2011 Encana Annual Information Form
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Encana Corporation Annual Information Form February 23, 2012 Table of Contents Table of Contents .................................................................................................................................................................1 Introduction ..........................................................................................................................................................................2 Corporate Structure ..............................................................................................................................................................3 General Development of the Business...................................................................................................................................4 Narrative Description of the Business ....................................................................................................................................7 Canadian Division................................................................................................................................................... 8 USA Division......................................................................................................................................................... 12 Market Optimization .............................................................................................................................................. 16 Former Operations................................................................................................................................................ 17 Reserves and Other Oil and Gas Information......................................................................................................... 18 Acquisitions, Divestitures and Capital Expenditures................................................................................................ 19 Competitive Conditions ......................................................................................................................................... 20 Environmental Protection ...................................................................................................................................... 20 Social and Environmental Policies ......................................................................................................................... 21 Employees............................................................................................................................................................ 22 Foreign Operations ............................................................................................................................................... 22 Directors and Officers ......................................................................................................................................................... 23 Audit Committee Information............................................................................................................................................... 26 Description of Share Capital................................................................................................................................................ 28 Credit Ratings .................................................................................................................................................................... 30 Market for Securities........................................................................................................................................................... 31 Dividends ........................................................................................................................................................................... 31 Legal Proceedings.............................................................................................................................................................. 32 Risk Factors ....................................................................................................................................................................... 32 Transfer Agents and Registrars........................................................................................................................................... 38 Interest of Experts .............................................................................................................................................................. 38 Additional Information ......................................................................................................................................................... 38 Note Regarding Forward-Looking Statements...................................................................................................................... 39 Note Regarding Reserves Data and Other Oil and Gas Information...................................................................................... 40 Appendix A - Canadian Protocol Disclosure of Reserves Data and Other Oil and Gas Information ..................................... A-1 Appendix B - Report on Reserves Data by Independent Qualified Reserves Evaluators (Canadian Protocol)...................... B-1 Appendix C - Report of Management and Directors on Reserves Data and Other Information (Canadian Protocol)............. C-1 Appendix D - U.S. Protocol Disclosure of Reserves Data and Other Oil and Gas Information ............................................. D-1 Appendix E - Audit Committee Mandate ........................................................................................................................... E-1 Encana Corporation Annual Information Form (prepared in US$) 1 Introduction This is the annual information form of Encana Corporation (“Encana” or the “Company”) for the year ended December 31, 2011. In this annual information form, unless otherwise specified or the context otherwise requires, reference to “Encana” or to the “Company” includes reference to subsidiaries of and partnership interests held by Encana Corporation and its subsidiaries. In this annual information form, daily natural gas volumes are referenced in either thousands of cubic feet (“Mcf”) per day (“Mcf/d”), millions of cubic feet (“MMcf”) per day (“MMcf/d”), or billions of cubic feet (“Bcf”) per day (“Bcf/d”). The term “liquids” is used to represent oil, natural gas liquids (“NGLs”) and condensate. Daily liquids volumes are referenced in either barrels (“bbls”) per day (“bbls/d”), thousands of barrels (“Mbbls”) per day (“Mbbls/d”) or millions of barrels (“MMbbls”) per day (“MMbbls/d”). Certain liquids volumes have been converted to thousands of cubic feet equivalent (“Mcfe”), millions of cubic feet equivalent (“MMcfe”) or billions of cubic feet equivalent (“Bcfe”) on the basis of one barrel (“bbl”) to six Mcf. Also, certain natural gas volumes have been converted to barrels of oil equivalent (“BOE”) on the same basis. Mcfe, MMcfe, Bcfe and BOE may be misleading, particularly if used in isolation. An Mcfe, MMcfe or Bcfe 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 wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. On January 1, 2011, Encana adopted International Financial Reporting Standards (“IFRS”) for financial reporting purposes, using a transition date of January 1, 2010. The Company’s annual audited Consolidated Financial Statements for the year ended December 31, 2011, including 2010 required comparative information, have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board ("IASB"). Prior to 2011, the Company prepared its consolidated financial statements in accordance with Canadian generally accepted accounting principles (“previous GAAP”). Unless otherwise indicated, all financial information included in this annual information form is determined using IFRS, which differ from U.S. generally accepted accounting principles (“U.S. GAAP”). Note 27 to Encana’s annual audited Consolidated Financial Statements for the year ended December 31, 2011 contains a discussion of the principal differences between Encana’s financial results calculated under IFRS and U.S. GAAP. Readers are directed to the sections titled “Note Regarding Forward-Looking Statements” and “Note Regarding Reserves Data and Other Oil and Gas Information”. Unless otherwise specified, all dollar amounts are expressed in United States (“U.S.”) dollars, all references to “dollars”, “$” or to “US$” are to U.S. dollars and all references to “C$” are to Canadian dollars. All proceeds from divestitures are provided on a before-tax basis. Encana Corporation Annual Information Form (prepared in US$) 2 Corporate Structure Name and Incorporation Encana Corporation is incorporated under the Canada Business Corporations Act (“CBCA”). Its executive and registered office is located at 1800, 855 - 2nd Street S.W., Calgary, Alberta, Canada T2P 2S5. On November 30, 2009, Encana completed a corporate reorganization (the “Split Transaction”) to split into two independent publicly traded energy companies – Encana and Cenovus Energy Inc. (“Cenovus”). In conjunction with the Split Transaction, Encana’s articles were