Canadian investors clashed with Encana's new American CEO who eventually decided to move the company closer to home.
Exactly one year after making a transformative acquisition, Doug Suttles, the American CEO of Canadian energy giant Encana, is finally moving the company, now renamed Ovintiv, out of Canada.
Back in November 2018, Suttles, who had by then been Encana CEO for just over five years, acquired Houston, Texas-based energy producer Newfield Exploration in a US$7.7 billion deal that raised fears in Canada that Encana—which has part of “Canada” in its name—would see its headquarters moved out of the country.
Suttles had already moved himself to Denver, Colorado from Calgary earlier in 2018, saying the very idea of headquarters is practically obsolete: A company should be able to function wherever its people are. His thinking was that Encana could function out of three bases: one each in Denver and Houston in the US and a third in Calgary, Canada. A former Exxon and BP executive, he is a pioneer among CEOs in attempting a “headquarterless” corporation.
Yet Encana lost two-thirds of its market value in the year since the acquisition of Newfield, as Canadian investors rejected the logic of the deal, forcing Encana to pivot toward the US, tapping US capital and investors.
Canadians’ initial fears were realized at the end of October, when Suttles, the second-highest-paid energy executive in Canada at CA$15.5 million (US$11.7 million) in 2018, announced that Encana would redomicile to the US, renaming itself Ovintiv.
Suttles expects no job losses in Canada, as the production base in Canada remains undisturbed and the Canadian business will be run out of the Canadian hub in Calgary.
But with a primary listing on US exchanges and a less Canadian-sounding name, Ovintiv will likely be valued as a US energy company. Once the redomicile is complete in 2020, and Encana/Ovintiv begins to be included in US index funds, it could trigger a recovery in market value—much desired by CEO Suttles.