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Shareholders give resounding approval to EnCana Corp. Alberta Energy, PanCanadian Energy merger creates world’s largest independent, measured by enterprise value, reserves, production Gary Park PNA Canadian Correspondent
EnCana Corp, a Canadian-headquartered energy giant, is ready for take off on North American stock markets on April 8 after getting an overwhelming blessing from shareholders of the founding companies April 4.
The new entity arises from a merger of Alberta Energy Co. and PanCanadian Energy Corp., whose shareholders voted 91 percent and 81 percent, respectively, to approve the deal. It starts out as the world’s largest independent oil and gas company when measured by enterprise value, reserves and production.
From its core growth platform in Western Canada its other major bases are in the U.S. Rocky Mountains, Gulf of Mexico, Canada’s East Coast offshore, Ecuador and the U.K. Central North Sea.
It also has a promising stable of far-flung new ventures to explore, especially in the Arctic — both Alaska’s North Slope and Canada’s Mackenzie Delta. Other prospects include Brazil, North Africa, the Middle East, Azerbaijan and Australia.
The declared goals, which include achieving C$250 million in annual administrative cost savings, are to grow production from 720,000 barrels of oil equivalent per day to 1.1 million barrels per day, from proven reserves of 2.7 billion barrels of oil equivalent, with a two-to-one weighting in favor of natural gas. Response has been positive Gwyn Morgan, Alberta Energy’s ambitious president and chief executive officer who will carry the same titles to EnCana, told the National Post he is confident the new company will “exceed anything we thought we would be able to generate in terms of financial results.”
He said the market response to the creation of a strong company was so positive that there was “no real opportunity” for a rival bid to be assembled over the past two months.
“Our view is that we’re not only going to be able to grow this business ... we’re also going to have extra money for acquisitions,” Morgan has told investors across North America over the past two months.
Although the deal is being hailed as triumph for the Canadian oil patch, by slowing the pace of U.S.-driven takeovers — 69 percent of last year’s C$271 billion in companies and assets and 29 percent of 2000’s C$21 billion — EnCana will initially be 45 percent owned by American shareholders and some analysts forecast foreign exposure will quickly grow to 55 percent.
Its immediate tests include deciding who to layoff among 3,800 employees, unloading up to C$1 billion in assets and establishing four operating divisions — onshore North American upstream; international and new ventures exploration; offshore and international development and production; and midstream and marketing — that Morgan wants to act like individual companies.
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