After generations in Calgary as a national oil and gas industry pillar with a name short for Canadian energy, Encana Corp. is moving its headquarters to the United States and rebranding itself as Ovintiv Inc.
CEO Doug Suttles on Thursday announced the switch as a “strategic transformation” to tap growing U.S. investment pools such as stock exchange index funds and computer-managed passive accounts.
The new U.S. location was not immediately disclosed but it is expected to be Denver, in the middle of the company’s continent-spanning assets and where Suttles lives. The company’s footprint stretches from Alberta and British Columbia (BC) to South Texas.
The company has set a target of early 2020 to complete the headquarters relocation, renaming and an equity consolidation that would swap one Ovintiv share for every five of Encana.
The relocation was no surprise in Canada. The news “follows Encana’s earlier decision in November 2018 to move to a ‘headquarter-less model’ with a heavy shift to the U.S.,” said Energy Minister Sonya Savage, an industry veteran.
Third quarter financial results also showed the American emphasis. The firm’s main Canadian operating area, the Montney Shale straddling northern Alberta and BC, trails U.S. production from the Permian and Anadarko basins.
Encana produced 273,000 boe/d from the Permian and Anadarko in the third quarter, while Montney Shale output was 210,000 boe/d for the period.
The American side in the Canadian-born firm’s asset portfolio is poised for even more growth after the company’s $7.7 billion takeover of Newfield Exploration Co. closed earlier this year.
The name Encana was inspired by a 2002 merger of Calgary industry pillars, Alberta Energy Company (AEC) and PanCanadian Energy. A provincial legislature charter created AEC in 1975 as an oil and gas investment vehicle for Albertans. PanCanadian was born as the resource development arm of the Canadian Pacific Railway, tapping mineral wealth from its 19th century land grants.
Suttles said industry and financial market conditions alone inspired Encana’s U.S. relocation and renaming.
“This is not a political move,” he said. “This is quite simply accessing the capital trends in the marketplace.”
But Western Canadians instantly blamed the switch at least partly on politics, including reelection earlier in October of a Liberal national government with a taste for strict regulation and a declared commitment to energy transition away from fossil fuels.
“I am troubled,” Savage said. “Sadly, I cannot say I am surprised, as Encana has been shifting its efforts to the U.S. for years, in large part due to harmful policies in Canada. I sincerely hope today's news will serve as a wake-up call for leadership in Ottawa.”
Retired Encana CEO Gwyn Morgan, who presided over the AEC-PanCanadian merger, blamed the “destructive policies” of Prime Minister Justin Trudeau, who was recently reelected. “Liberals have left the company with no choice but to shift its asset base and capital program south of the border. Now, its reelection strikes the final blow."