Encana Corp (NYSE:ECA) is planning to move its headquarters to the US citing an unfavorable business climate in Canada. The company plans to protect the interests of its investors. Though it’s Chief Executive Officer, Doug Suttles denied the move is on the backdrop of government’s hostility to the oil and gas industry, the founder, Gwyn Morgan said not sure.
Built an industry from scratch
Morgan said he built the $60 billion company from scratch and spent 30 years at this company. He undertook a merger with a Pan Canadian Group to become a larger company and prevent a takeover by the US Company. The change in government policies has debilitated the oil and gas industry in Canada. He did not foresee a need for exporting the company. Now, it is the reality and the company establishes the headquarters in the US.
Encana still maintains operations in Canada
Encana is still maintaining the operations in Canada despite moving a large portion to the US. The company has been downsizing the assets in Canada and engaged in more procurement in the US in the past few years to spur growth.
The relocation of the operations to the US is to attract a lot of investors and decided to drop Canada from its name. According to Jason Kenney, an Alberta Premier, the development of a new pipeline and associated federal laws and the recent talk of phasing out the oil and gas industry have caused an inhospitable environment for the companies such as Encana. Kenney said several companies like Kinder Morgan and now Encana have taken a hit in the past years. It leads to a mass exodus of forex reserves from Canada.
After struggling with regulatory complications for several years, Kinder divested its expansion project and Trans Mountain pipeline in 2018 for $4.5 billion to the federal government. In 2019, the company sold balance assets to Pembina Pipeline Corp.
Encana acquired Newfield exploration in late 2018 for $7.7 billion signalings to a 60% shift to the US. A senior analyst at Edward Jones, Jennifer Rowland said she is not surprised by the recent move of the company and reinvents it to offer rich rewards to the shareholders.