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article imageEncana moving out of Canada and changing its name

By Karen Graham     Nov 2, 2019 in Business
Calgary - At one time, prior to 2013 asset sales, Calgary-based Encana Corp. was the largest natural gas producer in Canada. But the company announced Thursday that it will be changing its name to Ovintia and moving its headquarters to the United States.
On October 31, in a press release, Encana announced its intention to establish corporate headquarters in the United States. The move, which requires shareholder, stock exchange and court approval, is expected to occur in early 2020.
Encana's CEO Doug Suttles said on an earnings call Thursday the move has nothing to do with Canadian politics and were motivated in part by its under-performance to its U.S.-based peers, reports the Financial Post.
“We intend to establish a U.S. domiciled company that will expose us to significantly larger and growing pools of investment,” Suttles said. “By looking at prior data, this will expose our company to almost three times the amount of index participation we see today as a Canadian company.”
But Gwyn Morgan, the company's founder, isn't so sure. He explained why in an interview with As it Happens guest host Megan Williams.
Morgan - who says he built the company from scratch to a $60-billion market-value company claims the business climate in Canada has changed. "But the reality is that the business climate has forced Encana over the last few years to build assets in the U.S., reduce assets in Canada, with sales in Canada and purchases in the U.S., and move people," he said.
Encana’s peers - Royal Dutch Shell, ConocoPhillips, and Suncor Energy have either been selling their Canadian assets or have scaled back investments as pipeline space crunch impacts prices, reports CNBC. And shares of Encana have also underperformed their Canadian peers, leaving analysts to warn that the company’s relocation will not necessarily improve its performance.
Encana's under-performance dates back to November 2018, when Encana sold its assets in the San Juan Basin for $480 million, then turned around in February 2019, and announced it had completed its acquisition of Newfield Exploration Company in the U.S. in an all-stock transaction valued at $5.5 billion.
“This is not the fix you are looking for,” Raymond James analyst Chris Cox wrote in a research note Friday, adding, “companies that are successfully executing strategically and conveying a compelling message to the Street typically don’t go through a rebranding effort.”
Encana stock is down 33.38 percent year to date, compared to S&P/TSX Capped Energy Index’s nearly 11 percent drop during the period.
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