TEXT-Moody's release on EnCana Corp

(The following statement was released by the rating agency)

Approximately $6.5 billion of debt securities affected

May 12 - Moody's Investors Service affirmed EnCana Corporation's (EnCana) (ECA.TO: Quote, Profile, Research) Baa2 senior unsecured rating and changed its outlook to stable from positive.

This action reflects EnCana's announcement that it intends to split into two independent publicly traded companies, a natural gas company (GasCo), with a focus on North American natural gas plays; and an integrated oil company (IOCo), which will house oilsands assets in Canada, refinery interests in the US, and oil and gas assets in Canada.

The changing of the outlook to stable reflects that EnCana's rating is unlikely to be raised pending either the conclusion of the proposed split. The stable outlook also considers EnCana's solid positioning within the Baa2 rating category.

EnCana's Baa2 rating reflects its substantial scale and geographic diversification; consistent reserve replacement, production growth and capital productivity; ability to generate strong free cash flow; and the value of its oilsands development and joint venture interests in downstream assets.

The Baa2 rating also considers EnCana's very large capital expenditure requirements for its resource play gas business, oilsands development, and refinery expansion.

The rating also reflects EnCana's aggressive shareholder return policies, in which essentially all free cash flow is paid to shareholders through dividends and share buybacks. Moody's has not rated either GasCo or IOCo at this time.

However, based on preliminarily available information and current market conditions, Moody's anticipates that both companies would have ratings in the Baa range.