Encana delivered outstanding financial and operating results in the fourth quarter to close a year of strong, consistent performance. The company met or exceeded its 2017 guidance targets, generated net earnings of $827 million, cash from operating activities of $1.1 billion and expanded its non-GAAP cash flow margin by 81 percent from 2016. Encana is positioned to meet or exceed the targets outlined in its five-year plan and sees potential to generate significantly more cash available than originally expected.

Demonstrating its focus on shareholder returns, Encana plans to spend up to $400 million to repurchase up to 35 million common shares over the next 12 months through a normal course issuer bid (NCIB). The commencement of the NCIB is subject to and following Toronto Stock Exchange (TSX) approval.The company plans to fund the NCIB with cash on hand.

Full-year and fourth quarter 2017 highlights include:

• Net earnings of $827 million, up from a net loss of $944 million in 2016.
• Cash from operating activities of $1.1 billion, up over 65 percent from 2016; fourth quarter cash from operating activities of $369 million, up 85 percent from the fourth quarter of 2016.
• Non-GAAP cash flow of $1.3 billion, up 60 percent from 2016; fourth quarter non-GAAP cash flow of $444 million, up 47 percent from the fourth quarter of 2016.
• Non-GAAP cash flow margin up 81 percent from 2016 to $11.75 per barrel of oil equivalent (BOE), significantly exceeding the original 2017 target of $10 per BOE.
• Core asset production growth of 31 percent from the fourth quarter of 2016 to the fourth quarter of 2017, significantly exceeding the original 2017 target of greater than 20 percent.
• Fourth quarter Permian production of 82,600 barrels of oil equivalent per day (BOE/d), significantly exceeding the original 2017 target of 75,000 BOE/d; fourth quarter Montney liquids production more than doubled from the fourth quarter 2016 to 29,000 barrels per day (bbls/d).
• Replaced 168 percent of full-year 2017 production on a Canadian protocols proved plus probable reserves basis after royalties (2P reserves) and 228 percent on an SEC proved reserves basis (U.S. protocols), excluding dispositions.
• Permian and Montney together replaced 331 percent of their full-year 2017 production on a Canadian protocols 2P reserves basis and 339 percent on an SEC proved reserves basis, excluding dispositions.

"We delivered very strong financial and operational results in 2017," said Doug Suttles, Encana President & CEO. "Driven by disciplined capital allocation, consistent performance and relentless pursuit of improvement, we significantly exceeded our cash flow margin target and delivered substantial oil and condensate growth. We are well positioned for 2018 and expect to fund our 2018 capital program from corporate cash flows."

"We have further demonstrated our confidence in our five-year plan and our commitment to shareholder returns with the announcement of our share repurchase program which we plan to fund with cash on hand," added Suttles. "We are firmly on track to deliver quality returns and compelling growth through our five-year plan and we see strong financial upside."

Innovation, efficiency and commercial ingenuity drive well performance and value

Encana's strong and consistent performance is driven by a relentless focus on innovation and efficiency. The company's large-scale cube development model, high-intensity completions and precision targeting continue to maximize margin, resource recovery and capital efficiency. These innovations increased average 180-day initial production rates by over 25 percent for only 9 percent additional cost. Encana has secured the majority of expected field services and materials for 2018 and expects efficiencies to offset inflation.

Operational highlights include:

Permian: strong finish to 2017 sets stage for significant 2018 production growth

• Cube development, advanced completions and precision targeting continue to drive well productivity, efficiencies and returns.
• 2017 total production averaged 66,200 BOE/d, up 37 percent from 2016. Total production in 2018 is expected to increase by approximately 30 percent from 2017.

Montney: high-quality condensate play driving significant margin expansion

• Fourth quarter 2017 liquids production more than doubled from the fourth quarter of 2016 to 29,000 bbls/d. This is expected to double again in the fourth quarter of 2018 to between 55,000 and 65,000 bbls/d.
• Montney condensate receives premium pricing similar to WTI. Encana has diversified the markets for its Western Canadian gas with only four percent of total expected company revenue exposed to AECO in 2018 and approximately five percent in 2019 and 2020.

Eagle Ford and Duvernay: quality assets generating free cash flow

• Enhanced completion designs continue to drive productivity improvements. These plays averaged total combined production of 67,800 BOE/d in 2017 which was consistent with 2016.
• Both assets delivered free operating cash flow in 2017 and are expected to deliver significant free operating cash flow again in 2018.

2017 year-end and fourth quarter results: driving quality growth and quality returns

Encana reported full-year net earnings of $827 million or $0.85 per share and a fourth quarter net loss of $229 million, reflecting a non-cash deferred tax charge primarily due to a decrease in tax rates in 2017 arising from U.S. tax reform. Cash from operating activities in 2017 was $1.1 billion and $369 million in the fourth quarter. Full-year non-GAAP operating earnings were $422 million, up from $76 million in 2016. Fourth quarter non-GAAP operating earnings were $114 million, up from $85 million in the fourth quarter of 2016. Non-GAAP cash flow for 2017 was $1.3 billion, up 60 percent from 2016. Non-GAAP cash flow in the fourth quarter was $444 million, up 47 percent year-over-year.

In 2017, Encana delivered total production of 313,200 BOE/d with the company's core assets contributing 83 percent. Total fourth quarter production averaged 335,200 BOE/d, with core assets contributing 93 percent. Full-year liquids production averaged 129,100 bbls/d with fourth quarter liquids volumes of 152,600 bbls/d, up 40 percent from the same period in 2016. Full-year natural gas production averaged 1,104 million cubic feet per day (MMcf/d).

Discipline, innovation and efficiency: lowering costs and maintaining a strong balance sheet 

Encana continued to drive efficiencies across its business in 2017 and met all cost savings targets for the year. The company reduced transportation and processing expense by $56 million or six percent compared to 2016; operating expense (excluding long-term incentives costs) by $78 million or 14 percent; and administrative expense by $11 million or six percent (excluding the impact of long-term incentive costs and restructuring charges).

At year-end 2017, Encana had approximately $5.2 billion in total liquidity, composed of $719 million in cash and cash equivalents and $4.5 billion in available credit facilities.

2018 capital and production guidance: disciplined capital allocation, liquids growth and margin expansion

Encana expects its 2018 capital program will be between $1.8 billion and $1.9 billion which will be fully funded from cash flows. Approximately 70 percent of its capital program will be focused on growing oil production from the Permian and high-margin condensate production in the Montney. The company's core assets are expected to contribute over 95 percent of total 2018 production. Encana expects to grow 2018 total annual production to between 360,000 to 380,000 BOE/d and grow total liquids production to between 165,000 bbls/d and 175,000 bbls/d.