As part of its strategic reorganization, Encana Corp. said Nov. 5 it will consolidate its office locations to Calgary, Alberta, and Denver, Colo., resulting in the closing of its Plano office. The company’s new structure is expected to result in a 20 percent workforce reduction.
“In order to align our organization with our strategy, we have had to make a number of exceptionally difficult decisions,” said Enanca President and CEO Doug Suttles. “The restructuring that is under way reflects our shift from funding about 30 different plays to focusing our resources on five key areas. We will work as hard as we can to make these staffing decisions quickly and thoughtfully and we will treat everyone affected with respect as we work through this very difficult part of our transition.” The company said it will invest 75 percent of its 2014 capital into five high return oil and liquids-rich plays: the Montney, Duvernay, DJ Basin, San Juan Basin and Tuscaloosa Marine Shale.
Encana also plans to transfer its significant mineral fee title land position and associated royalty interests across southern Alberta – 5 million net acres where the company holds the oil and gas rights and can collect royalties on production – into a separate company through an IPO by mid-2014. Encana intends to retain a significant stake in the new company, which will manage leasing activities in the area currently known as Encana’s Clearwater play. In addition to its investment in its top five plays and the Clearwater royalty business IPO, Encana will continue to seek opportunities to improve its portfolio and realize the full value of its massive asset base. The company identified a number of assets that have considerable potential through a divestiture process scheduled to begin immediately.
“Our tremendous asset base offers us the opportunity to build a focused portfolio with exposure to different geographic regions and product diversity, providing quality investment options and the ability to prosper through variable commodity price cycles,” Suttles said. Under its realignment, the company said it can average a more than 10 percent compound annual growth rate in cash flow per share through 2017. Encana expects its capital program to be $2.5 billion for 2014 and will issue more detailed guidance for that program in mid-December 2013. – Betty Dillard