CALGARY, Alberta, February 17, 2012 - Encana Corporation has entered into an agreement with Mitsubishi Corporation that will see the Japanese global integrated business enterprise invest approximately C$2.9 billion for a 40 percent interest in the Cutbank Ridge Partnership.

The Partnership holds about 409,000 net acres of Encana's undeveloped Montney-formation natural gas lands in the company's Cutbank Ridge resource play in northeast British Columbia.

Through the Cutbank Ridge Partnership, Encana and Mitsubishi plan to create long-term shareholder value by jointly developing production capacity to deliver abundant natural gas 

"This agreement brings a world-class partner to a world-class energy asset. Cutbank Ridge ranks among the most prolific and lowest-cost resource plays in North America and Mitsubishi's financial commitment recognizes the significant value contained in a portion of our enormous resource opportunity," said Randy Eresman, Encana's President & Chief Executive Officer.

"The alignment we've already established with Mitsubishi will greatly enhance our plans to maintain Cutbank Ridge's leadership position among the most cost competitive resource plays on the continent. Despite an increased capital spending profile on these natural gas assets resulting from this transaction, Encana plans to more than offset the near term impact on North American natural gas production oversupply by capital spending reductions elsewhere in its natural gas portfolio," he added.

"We are excited to join Encana - a first-rate unconventional producer that has pioneered low-cost, continuous improvement and technical innovation across its premium portfolio of North American resource plays. Encana's operational merit, execution excellence and high performance culture are an ideal match with our business approach," said Jun Yanai, Mitsubishi's Executive Vice President, Chief Executive Officer for Energy Business Group.

Under the agreement, Encana will own 60 percent and Mitsubishi will own 40 percent of the Cutbank Ridge Partnership. Mitsubishi will pay C$1.45 billion on closing, which is expected to occur later this month, and Mitsubishi will invest C$1.45 billion in addition to its 40 percent of the Partnership's future capital investment for a commitment period, which is expected to be about five years, thereby reducing Encana's capital funding commitments to 30 percent of the total expected capital investment over that period.

The assets in the Partnership include about 409,000 net acres of   undeveloped Montney lands in British Columbia, plus additional development potential in the Cadomin and Doig geological formations. 

Encana will be the managing partner and operator of the Partnership. This transaction does not include any of Encana's current Cutbank Ridge production of about 600 million cubic feet of natural gas per day, processing plants, gathering systems or Encana's Alberta landholdings. 

"This transaction represents the next step towards the long-term development and value recognition of our undeveloped Cutbank Ridge lands in British Columbia - a major natural gas resource capable of delivering long-term, affordable energy supplies to domestic and export markets," Eresman said.

Mitsubishi is one of Shell Canada's partners in its plan to build an LNG  plant at Kitimat. Further, Encana is one of three partners in the Kitimat  LNG partnership. KLNG has begun some preliminary work at Kitimat and has  already received a permit to export LNG.

The Cutbank Ridge Partnership's lands have proved undeveloped reserves of approximately 900 billion cubic feet of natural gas equivalent. The lands contain estimated natural gas initially in place of about 130 trillion cubic feet. The undeveloped proved, probable and possible reserves and economic contingent resources on the Partnership lands are outlined in the table below. For additional information on Encana's estimated reserves and economic contingent resources.

^{1 Represents year-end 2011 bookings, after royalties, using forecast prices and costs}

Under the agreement with Mitsubishi, the Partnership has established clear corporate governance and management practices and operating procedures. The transaction, which has received an advanced ruling certificate from Canada'sCompetition Bureau, is subject to satisfaction of customary closing conditions, and is expected to close by the end ofFebruary 2012.

The Cutbank Ridge Partnership's investment and long term growth plans are with the Government of British Columbia's new strategy to further develop the use of natural gas to power the growing economy in the northern regions of the province. (See GLOBE-Net article Natural gas to fuel B.C.'s new economy)

Natural Gas: Fueling the Future

Is natural gas the bridge to a carbon-free energy future? Natural gas is affordable, abundant, accessible, and can reduce emissions from the built environment and the power generation and transportation sectors. At GLOBE 2012, taking place March 14-16, in Vancouver, a pane of experts will discuss how natural gas solutions are being deployed for economies that need greater energy security, affordable pricing, and better air quality. Panelists will discuss the opportunities and challenges for natural gas as a fuel source for powering a cleaner energy future. Sponsored by 

Confirmed Participants:

David Demers, Chief Executive Officer, Westport Innovations Inc., Canada 

Diana McQueen, Minister of Environment and Water, Government of Alberta - Environment and Water, Canada