How Doug Suttles turned high-flying Encana into a compact U.S. company

How Doug Suttles turned high-flying Encana into a compact U.S. company

In eight years on the helm, Suttles reined in spending, moved the corporate’s headquarters from Calgary to Denver and renamed it Ovintiv

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CALGARY — Doug Suttles will quickly depart Ovintiv Inc., an nearly unrecognizable firm from when he took the highest job at what was then known as Encana Corp. eight years in the past.

Ovintiv introduced CEO Suttles, 60, will retire on Aug. 1. He had already handed over the position of president to incoming CEO Brendan McCracken final 12 months, after a earlier handover of the president’s position to Michael McAllister in 2019. McAllister retired inside a 12 months.

“The president seat has seen some turnovers over the current previous,” Nationwide Financial institution of Canada Monetary Markets analyst Travis Wooden wrote in a analysis notice following the announcement of Suttle’s retirement, including that he didn’t anticipate a significant change in Ovintiv’s course following Suttle’s departure.

“It has actually been an honour and privilege to guide Ovintiv over the previous eight years,” Suttles mentioned in a launch. He took the highest job after stints as chief working officer of BP Exploration and Manufacturing, a unit of BP Plc, and as president of the London-based oil main’s operations in Alaska, Russia, the North Sea and Trinidad.


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In eight years on the helm, Suttles reined in spending, relocated the corporate’s headquarters from Calgary to Denver in try and seize funding from U.S.-focused passive buyers and rebranded the corporate as Ovintiv. Within the course of, he turned the corporate from an enormous Canadian producer with a mixture of onshore and offshore property, right into a narrowly targeted American oil and gasoline firm. Throughout this era, the business weathered two debilitating oil worth crashes, one in 2014 and once more in 2020. The corporate recorded losses of US$5.16 billion in 2014 and US$6.1 billion final 12 months.

Earlier than leaving Calgary, Suttles was persistently among the many highest paid executives within the Canadian oilpatch. His US$11.2 million in complete compensation for 2020 is estimated to be 76 instances the median Ovintiv’s worker’s annual wage, based on firm disclosures.

Whereas revenues rose underneath Suttles, complete property shrank to US$14.5 billion final 12 months, in comparison with US$18.7 billion the 12 months earlier than he took over. Complete shareholders’ fairness had additionally contracted to $3.84 billion in 2020 from US$5.29 billion final 12 months, based on firm studies. Nonetheless, the corporate’s manufacturing eked out a small achieve of 543.8 million barrels of oil equal per day, from 527.9 million boepd the 12 months earlier than he joined.

Suttles presided over a significant refocusing effort for Encana Corp. starting in 2013, main the corporate to unload lower-margin property and deal with what it known as its “core 4” oil and pure gasoline liquids performs, which on the time have been the Montney and Duvernay gasoline formations in Alberta and British Columbia and the Permian and Eagle Ford shale oil formations in Texas.


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As the corporate locked in on these 4 performs it offered off a set of different property, together with its Massive Horn pure gasoline property for $1.8 billion in 2014, its Haynesville gasoline property in Louisiana for US$850 million in 2015 and its Colorado property to an organization managed by the Canada Pension Plan Funding Board for US$900 million the identical 12 months.

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The technique modified once more, nevertheless, in Nov. 2018 when Ovintiv introduced an unpopular US$7.7-billion deal, together with debt, for Newfield Exploration, which took Encana into the Scoop/Stack play in Oklahoma. Encana’s share worth fell sharply, from near US$50 per share earlier than the deal, to US$33.60 every a month later, regardless of pledges to lift its dividend by 25 per cent.

At that time, the Eagle Ford in Texas and the Duvernay in Alberta have been not thought of core to the corporate’s technique as Encana executives tried to promote buyers on three core performs: the Montney, the Permian and the Scoop/Stack.

The corporate’s shares have by no means recovered to ranges earlier than the Newfield deal and have been buying and selling at US$31.31 every on the New York Inventory Change on Tuesday.

Some analysts imagine the corporate’s fairness stays undervalued.

Tudor, Pickering, Holt & Co. has a $37 worth goal on the corporate’s shares and considers it a “favorite” amongst intermediate U.S. exploration and manufacturing firms.

“We’re not anticipating any main modifications to the technique that (Ovintiv’s) administration group total has detailed – a deal with debt pay down over the subsequent a number of quarters,” the funding financial institution’s analysts wrote.

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In-depth reporting on the innovation financial system from The Logic, dropped at you in partnership with the Monetary Submit.


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