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Alberta Energy boss refuses to play winners and losers in EnCana deal Morgan tells employees that ‘keeping score’ will divert energy from achieving the new company’s ‘enormous potential;’ says the only enemy is time Gary Park PNA Canadian Correspondent
Who won, who lost and what it all means to a raft of energy projects from Alaska to the Gulf of Mexico — those questions are now in the melting pot as Alberta Energy Co. Ltd. and PanCanadian Energy Corp. get on with the task of blending their two companies into EnCana Corp.
The C$27 billion deal, dubbed a “merger of equals,” is in the hands of eight transition teams, who are faced with accomplishing a swift integration plan in time for an April 4 meeting of shareholders.
But from the outset, there has been a frenzy of speculation over which company will emerge on top.
While the deal is structured as a PanCanadian takeover of AEC, with PanCanadian shareholders gaining a 54 percent stake in EnCana, analysts have been convinced that the more aggressive AEC will land most of the top executive posts in the new entity. Morgan to head EnCana That theory gained some weight when AEC President and Chief Executive Officer Gwyn Morgan was named to the same jobs in EnCana, while PanCanadian Chairman and CEO David O’Brien was given the less powerful title of non-executive chairman of EnCana.
It picked up further steam when Randy Eresman, president of AEC’s upstream operations in North America, was selected to lead the transition team covering the United States and Western Canada, or 90 percent of EnCana’s production.
PanCanadian’s Chief Operating Officer David Boone will oversee operations in Canada’s East Coast, the North Sea and Gulf of Mexico.
Gerry Macey, PanCanadian’s executive vice president in charge of exploration, will head up a unit charged with find new reserves in an offshore, international and new ventures division, including Alaska and the Mackenzie Delta. AEC takes five of eight In the final reckoning, AEC claimed five of the leadership roles in the eight transition teams charged with structuring EnCana’s operations into four main divisions: North American exploration and production; offshore, international and new ventures exploration; offshore and international development and production; and pipelines, gas processing and marketing.
At the same time, it was confirmed that PanCanadian’s Executive Vice President Wesley Twiss will not be part of EnCana and PanCanadian President Michael Grandin will remain only as a member of the new board.
But Morgan, in a memo to employees of the two companies, brushed off talk of who will come out on top.
“I know the media would have us ‘keeping score’ of who gets what job in the new company,” he said. “We must avoid the counter-productive trap of this ‘winners and losers’ thinking, or we will have no chance of achieving the enormous potential of our merged company.” Employee focus a challenge Gord Currie, an analyst with Canaccord Capital Corp., said an overriding challenge for the two companies will be keeping 1,800 AEC and 2,000 PanCanadian employees focused on the targets while anxiety grows among those employees over their own job futures. AEC and PanCanadian have conceded there will be some job losses, but they haven’t announced a figure. Insiders are counting on hundreds of layoffs, possibly in the range of 10 percent.
But there is no time to dwell on the painful side of integration. It’s Morgan’s philosophy that in any mergers “time is the enemy.”
The bigger goal is boosting daily production to 4 billion cubic feet of gas and 430,000 barrels of oil by 2005 from this year’s high-end target of 2.74 trillion cubic feet of gas and 264,000 barrels of oil — a compounded annual growth rate of 16 percent.In Morgan’s view, EnCana can not only achieve those levels, but generate the cash flow that will open the door to further acquisitions.
Those who know Morgan best don’t question his ability to deliver value to shareholders.
Thomas Stern, managing director of Chieftain Capital Management Inc., one of AEC’s largest shareholders, told the Calgary Herald that Morgan has an incredible grasp of the business from the bottom up.
“He’s smart, thoughtful and recognizes his shortcomings,” Stern said. “EnCana is going to be one hell of a company.”
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