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Encana Corporation
IndustryPetroleum
PredecessorPanCanadian Petroleum
Alberta Energy Company
Founded5 April 2002 (2002-04-05)
Defunct24 January 2020 (2020-01-24)
FateRestructured
SuccessorOvintiv
HeadquartersThe Bow,
Calgary, Alberta

Encana Corporation was a Canadian independent petroleum company that existed from 2002 to 2020. The company was created by David P. O'Brien of PanCanadian Petroleum and Gwyn Morgan of the Alberta Energy Company through the merger of their companies. At the time of its creation Encana was the world's largest independent petroleum operation. Encana was one of Canada's most successful businesses, and in September 2005 it became Canada's largest corporation by market capitalisation. In 2009, Encana spun off its oil producing operations as Cenovus.

In October 2019, chief executive officer Douglas J. Suttles announced the company would undergo a corporate restructuring that would see its residency moved to the United States and its name changed to Ovintiv. On 14 January 2020 shareholders voted 90 per cent in favor of the move, and on 24 January the restructuring was completed.

Predecessor companies

PanCanadian Petroleum

Main article: PanCanadian Petroleum

PanCanadian Petroleum was founded in 1971 through the merger of Canadian Pacific Oil and Gas and Central-Del Rio Oils. CPOG had been founded in 1958 by the Canadian Pacific Railway as a vehicle to produce petroleum on the land grants it had received in the nineteenth century. Central-Del Rio was a small independent producer run by oilman Neil McQueen, and the CPOG had acquired gradually a majority holding in the company. After the creation of PanCanadian, Canadian Pacific Limited remained the company's majority shareholder with approximately an 87 per cent stake. PanCanadian's freehold leases, which it inherited from the railway, gave it the largest reserves of any Canadian petroleum company.

Alberta Energy Company

Main article: Alberta Energy Company

The Alberta Energy Company was created in 1973 by the provincial government under premier Peter Lougheed as a mechanism for Albertans to invest in the Syncrude project. Initially, the company was half owned by the government and half owned by the public. The AEC also produced gas in the Suffield Block and in Primrose Lake. The government began in 1983 to reduce its equity in the company, and in April 1993 it sold off its remaining 36 per cent stake. In 1994, Gwyn Morgan assumed the presidency and led the company for the duration of its existence. As a fully public company, the AEC grew substantially in the 1990s and became Canada's largest producer of natural gas.

History of Encana

The Bow, Encana's former headquarters in Calgary

Creation of the company

In April 2002, Pan Canadian Petroleum Ltd was spun out of Canadian Pacific Limited. It subsequently merged with Alberta Energy Corporation to form EnCana. Gwyn Morgan was named president and CEO.

Morgan era, 2002–2005

On Wednesday, 14 September 2005, EnCana surpassed the Royal Bank of Canada to become Canada's largest corporation by market capitalisation, with a value of $51.841 billion.[1]

Eresman era, 2006–2013

In 2009, EnCana completed the corporate spin-off of Cenovus Energy, which held its oil business, representing one-third of its total production and reserves, and EnCana Corporation retaining the natural gas business.[2][3] Investors favoured the split as it gave them the flexibility to choose between investing in oil, gas, or both.[4]

In December 2012, Encana announced a US$2.1 billion joint venture with state-owned, Beijing-based PetroChina through which PetroChina received a 49.9% stake in Encana's Duvernay Formation acreage in Alberta. This was in line with the rules that "favor minority stakes over takeovers" since Prime Minister Stephen Harper's December 7, 2012 prohibition of purchases by state-owned enterprises seeking to invest in Canadian oil.[5][6] By the end of 2012, Encana's staff had increased to 4,169 employees.[7]

Encana and Cenovus' headquarters, The Bow in Calgary, was completed in 2013, becoming the tallest building in Canada outside of Toronto.[8] The project, owned by H&R REIT, was announced as Encana's headquarters in 2006, prior to the Cenovus split.[9]

Suttles era, 2013–2020

In November 2013, the company cut its dividend, announced layoffs of 20% of its employees, closure of its office in Plano, Texas, and plans to sell assets and to found a separate company for its mineral rights and royalty interests across southern Alberta.[7] It planned to invest 75% of its 2014 capital budget into 5 projects: Projects in the Montney Formation and the Duvernay Formation in Alberta, the San Juan Basin in New Mexico, Louisiana's Tuscaloosa Marine Shale, and the Denver-Julesburg Basin (DJ Basin) in northeast Colorado, Wyoming, and Nebraska.[7][10]

Restructuring as Ovintiv

In October 2019, the company announced plans to move its operations from Canada to Denver, where its CEO lived, and change its name to Ovintiv.[11][12] To complete the restructuring, a new Canadian corporation called Ovintiv (corporation number 1185826-2) was created on 22 January 2020, which acquired all issued shares of Encana in a one-for-one stock swap for Ovintiv shares. On 24 January, Ovintiv was imported to Delaware under the Delaware General Corporation Law, thus concluding the move.[13]

Assessments of Encana's demise

The name change, notably the dropping of "Cana" was met with criticism in Canada. Encana's departure from Canada "only intensified the gloom enveloping the Canadian energy industry after foreign companies sold more than US$30 billion".[14] Youssef Youssef, a commerce professor at Humber College in Toronto, also takes this perspective, citing the difficulty in changing a brand as recognizable as this one "(Encana) was a solid brand and it had resonance within the Canadian oil industry, and everybody knows the company, so to change the brand, it takes a lot of steps.”[15]

Leadership

Chairman of the Board President

David P. O'Brien, 5 April 2002 – 24 July 2013
Clayton H. Woitas, 24 July 2013– 24 January 2020

Gwyn Morgan, 5 April 2002 – 31 December 2005
Randall K. Eresman, 1 January 2006 – 11 January 2013
Clayton H. Woitas (interim), 11 January 2013 – 11 June 2013
Douglas J. Suttles, 11 June 2013 – 10 September 2019
Michael G. McAllister, 10 September 2019 – 24 January 2020

References

  1. ^ "EnCana is No. 1 in Canada," Calgary Herald (15 September 2005), D1.
  2. ^ Haggett, Scott (November 30, 2009). "EnCana wraps up spinoff of its oil business". Reuters.
  3. ^ "EnCana proceeds with plan to split into two distinct and independent energy companies" (PDF) (Press release). Cenovus Energy. September 10, 2009.
  4. ^ Parkinson, David (December 9, 2009). "Cenovus spinoff gives investors a choice".
  5. ^ Jones, Jeffrey (December 13, 2012). "Encana, PetroChina take $2.2 billion stab at joint venture". Reuters.
  6. ^ "Encana, PetroChina form joint venture to develop natural gas in Alberta". Financial Post. December 13, 2012.
  7. ^ a b c "Encana laying off 20% of workers". CBC News. November 5, 2013.
  8. ^ "The Bow tower officially opens in Calgary". CBC News. June 4, 2013.
  9. ^ Parkinson, David (February 9, 2007). "H&R REIT to develop EnCana's new headquarters". Globe and Mail.
  10. ^ Dawson, Chester; McKinnon, Judy (November 5, 2013). "Encana to Cut Dividend, Jobs in Reorganization". The Wall Street Journal.
  11. ^ "Encana to Establish Corporate Domicile in the U.S." PR Newswire. October 31, 2019.
  12. ^ "Encana reveals Denver will be its new headquarters after leaving Calgary". CBC News. November 7, 2019.
  13. ^ Ovintiv, 2019 Annual Report, 8.
  14. ^ Balji, Divya; Orland, Kevin (January 23, 2020). "Encana, whose history in Canada dates back to 1800s, says farewell to the TSX today as it heads south". Financial Post. Bloomberg News.
  15. ^ Dawson, Tyler (October 31, 2019). "As Encana becomes Ovintiv, the rebrand begs a question: What the hell is an Ovintiv?". Financial Post.
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