Encana Corp., one of Canada’s oldest and amplest energy companies, is moving its corporate headquarters from Calgary to the Common States.
The company, which is also changing its name to Ovintiv Inc., said Thursday that press a U.S. address will expose it to increasingly larger pools of investment in U.S. table of contents funds and passively managed accounts, as well as better align it with its U.S. examines.
On a morning conference call, CEO Doug Suttles insisted the name and “corporate housing” changes will not affect any Canadian staff, result in any layoffs, or engage investment strategies in oil and gas formations in Alberta and B.C.
“Make no mistake, we have a elongated and proud history in Canada, and our assets here are world class,” he alleged.
“Our returns in Canada continue to be every bit as strong as the rest of our portfolio. We whim continue to make profitable investments in the Montney and the Duvernay, and manage these assets out of the Calgary job. We do not expect any impact on our Canadian workforce, either in the office or the field.”
Suttles said the wretched change won’t alter how the company runs its day-to-day activities.
“There’ll be no change of roles or responsibilities, no reduction in staff and actually no change to how we’re allocating important,” he said during the conference call.
The company said it’s hoped the plot, which still requires shareholder, stock exchange and court sanction, would be in place early next year.
Thursday’s announcement came after Encana augured a third-quarter profit of $149 million or 11 cents per share, up from a profit of $39 million or four cents per dispensation a year ago.
Alberta minister blames Ottawa
Alberta Energy See to Sonya Savage laid the blame for Encana’s move at Ottawa’s feet, citing Pecker C-69, which overhauls the federal environmental assessment process for serious construction projects, as well as Bill C-48, the oil tanker traffic ban in northern B.C. inundates.
“They didn’t do a thing that industry wanted,” she said at a centre availability in Edmonton on Thursday. “It has been a very hostile environment to growers.”
However, in an interview with Radio Canada, Suttles said the verdict to move Encana’s corporate domicile to the U.S. was about courting capital and had nothing to do with wirepulling.
It has no political overtone, it has nothing to do with roles and jobs, it’s quite altogether trying to make sure, over time, we’re doing everything we can to get the value of the assemblage reflected in the share price,” he said.
“It does not change our commitment to the burg of Calgary, to the province of Alberta.”
Analysts react to Encana plans
Response to the news of the change of headquarters was mixed.
“This is a sad day for Canada’s energy sector,” communicated Deborah Yedlin, business commentator for CBC’s Calgary Eyeopener.
“I was shocked equivalent to everybody else to see this, although some will say this was telegraphed as Encana has touched to make some significant acquisitions in the U.S.”
She said Encana had already in truth changed its asset mix to include more U.S. elements, including shale plays.
“But I characterize as this just adds to the overall uncertainty, weariness and anxiety because we are go steady with companies looking elsewhere to invest their capital, and increasingly we’re not consort with that capital invested in Canada.”
Analysts said the move is not surprising reality Encana’s increased focus on oil and natural gas liquids plays in the United Nationals over the past decade, culminating in its $5.5 billion US all-shares property of U.S. rival Newfield Exploration Co. announced a year ago.
“I am not surprised at all by the move,” said Jennifer Rowland, a U.S.-based analyst with Edward Jones.
“Position the Newfield deal, 60 per cent of Encana’s production is in the U.S. and two of its key growth drivers are in the U.S. … Advantage CEO Suttles doesn’t live in Canada; he lives in Denver.”
Phil Skolnick, an analyst with Eight Principal Research, said the headquarters move is bound to lead to speculation here a sale of Canadian operations.
“It will beg the question of whether or not ECA will after all sell or spin out its Canadian assets. We believe in this current Stock Exchange, this is not in the works,” he said in a report.
Deep Canadian roots
Encana investigates its roots to the Canadian Pacific Railway, which was granted subsurface mineral rights by the guidance of Sir John A. Macdonald, Canada’s first prime minister, as compensation for adopting the risk of developing the railroad. Those rights were later come by by Encana’s predecessors.
Previous iterations of the company included Pan Canadian Petroleum Ltd., toned in 1971, which merged with Alberta Energy Corp. to technique EnCana in 2002. EnCana was split into natural gas-weighted Encana and oil coterie Cenovus Energy Corp. in 2009.
Encana was the largest gas producer in Canada for sundry years — Suttles said the name change is in part designed to drive out off the association with natural gas, a commodity with overproduction in North America that has led to reduced prices for years.
The name change is reminiscent of TransCanada Corp.’s affect to officially drop the “Canada” from its name last May, renaming itself TC Dash Corp., a name it said better speaks to the breadth of its pipeline, power origination and energy storage businesses and its operations in Canada, the U.S. and Mexico.
Encana also charts a share consolidation that will see shareholders receive one share of Ovintiv for every five collective shares of Encana. It plans to continue to trade on both the Toronto and New York trade in exchanges.