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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
of the Securities Exchange Act of 1934
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For November 5, 2007
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Commission File Number: 1-15226 |
ENCANA CORPORATION
(Translation of registrants name into English)
1800, 855 2nd Street SW
Calgary, Alberta, Canada T2P 2S5
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F or Form 40-F:
Form 20-F o Form 40-F þ
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7):
Indicate by check mark whether by furnishing the information contained in this Form, the registrant
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934:
Yes o No þ
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b): 82-
DOCUMENTS FILED AS PART OF THIS FORM 6-K
See the Exhibit Index to this Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 5, 2007
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ENCANA CORPORATION
(Registrant)
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By: |
/s/ Linda H. Mackid
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Name: |
Linda H. Mackid |
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Title: |
Assistant Corporate Secretary |
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Form 6-K Exhibit Index
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Exhibit No. |
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99.1
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EnCana to acquire partner Leor Energys interests in highly
prolific Deep Bossier gas fields of East Texas for US$2.55
billion |
EnCana to acquire partner Leor Energys interests in highly prolific
Deep Bossier gas fields of East Texas for US$2.55 billion
EnCana to double ownership to 100 percent in Amoruso Field; strong wells each produce more than 50 MMcf/d
Conference call today at 9 a.m. Mountain Time (11 a.m. ET), details below
Calgary, Alberta, (November 5, 2007) A subsidiary of EnCana Corporation (TSX & NYSE: ECA) has
entered into an agreement to acquire all of the Deep Bossier natural gas and land interests of
privately-owned Leor Energy in Texas for US$2.55 billion.
We are acquiring our partners 50 percent interest in the prolific Amoruso Field, centered in one
of the fastest-growing natural gas trends in North America the Deep Bossier formation. These
assets are a seamless fit with our existing production and operations, and they hold tremendous
growth potential in the near and longer term. Strengthening our Deep Bossier position exemplifies
EnCanas core strategy being a leading North American unconventional gas producer, said Randy
Eresman, EnCanas President & Chief Executive Officer.
We began to work on acquiring Leors remaining interest this spring and becoming the 100 percent
owner of the Amoruso Field is the culmination of more than two years of development work along the
Deep Bossier geological trend in East Texas. As operator of the Amoruso Field, we have led the
exploration, definition and systematic development of this exciting new geological resource since
our entry in 2005 until today. In just over 24 months, production from the Amoruso Field has grown
from zero to more than 215 million gross cubic feet per day. This is an exciting long-life asset
that is at the earliest days of development. It has the potential to be the leading resource play
in our North American portfolio, Eresman said.
High-volume gas wells
The Amoruso Field is home to some of the largest producing onshore gas wells in the United States
during the past five years. Two of the countrys five largest wells since 2002 Bonnie Ann 1 and
South McLean B1 are in the Amoruso Field. Initial gross production rates in these wells have
exceeded 50 million cubic feet per day. The most recent Amoruso well Laxson is producing about
65 million gross cubic feet of gas per day. EnCana has seven rigs working in the field now and
expects to increase that to about 10 next year.
This is a resource acquisition. We are investing today for tomorrows reserves and production
growth. This acquisition follows our successful practice of entering a play early, locking up a
large land position, applying the right technology and generating value that was previously
unrecognized. It is similar to what we have done in plays such as Jonah in Wyoming and Cutbank
Ridge in British Columbia, Eresman said.
Leor resource acquired for about $3 per thousand cubic feet
EnCana estimates the Deep Bossier lands acquired from Leor have about 200 net well locations. Each
well costs about $10 million to drill, complete and tie in and is expected to recover between 8
billion and 13 billion cubic feet of gas. This results in estimated ultimate recovery of between
1.3 trillion to 1.8 trillion cubic feet of gas net after royalties. At the midpoint of this range,
EnCana estimates that would result in a full-cycle finding, development and acquisition cost of
about $3.00 per thousand cubic feet.
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Entire Deep Bossier play cost of about $2.50 per thousand cubic feet
When combined with EnCanas existing Deep Bossier interests, the company estimates that it would
have a total of about 370 potential drilling locations with a similar range of estimated gas
recovery per well. This would put estimated ultimate recovery, on a net after-royalty basis, at
between 2.4 trillion and 3.3 trillion cubic feet, resulting, at the midpoint, in a full-cycle
finding, development and acquisition cost of about $2.50 per thousand cubic feet. In addition to
the Deep Bossier formations, the acquired lands have significant potential in shallower formations
that is expected to enhance the ultimate gas recovered and the plays economics.
The Leor acquisition includes:
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Leors 50 percent interest in the Amoruso Field |
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Daily gas production of about 75 million net cubic feet per day |
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About 26,600 net acres of land in Amoruso, centered in Robertson County about half way
between Dallas and Houston |
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About 9,100 net acres of offsetting land to the east at South Hilltop |
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About 20,600 net acres of other undeveloped lands in Robertson and Madison counties |
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Total East Texas land of about 56,300 net acres, the vast majority of which is undeveloped |
EnCana started acquiring, exploring and developing Deep Bossier play more than two years ago
EnCana entered this Deep Bossier formation play in July 2005 by acquiring a 30 percent interest
from Leor, then increased its Amoruso interest to 50 percent in June 2006. EnCana has drilled and
operated most of the Amoruso Fields 30 producing wells to date. Current production is constrained,
but substantial new processing capacity is expected to come on stream in December with the
completion of a new gas plant and a gathering system expansion. EnCana expects production to reach
more than 220 million cubic feet per day by year-end and average between 315 million and 355
million cubic feet per day in 2008, up more than double from current levels.
One of North Americas best new resource plays
This Deep Bossier play is among the best new unconventional gas properties in North America, said
Jeff Wojahn, Executive Vice-President & President of EnCanas USA Region. The Deep Bossier
geological trend runs along the well-established Bossier shelf, which currently produces more than
1.4 billion cubic feet per day of gas. We have just begun to tap the emerging potential of this
deeper accumulation of gas-charged rock. Deep Bossier wells are 15,000 to 20,000 feet deep and
intersect shale and sandstone formations that range between 2,000 and 3,000 feet thick.
Continual production and cost improvement
With each well drilled, our initial production rates have increased, and our most recent wells
have averaged more than 20 million gross cubic feet per day during the first month. Over the past
two years, we have conducted extensive seismic mapping, advanced our technical understanding of the
geology, optimized drilling targets, lowered well costs and improved recovery rates. This
acquisition increases our total land over the Deep Bossier trend to about 215,000 net acres,
Wojahn said.
Deep Bossier at the heart of U.S. gas market, well-developed infrastructure and service sector
Beyond its superb geological characteristics, this Deep Bossier geological trend is located in a
highly-developed oil and gas region that benefits from an experienced and well-established service
sector, efficient state regulation and available midstream gas processing. Production is close to
major pipelines with ample transportation capacity and the continents most liquid trading hubs
Henry Hub, Louisiana, the Houston Ship Channel and Carthage, Texas. The assets location and
infrastructure enables producers to capture some of the most attractive netbacks in North America.
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Deep Bossier acquisition immediately accretive to cash flow
EnCana expects the acquisition will be immediately accretive to cash flow and neutral to earnings.
EnCana plans to pay for the acquisition with a combination of cash and debt. EnCana has arranged a
US$2 billion revolving bridge financing with CIBC to help fund the acquisition. On a pro forma
basis after the planned acquisition, EnCana estimates that its net debt-to-capitalization ratio
will be about 33 percent, which is in the lower half of the companys targeted range of between 30
and 40 percent. EnCanas net debt-to-adjusted EBITDA multiple, on a trailing 12-month basis, is
expected to remain at slightly higher than 1 times, which is at the low end of the companys target
range. The acquisition has an effective date of October 1, 2007 and is expected to close before
year-end. The transaction is subject to closing conditions and regulatory approvals. EnCana expects
to continue its program of non-core asset divestitures in the future.
IMPORTANT NOTE: 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 companys
financial statements are prepared in accordance with Canadian generally accepted accounting
principles (GAAP).
CONFERENCE CALL TODAY
EnCana will host a conference call today, Monday, November 5, 2007, starting at 9 a.m., Mountain
Time (11 a.m. Eastern Time), to discuss EnCanas planned acquisition of Leors interests.
Conference call participants can also view presentation slides during the call via the VisionCast
link noted below.
To participate in the conference call, please dial (416) 915-8331 or (866) 904-6909 approximately
10 minutes prior to the start time.
To view the presentation slides that accompany the call, go to this VisionCast link on the Internet
10 minutes before the start time:
https://www.livemeeting.com/cc/vcc/join?id=w6164982&role=attend&pw=A616498
There is no audio webcast of the conference call. Participants must call in to the telephone
numbers above to hear the call.
An archived recording of the call will be available from approximately 3:00 p.m. Mountain Time on
November 5 until midnight November 9, 2007 by dialing (888) 203-1112 or (647) 436-0148 and entering
access code 6164982.
EnCana Corporation
With an enterprise value of approximately US$60 billion, EnCana is a leading North American
unconventional natural gas and integrated oilsands company. By partnering with employees, community
organizations and other businesses, EnCana contributes to the strength and sustainability of the
communities where it operates. EnCana common shares trade on the Toronto and New York stock
exchanges under the symbol ECA.
ADVISORY REGARDING FORWARD-LOOKING STATEMENTS In the interest of providing EnCana shareholders
and potential investors with information regarding the Company and its subsidiaries, including
managements assessment of EnCanas and its subsidiaries future plans and operations, certain
statements contained in this news release constitute forward-looking statements or information
(collectively referred to herein as forward-looking statements) within the meaning of the safe
harbour provisions of applicable securities legislation. Forward-looking statements are typically
identified by words such as anticipate, believe, expect, plan, intend, forecast,
target, project or similar words suggesting future outcomes or statements regarding an outlook.
Forward-looking statements in this news release include, but are not limited to, statements with
respect to: growth potential, estimates of original gas in place, recoverable gas in place,
recovery rates, drilling and other costs per well, production, decline rates, payout periods and
estimated ultimate recovery for the Deep Bossier formation and Amoruso Field, both in the near and
long term; projections with respect to future available gas
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transportation capacity and regional natural gas supplies utilizing such capacity; expected
drilling activity in the Amoruso Field; projected finding, development and acquisition costs for
the Amoruso Field formation and Deep Bossier play; projections that the Amoruso Field may be a top
or best emerging resource play; the projected life and production profile of the Amoruso Field and
wells therein, and the Companys estimation of the current stage of development thereof; expected
gas processing capacity increases and its effect on production levels by year end; projections with
respect to available netbacks with respect to Amoruso Field gas production; the impact of the
acquisition on cash flow and earnings; plans for the funding of the acquisition; projections of the
Companys net debt-to-capitalization ratio and net debt-to-adjusted EBITDA multiple following the
acquisition; the satisfaction of closing conditions and receipt of regulatory approvals; the
expected timing of, and closing date for, the acquisition; potential future non-core asset
divestitures; the projected impact of the new Alberta royalty framework on the Companys projects
and developments, projected increases in royalties which may be payable thereunder and potential
reductions in capital available for investment; and the expected announcement of the Companys 2008
capital investment plans. 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 Companys 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 risks and uncertainties include, among other
things: volatility of and assumptions regarding oil and gas prices; assumptions based upon EnCanas
current guidance; fluctuations in currency and interest rates; product supply and demand; market
competition; risks inherent in the Companys and its subsidiaries marketing operations, including
credit risks; imprecision of reserve estimates and estimates of recoverable quantities of oil,
bitumen, natural gas and liquids from resource plays and other sources not currently classified as
proved; the Companys and its subsidiaries ability to replace and expand oil and gas reserves; the
ability of the Company and ConocoPhillips to successfully manage and operate the North American
integrated heavy oil business and the ability of the parties to obtain necessary regulatory
approvals; refining and marketing margins; potential disruption or unexpected technical
difficulties in developing new products and manufacturing processes; potential failure of new
products to achieve acceptance in the market; unexpected cost increases or technical difficulties
in constructing or modifying manufacturing or refining facilities; unexpected difficulties in
manufacturing, transporting or refining synthetic crude oil; risks associated with technology; the
Companys ability to generate sufficient cash flow from operations to meet its current and future
obligations; the Companys ability to access external sources of debt and equity capital; the
timing and the costs of well and pipeline construction; the Companys and its subsidiaries ability
to secure adequate product transportation; changes in royalty tax, environmental and other laws or
regulations or the interpretations of such laws or regulations; political and economic conditions
in the countries in which the Company and its subsidiaries operate; the risk of international war,
hostilities, civil insurrection and instability affecting countries in which the Company and its
subsidiaries operate and terrorist threats; risks associated with existing and potential future
lawsuits and regulatory actions made against the Company and its subsidiaries; and other risks and
uncertainties described from time to time in the reports and filings made with securities
regulatory authorities by EnCana. Statements relating to reserves or resources or resource
potential are deemed to be forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions that the resources and reserves described exist in the
quantities predicted or estimated, and can be profitably produced in the future. 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. 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.
NOTE REGARDING CERTAIN DEFINITIONS Resource Play and Estimated Ultimate Recovery EnCana uses
the terms resource play and estimated ultimate recovery. Resource play is a term used by EnCana to
describe an accumulation of hydrocarbons known to exist over a large areal expanse and/or thick
vertical section, which when compared to a conventional play, typically has a lower geological
and/or commercial development risk and
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lower average decline rate. As used by EnCana, estimated ultimate recovery (EUR) has the meanings
set out jointly by the Society of Petroleum Engineers and World Petroleum Congress in the year
2000, being those quantities of petroleum which are estimated, on a given date, to be potentially
recoverable from an accumulation, plus those quantities already produced therefrom.
NOTE REGARDING NON-GAAP MEASURES Net Debt-to-Capitalization and Adjusted EBITDA are non-GAAP
measures. Adjusted EBITDA is 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. Net Debt-to-Capitalization
and Net Debt-to-Adjusted EBITDA are two ratios Management uses to steward the Companys overall
debt position as measures of the Companys overall financial strength.
Further information on EnCana Corporation is available on the companys website, www.encana.com, or
by contacting:
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FOR FURTHER INFORMATION: |
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Investor contact:
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Media contact: |
EnCana Corporate Communications |
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Paul Gagne
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Alan Boras |
Vice-President, Investor Relations
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Manager, Media Relations |
(403) 645-4737
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(403) 645-4747 |
Ryder McRitchie |
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Manager, Investor Relations |
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(403) 645-2007 |
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Susan Grey |
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Manager, Investor Relations |
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(403) 645-4751 |
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