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Encana Corp.’s new CEO is promising bold action to revive what was once Canada’s largest energy producer. Doug Suttles said Thursday the company will be involved in fewer plays, bring in a new corporate structure and realign employee incentives to better match today’s low natural gas prices.
The changes signal a new era of restraint in a company whose past was all about living large, growing production and dominating its business, but that seems to be finally responding to what market is looking for from the country’s largest natural gas producer.
The stock bounced nearly 4% to close at $18.61 in Toronto, on anticipation of major asset sales, after falling 20% in the past year.
“We need to change in a big way, in a bold way,” the former BP PLC executive from Texas said at a New York conference. “Encana will be back to winning. We will get back to the Encana we have known for many years.”
Suttles, who joined Encana in June, promised to announce the strategy’s details in the coming weeks so they can be incorporated in next year’s budget.
Meanwhile, the former chief operating officer of BP Exploration and Production provided a high level view of what’s coming, the result of internal and external feedback and of his own assessment of the company’s strengths and weaknesses.
Encana has its hands in far too many plays, many of them in dry gas that is less valuable in today’s market, and needs to prioritize and re-focus its efforts, he said.
The far-flung business is the result of a capital allocation process that is “broken.
“Encana has 75 years of resource potential in the portfolio today,” he said. “I can actually fulfill all the North American gas demand in the next three years from my existing portfolio. On one side, this is a great asset because we have a great resource base, but the flip side is we have more than we actually need.”
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