Posthaste: End of En(ergy)Cana(da) — why one of Canada’s oldest oil and natural gas producer is moving to the U.S.
It had long been speculated that Encana Corp. was looking to shift its operations to the United States, and the company finally confirmed this morning that it intended to establish a corporate domicile down south.
The speculation had gathered steam especially after CEO Doug Suttles relocated from the company’s Calgary headquarters to its Denver office last year.
As Eight Capital analyst Phil Sklonick put it, it’s the “
end of En(ergy)Cana(da)“.
Encana cited access to the larger U.S. investor base as one of the primary reasons for the move.
“Over the last five-plus years, we have transformed our portfolio and our culture. We’ve created a high quality, liquids focused multi-basin portfolio. Our focus on innovation and efficiency is consistently delivering superior financial and operational performance,” Suttles said in a statement. “A domicile in the United States will expose our company to increasingly larger pools of investment in U.S. index funds and passively managed accounts, as well as better align us with our U.S. peers.”
Over the years, Encana has been slowly selling off Canadian assets and acquiring U.S. shale gas plays such as the Eagle Ford. The company said 80 per cent of its 2019 capital investment was in the U.S.
The new company will rebrand under the name Ovintiv Inc. after shareholder, stock exchange and court approval, which is expected to occur by early 2020.
Investments in Canada’s oil and gas sector has dropped precipitously over the past decade. A number of international oil companies, including ConocoPhillips, Total ASA, Equinor ASA, BP Plc, Royal Dutch Shell Plc., have either quit or reduced their exposure to the Canadian oilpatch, citing a mix of transportation constraints and regulatory uncertainty.
The departure of Encana, which calls itself “one of North America’s oldest oil and natural gas producers,” with origins going back to the late 1800s when workers for the Canadian Pacific Railway (CPR) drilling a water well discovered natural gas near Medicine Hat, Alta., is a symbolic blow to the Canadian oil and gas sector.
Here’s what you need to know this morning:
Statistics Canada to report gross domestic product by industry for August at 8.30 a.m. ET
The Supreme Court of Canada delivers judgments in 19 applications for leave to appeal
Petroleum Services Association of Canada releases its 2020 Canadian oilfield services activity forecast
Report on economic development from the Winnipeg Metropolitan Region to be released
Notable Earnings: BCE Inc. Q3, Bombardier, SNC-Lavalin, Gildan Activewear, Resolute Forest Products Inc., Cogeco, Thomson Reuters, Sherritt International Corp., Aecon, Sleep Country Canada Holdings Inc., Open Text Corp., MEG Energy, Encana Corp., Suncor Inc., Cenovus Energy, Vermilion Energy Inc., ATCO Ltd., Calfrac Well Services Ltd., Crescent Point Energy Corp., Great-West Lifeco
The Bank of Canada could soon capitulate and cut interest rates because of the trade wars, writes Kevin Carmichael.
Canada’s central bank left its benchmark interest rate unchanged at 1.75 per cent on Oct. 30, as hiring has been strong and inflation is on target. The new policy statement said “choppy” consumer spending will be supported by “solid income growth,” while lower mortgage rates are driving a rebound in housing.
But policy makers seem wary that the country’s run of relatively good fortune will last for much longer, Carmichael says.