-adjusted-EBITDA multiple, on a trailing 12-month basis, of 1 to 2
times. At
In the quarter, EnCana invested
On
On
-------------------------------------------------------------------------
CONFERENCE CALL TODAY
8 a.m. Mountain Time (10 a.m. Eastern Time)
EnCana Corporation will host a conference call today, Tuesday April 22,
2008, starting at 8 a.m. MT (10 a.m. ET). To participate, please dial
(866) 321-6651 (toll-free in North America) or (416) 642-5212
approximately 10 minutes prior to the conference call. An archived
recording of the call will be available from approximately 3:00 p.m. MT
on April 22 until midnight April 29, 2008 by dialling (888) 203-1112 or
(647) 436-0148 and entering access code 1634938.
A live audio webcast of the conference call will also be available via
EnCana's website, www.encana.com, under Investor Relations. The webcast
will be archived for approximately 90 days.
-------------------------------------------------------------------------
NOTE 1: Non-GAAP measures
This news release contains references to cash flow, operating earnings, free cash flow, net debt, capitalization and adjusted earnings before interest, tax, depreciation and amortization (EBITDA).
- Cash flow is a non-GAAP measure defined as cash from operating
activities excluding net change in other assets and liabilities, net
change in non-cash working capital from continuing operations and net
change in non-cash working capital from discontinued operations.
- Operating earnings is a non-GAAP measure that shows net earnings
excluding non-operating items such as the after-tax impacts of a
gain/loss on discontinuance, the after-tax gain/loss of unrealized
mark-to-market accounting for derivative instruments, the after-tax
gain/loss on translation of U.S. dollar denominated debt issued from
Canada and the partnership contribution receivable, the after-tax
foreign exchange gain/loss on settlement of intercompany
transactions, future income tax on foreign exchange related to U.S.
dollar intercompany debt recognized for tax purposes only, and the
effect of changes in statutory income tax rates. Management believes
that these excluded items reduce the comparability of the company's
underlying financial performance between periods. The majority of
U.S. dollar debt issued from Canada has maturity dates in excess of
five years.
- 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.
- Net debt is a non-GAAP measure defined as long-term debt plus current
liabilities less current assets. Capitalization is a non-GAAP measure
defined as net debt plus shareholders' equity. Net debt to
capitalization and net debt to adjusted EBITDA are two ratios
management uses to steward the company's overall debt position as
measures of the company's overall financial strength.
- Adjusted EBITDA is a non-GAAP measure defined as net earnings from
continuing operations before gain on divestitures, income taxes,
foreign exchange gains or losses, interest net, accretion of asset
retirement obligation, and depreciation, depletion and amortization.
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
With an enterprise value of approximately
ADVISORY REGARDING RESERVES DATA AND OTHER OIL AND GAS INFORMATION - EnCana's disclosure of reserves data and other oil and gas information is made in reliance on an exemption granted to EnCana by Canadian securities regulatory authorities which permits it to provide such disclosure in accordance with U.S. disclosure requirements. The information provided by EnCana may differ from the corresponding information prepared in accordance with Canadian disclosure standards under National Instrument 51-101 (NI 51-101). EnCana's reserves quantities represent net proved reserves calculated using the standards contained in Regulation S-X of the U.S. Securities and Exchange Commission. Further information about the differences between the U.S. requirements and the NI 51-101 requirements is set forth under the heading "Note Regarding Reserves Data and Other Oil and Gas Information" in EnCana's Annual Information Form.
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). Also, certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the same basis. BOE and 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: future economic and operating
performance (including per share growth, net debt-to-capitalization and net
debt-to-adjusted-EBITDA ratios, sustainable growth and returns, cash flow,
free cash flow, cash flow per share and increases in net asset value);
anticipated ability to meet the company's guidance forecasts; anticipated life
of proved reserves; anticipated growth and success of resource plays and the
expected characteristics of resource plays; anticipated reduction in
greenhouse gas emissions; anticipated oil recovery from
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.
Interim Consolidated Financial Statements
(unaudited)
For the period ended March 31, 2008
EnCana Corporation
U.S. DOLLARS
First quarter report
for the period ended March 31, 2008
CONSOLIDATED STATEMENT OF EARNINGS (unaudited)
Three Months Ended
March 31,
---------------------------
($ millions, except per share amounts) 2008 2007
-------------------------------------------------------------------------
REVENUES, NET OF ROYALTIES (Note 4)
Upstream $ 3,560 $ 2,739
Integrated Oil 2,253 1,556
Market Optimization 625 756
Corporate - Unrealized gain (loss)
on risk management (Note 16) (1,096) (615)
-------------------------------------------------------------------------
5,342 4,436
EXPENSES (Note 4)
Production and mineral taxes 114 92
Transportation and selling 320 278
Operating 696 551
Purchased product 2,393 1,851
Depreciation, depletion and
amortization 1,035 843
Administrative 156 95
Interest, net (Note 6) 134 101
Accretion of asset retirement
obligation (Note 11) 21 14
Foreign exchange (gain) loss, net (Note 7) 95 (12)
(Gain) loss on divestitures (Note 5) - (59)
-------------------------------------------------------------------------
4,964 3,754
-------------------------------------------------------------------------
NET EARNINGS BEFORE INCOME TAX 378 682
Income tax expense (Note 8) 285 185
-------------------------------------------------------------------------
NET EARNINGS $ 93 $ 497
-------------------------------------------------------------------------
-------------------------------------------------------------------------
NET EARNINGS PER COMMON SHARE (Note 15)
Basic $ 0.12 $ 0.65
Diluted $ 0.12 $ 0.64
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS (unaudited)
Three Months Ended
March 31,
---------------------------
($ millions) 2008 2007
-------------------------------------------------------------------------
RETAINED EARNINGS, BEGINNING OF YEAR $ 13,082 $ 11,344
Net Earnings 93 497
Dividends on Common Shares (300) (153)
Charges for Normal Course
Issuer Bid (Note 12) (229) (816)
-------------------------------------------------------------------------
RETAINED EARNINGS, END OF PERIOD $ 12,646 $ 10,872
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (unaudited)
Three Months Ended
March 31,
---------------------------
($ millions) 2008 2007
-------------------------------------------------------------------------
NET EARNINGS $ 93 $ 497
OTHER COMPREHENSIVE INCOME, NET OF TAX
Foreign Currency Translation Adjustment (400) 111
-------------------------------------------------------------------------
COMPREHENSIVE INCOME $ (307) $ 608
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF ACCUMULATED OTHER COMPREHENSIVE INCOME
(unaudited)
Three Months Ended
March 31,
---------------------------
($ millions) 2008 2007
-------------------------------------------------------------------------
ACCUMULATED OTHER COMPREHENSIVE INCOME,
BEGINNING OF YEAR $ 3,063 $ 1,375
Foreign Currency Translation Adjustment (400) 111
-------------------------------------------------------------------------
ACCUMULATED OTHER COMPREHENSIVE INCOME,
END OF PERIOD $ 2,663 $ 1,486
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEET (unaudited)
As at As at
March 31, December 31,
($ millions) 2008 2007
-------------------------------------------------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 889 $ 553
Accounts receivable and
accrued revenues 2,611 2,381
Current portion of partnership
contribution receivable 301 297
Risk management (Note 16) 113 385
Inventories (Note 9) 1,009 828
-------------------------------------------------------------------------
4,923 4,444
Property, Plant and
Equipment, net (Note 4) 35,963 35,865
Investments and Other Assets 583 607
Partnership Contribution Receivable 3,070 3,147
Risk Management (Note 16) 179 18
Goodwill 2,800 2,893
-------------------------------------------------------------------------
(Note 4) $ 47,518 $ 46,974
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued
liabilities $ 4,330 $ 3,982
Income tax payable 960 1,150
Current portion of partnership
contribution payable 293 288
Risk management (Note 16) 1,163 207
Current portion of
long-term debt (Note 10) 679 703
-------------------------------------------------------------------------
7,425 6,330
Long-Term Debt (Note 10) 9,428 8,840
Other Liabilities 340 242
Partnership Contribution Payable 3,088 3,163
Risk Management (Note 16) 11 29
Asset Retirement Obligation (Note 11) 1,404 1,458
Future Income Taxes 5,972 6,208
-------------------------------------------------------------------------
27,668 26,270
-------------------------------------------------------------------------
Shareholders' Equity
Share capital (Note 12) 4,539 4,479
Paid in surplus 2 80
Retained earnings 12,646 13,082
Accumulated other comprehensive income 2,663 3,063
-------------------------------------------------------------------------
Total Shareholders' Equity 19,850 20,704
-------------------------------------------------------------------------
$ 47,518 $ 46,974
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
Three Months Ended
March 31,
---------------------------
($ millions) 2008 2007
-------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings $ 93 $ 497
Depreciation, depletion and
amortization 1,035 843
Future income taxes (Note 8) (79) (190)
Unrealized (gain) loss on
risk management (Note 16) 1,093 614
Unrealized foreign exchange
(gain) loss 76 (3)
Accretion of asset retirement
obligation (Note 11) 21 14
(Gain) loss on divestitures (Note 5) - (59)
Other 150 36
Net change in other assets and
liabilities (93) 20
Net change in non-cash working
capital (538) 136
-------------------------------------------------------------------------
Cash From Operating Activities 1,758 1,908
-------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital expenditures (Note 4) (1,907) (1,490)
Proceeds from divestitures (Note 5) 72 281
Net change in investments and other 9 19
Net change in non-cash working capital 292 (58)
-------------------------------------------------------------------------
Cash (Used in) Investing Activities (1,534) (1,248)
-------------------------------------------------------------------------
FINANCING ACTIVITIES
Net issuance (repayment) of
revolving long-term debt (59) -
Issuance of long-term debt (Note 10) 723 434
Issuance of common shares (Note 12) 63 76
Purchase of common shares (Note 12) (311) (1,094)
Dividends on common shares (300) (153)
Other - 11
-------------------------------------------------------------------------
Cash From (Used in) Financing
Activities 116 (726)
-------------------------------------------------------------------------
FOREIGN EXCHANGE GAIN (LOSS)
ON CASH AND CASH EQUIVALENTS HELD
IN FOREIGN CURRENCY (4) 1
-------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 336 (65)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 553 402
-------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 889 $ 337
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements (unaudited)
(All amounts in $ millions unless otherwise specified)
1. BASIS OF PRESENTATION
The interim Consolidated Financial Statements include the accounts of
EnCana Corporation and its subsidiaries ("EnCana" or the "Company"), and
are presented in accordance with Canadian generally accepted accounting
principles. EnCana's operations are in the business of exploration for,
and development, production and marketing of natural gas, crude oil and
natural gas liquids ("NGLs"), refining operations and power generation
operations.
The interim Consolidated Financial Statements have been prepared
following the same accounting policies and methods of computation as the
annual audited Consolidated Financial Statements for the year ended
December 31, 2007, except as noted below. The disclosures provided below
are incremental to those included with the annual audited Consolidated
Financial Statements. The interim Consolidated Financial Statements
should be read in conjunction with the annual audited Consolidated
Financial Statements and the notes thereto for the year ended
December 31, 2007.
2. CHANGES IN ACCOUNTING POLICIES AND PRACTICES
As disclosed in the December 31, 2007 annual audited Consolidated
Financial Statements, on January 1, 2008, the Company adopted the
following Canadian Institute of Chartered Accountants ("CICA") Handbook
Sections:
- "Inventories", Section 3031. The new standard replaces the previous
inventories standard and requires inventory to be valued on a first-
in, first-out or weighted average basis, which is consistent with
EnCana's former accounting policy. The new standard allows the
reversal of previous write-downs to net realizable value when there
is a subsequent increase in the value of inventories. The adoption of
this standard has had no material impact on EnCana's Consolidated
Financial Statements.
- "Financial Instruments - Presentation", Section 3863 and "Financial
Instruments - Disclosures", Section 3862. The new disclosure standard
increases EnCana's disclosure regarding the nature and extent of the
risks associated with financial instruments and how those risks are
managed (See Note 16). The new presentation standard carries forward
the former presentation requirements.
- "Capital Disclosures", Section 1535. The new standard requires EnCana
to disclose its objectives, policies and processes for managing its
capital structure (See Note 13).
3. RECENT ACCOUNTING PRONOUNCEMENTS
As of January 1, 2009, EnCana will be required to adopt the CICA Handbook
Section 3064, "Goodwill and Intangible Assets", which will replace the
existing Goodwill and Intangible Assets standard. The new standard
revises the requirement for recognition, measurement, presentation and
disclosure of intangible assets. The adoption of this standard should not
have a material impact on EnCana's Consolidated Financial Statements.
In January 2006, the CICA Accounting Standards Board ("AcSB") adopted a
strategic plan for the direction of accounting standards in Canada. As
part of that plan, the AcSB confirmed in February 2008 that International
Financial Reporting Standards ("IFRS") will replace Canadian GAAP in 2011
for profit-oriented Canadian publicly accountable enterprises. As EnCana
will be required to report its results in accordance with IFRS starting
in 2011, the Company is assessing the potential impacts of this
changeover and developing its plan accordingly.
4. SEGMENTED INFORMATION
The Company has defined its continuing operations into the following
segments:
- Canada, United States and Other includes the Company's upstream
exploration for, and development and production of natural gas, crude
oil and NGLs and other related activities. The majority of the
Company's upstream operations are located in Canada and the United
States. Offshore and international exploration is mainly focused on
opportunities in Atlantic Canada, the Middle East and Europe.
- Integrated Oil is focused on two lines of business: the exploration
for, and development and production of bitumen in Canada using in-
situ recovery methods; and the refining of crude oil into petroleum
and chemical products located in the United States. This segment
represents EnCana's 50 percent interest in the joint venture with
ConocoPhillips.
- Market Optimization is conducted by the Midstream & Marketing
division. The Marketing groups' primary responsibility is the sale of
the Company's proprietary production. The results are included in the
Canada, United States and Integrated Oil segments. Correspondingly,
the Marketing groups also undertake market optimization activities
which comprise third-party purchases and sales of product that
provide operational flexibility for transportation commitments,
product type, delivery points and customer diversification. These
activities are reflected in the Market Optimization segment.
- Corporate includes unrealized gains or losses recorded on derivative
financial instruments. Once amounts are settled, the realized gains
and losses are recorded in the operating segment to which the
derivative instrument relates.
Market Optimization markets substantially all of the Company's upstream
production to third-party customers. Transactions between business
segments are based on market values and eliminated on consolidation. The
tables in this note present financial information on an after
eliminations basis.
Results of Operations (For the three months ended March 31)
Upstream
--------------------------------------------------
Canada United States Other
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2008
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