Encana annual report summary - 2010

Managing a suite of assets as geographically
and technically diversified as those in
Encana’s portfolio is a dynamic process that
balances the risks and returns of every dollar
invested on a project-by-project basis.
why invest in encana / because we have
a diverse portfolio
/ with the right balance
It’s like managing your own
personal investment portfolio,
and many of the same questions
that you would ask yourself
are analyzed and debated by
Encana’s management team
every day: Which investments will
bring growth and returns in the
short term Where does Encana
need to allocate dollars today to
ensure growth and sustainability in
future years What assets are no
longer a strategic focus and can
therefore be sold What assets
are available that can be added
to Encana’s portfolio in order
to successfully execute on the
company’s strategic objectives
In your own portfolio, you might
ask similar questions to meet
your goals: Should I pay down my
mortgage or invest more in my
retirement fund or my children’s
college savings The answer is
never simple, and finding a balance
between long- and short-term
objectives requires discipline.
“We have to fund a balanced
portfolio,” says Corey Code,
Encana’s Vice-President, Portfolio
Management and Assistant
Treasurer. “It’s critical that we
think about both the short- and
the long-term implications of our
investments. We want to deliver
sustainable growth and value to our
shareholders, not just this year, but
every year.”
Encana’s life cycle approach to
portfolio management provides a
strategic framework to evaluate
projects and make investments that
create value by reducing costs and
maximizing margins. It weighs shortand
long-term goals, divestitures
and acquisitions, risks and rewards
of investments, and forecast
and actual results, aligning each
component with the same end goal
of achieving sustainable growth and
value for Encana shareholders.
1 Strategic Plan
The strategic plan looks closely at
the company’s overarching strategy
by focusing on each operating
division’s resource assessments.
This is a detailed, bottom-up
examination of each operating
area’s drilling inventory, right down
to type curve analysis and cost
structures. This plan forms the
basis for establishing long-term
goals and for the second phase of
the portfolio process, Encana’s
annual budget.
2
annual budget /
Project Approval Requests
When the annual budget is
set, there are both economic
hurdles that must be met prior
to investment and qualitative
considerations that underscore the
company’s investment decisions.
“It’s about measuring our strategic
assets – those resource plays
that are very young with many
years of growth ahead – and our
developed assets that generate
strong returns today,” says Code.
16 Encana Corporation / Annual Report 2010