2005 Annual Information Form
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ANNUAL INFORMATION FORM February 25, 2005 TABLE OF CONTENTS Page INTRODUCTORY INFORMATION************************************************************ 1 NOTE REGARDING FORWARD-LOOKING STATEMENTS ************************************** 2 NOTE REGARDING RESERVES DATA AND OTHER OIL AND GAS INFORMATION*************** 3 CORPORATE STRUCTURE ****************************************************************** 4 Name and Incorporation ******************************************************************** 4 Intercorporate Relationships ***************************************************************** 4 GENERAL DEVELOPMENT OF THE BUSINESS *********************************************** 5 Upstream ******************************************************************************** 5 Midstream & Marketing ******************************************************************** 6 NARRATIVE DESCRIPTION OF THE BUSINESS *********************************************** 8 UPSTREAM****************************************************************************** 9 Canada ******************************************************************************** 9 United States *************************************************************************** 14 International New Ventures Exploration ***************************************************** 16 Ecuador******************************************************************************** 17 MIDSTREAM & MARKETING ************************************************************* 18 Midstream****************************************************************************** 18 Marketing ****************************************************************************** 20 RESERVES AND OTHER OIL AND GAS INFORMATION ************************************* 22 Reserve Quantities Information************************************************************* 22 Other Disclosures About Oil and Gas Activities *********************************************** 24 Daily Sales Volumes, Royalty Rates and Per-Unit Results ************************************** 28 Drilling Activity************************************************************************* 39 Location of Wells *********************************************************************** 41 Interest in Material Properties************************************************************** 42 Acquisitions, Dispositions and Capital Expenditures******************************************** 44 Delivery Commitments ******************************************************************* 45 GENERAL ******************************************************************************* 45 Competitive Conditions ******************************************************************* 45 Environmental Protection ***************************************************************** 45 Social and Environmental Policies ********************************************************** 45 Employees ***************************************************************************** 46 Foreign Operations*********************************************************************** 46 Reorganizations ************************************************************************* 46 DIRECTORS AND OFFICERS **************************************************************** 47 AUDIT COMMITTEE INFORMATION********************************************************* 49 DESCRIPTION OF SHARE CAPITAL********************************************************** 51 CREDIT RATINGS************************************************************************** 52 MARKET FOR SECURITIES ***************************************************************** 53 DIVIDENDS ******************************************************************************* 54 LEGAL PROCEEDINGS ********************************************************************* 54 RISK FACTORS **************************************************************************** 54 TRANSFER AGENTS AND REGISTRARS ***************************************************** 59 INTERESTS OF EXPERTS ******************************************************************* 59 ADDITIONAL INFORMATION *************************************************************** 59 APPENDIX A — Report on Reserves Data by Independent Qualified Reserves Evaluators**************** 60 APPENDIX B — Report of Management and Directors on Reserves Data and Other Information ********** 62 APPENDIX C — Audit Committee Mandate ***************************************************** 63 i INTRODUCTORY INFORMATION EnCana Corporation (‘‘EnCana’’ or the ‘‘Corporation’’) was formed through the business combination (the ‘‘Merger’’), on April 5, 2002, of Alberta Energy Company Ltd. (‘‘AEC’’) and PanCanadian Energy Corporation (‘‘PanCanadian’’). The Merger was accomplished through an arrangement in respect of AEC under the Business Corporations Act (Alberta) and certain corporate changes for PanCanadian. Pursuant to the Merger, PanCanadian indirectly acquired all of the outstanding common shares of AEC in consideration for common shares issued by PanCanadian. PanCanadian’s name was also changed to EnCana Corporation and its board of directors and senior management were reconstituted. Following completion of the Merger, AEC remained in existence, as an indirect wholly owned subsidiary of EnCana. On January 1, 2003, AEC and another subsidiary were amalgamated with EnCana. As a result of these transactions, the former PanCanadian and the former AEC continue as one corporation known as EnCana Corporation. In this annual information form, unless otherwise specified or the context otherwise requires, reference to ‘‘EnCana’’ or to the ‘‘Corporation’’ includes reference to subsidiaries of and partnership interests held by EnCana Corporation and its subsidiaries. Any reference to ‘‘EnCana’’ or the ‘‘Corporation’’ for periods prior to the Merger are to EnCana’s founding companies, PanCanadian and AEC, and their subsidiaries and partnership interests. Unless otherwise indicated, all financial information included in this annual information form is determined using Canadian generally accepted accounting principles (‘‘Canadian GAAP’’), which differs from generally accepted accounting principles in the United States (‘‘U.S. GAAP’’). The notes to EnCana’s audited consolidated financial statements contain a discussion of the principal differences between EnCana’s financial results calculated under Canadian GAAP and under U.S. GAAP. In accordance with Canadian GAAP, the consolidated financial statements of EnCana include the results of PanCanadian prior to the Merger and do not include any results related to AEC’s operations prior to the Merger. Accordingly, unless otherwise indicated, all financial information contained in this annual information form for the first quarter of 2002 does not reflect the results of AEC for that period. Unless otherwise indicated, other statistical information and operational results are presented on the same basis. Unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to ‘‘dollars’’ or ‘‘$’’ are to United States dollars and all references to ‘‘C$’’ are to Canadian dollars. 1 NOTE REGARDING FORWARD-LOOKING STATEMENTS This annual information form contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words such as ‘‘anticipate’’, ‘‘believe’’, ‘‘expect’’, ‘‘plan’’, ‘‘intend’’ or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements in this annual information form include, but are not limited to, statements with respect to: capital investment levels and the allocation thereof, drilling plans and the timing and location thereof, production capacity and levels and the timing of achieving such capacity and levels, pipeline capacity, the timing of pipeline construction, reserve estimates, the use of facilities related to the Hythe Gas Storage Facility and the timing thereof, storage capacity, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, plans for examining the Deep Panuke project, pending litigation, exploration plans, acquisition and disposition plans, including farmout plans, research and development plans, the timing and results of the environmental impact study in the Jonah area, the timing of acquisitions, the timing, completion and capacity of the Starks Storage facility, net cash flows, geographical expansion and plans for seismic acquisitions and surveys. 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 things contemplated by the forward-looking statements will not occur. 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. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this annual information form include, but are not limited to: volatility of oil and natural gas prices, fluctuations in currency