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Encana’s new boss clears decks Suttles delivers on pledge for ‘bold’ action, removing old executive guard to ‘get back to winning,’ regaining investor confidence Gary Park For Petroleum News
Doug Suttles needed only three months to let the 4,000 employees of Encana know that they are entering a new era, far removed from the once-cozy existence that elevated them to the No. 1 spot among North American natural gas producers and the largest market-cap on the Toronto Stock Exchange. Half of that value has been lost since 2010.
When Suttles was named chief executive officer on June 11, it was obvious the Encana board of directors was responding to a growing clamor from investors who had seen their stock values dragged down by the shale gas revolution.
The unspoken demand was for Encana to make a radical departure from its tradition of succession planning from within.
The third generation in his family to make a career in the petroleum industry, Suttles graduated in mechanical engineering from the University of Texas 30 years ago, spent eight years in Alaska in various engineering and leadership roles and moved to places such as Russia, Trinidad and the North Sea before getting saddled with his highest profile as BP chief operating officer, leading the company’s response to and resolution of its 2010 Macondo blowout in the Gulf of Mexico.
Gentle massaging not expected Nobody was lulled into thinking that Encana was in for gentle massaging when Suttles arrived in Calgary and said he was not planning any immediate management shakeup.
“We need to get a strategy in place first and then we’ll see what it means to other elements,” he said.
Two months later, employees were put on notice, when Suttles announced that “the things we need to change we need to change in a big way — a bold way — and we need also to make sure we are leveraging our strengths.”
One of his overriding priorities, he declared, was to maintain a strong balance sheet which “gives us confidence to act, it gives our investors confidence and it actually allows us to capture opportunities in a world which is likely to continue to be volatile.”
“We believe that by implementing our new strategy we will get back to winning; we will get back the Encana many people have known for many, many years,” he said.
Building blocks revealed The building blocks for that new strategy were revealed Oct. 2, after Suttles made a whirlwind tour of the vast majority of Encana’s operations, when he removed much of the old guard from the executive team and established a much tighter group.
Gone are: Jeff Wojahn, president of the USA Division (after 23 years with the company); Eric Marsh, senior vice president with the USA Division (13 years); Bill Stevenson, executive vice president (21 years); Bob Grant, executive vice president (28 years); and Bill Oliver (31 years).
Top appointments in the new organizational structure include Mike McAllister, new executive vice president and chief operating officer, and David Hill, executive vice president, exploration and business development, who will concentrate on identifying and securing top-tier resources for Encana.
Suttles said the overhauled structure “aligns with the core competencies needed to get Encana back to winning.”
It has “clear accountabilities across the company that are directly tied to the areas we need to focus on to be successful,” he said.
Analyst: Performance will be key RBC Dominion Securities analyst Greg Pardy, while acknowledging that establishing senior leadership is important to Encana’s game plan, said “demonstrated operating performance will be the key in the months ahead.”
Mike Tims, chairman of energy investment dealer Peters & Co., said the market is still looking for more details on the “overall strategy” for Encana, especially information on “future capital allocation plans” which is where the “real future of Encana will be written.”
In a New York investor presentation in September, Suttles provided the broad-brush strokes of what might be contained in the company’s 2014 capital budget when he said the company has far too many plays, many of them in dry gas, and hinted at confirmation of a major new North American shale basin in west-central Alberta’s liquids-rich Duvernay formation.
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