It should have been the crowning career moment for Rick George, who proudly sported his Order of Canada pin yesterday as he announced retirement from 21 years of building a Canadian energy champion.
But there was an elephant in the room at his press conference, held at the Westin hotel in downtown Calgary. Despite an oil price that is back to $100 (U.S.) a barrel, Suncor Energy Inc.’s stock is down more than a third since the beginning of the year, and almost 60 per cent from its high-water mark in May, 2008.
Even as Suncor’s chief executive officer bolstered his status as the industry leader in the oil sands – and a strong voice in the environmental debate – investors were delivering a harsh judgment on the last months of his stewardship.
“The fact [Suncor]has not got recognition in the stock market is not something I feel great about,” Mr. George, 61, said Thursday. People who know him says he is intensely frustrated by the market’s assessment. It shows markets are mercilessly fickle, with the capacity to crash the retirement party of the most successful Canadian energy executive of the past two decades.
It was also a reminder that Mr. George’s 21-year tenure – which ends at Suncor’s May annual meeting – has always been an adventure. He was not always the cool customer he seemed. Often, he was scrambling and throwing Hail Mary passes. Nearly as often, he connected.
CEOs count themselves lucky to pull off one game-changing play in a career. Mr. George had three – when he rescued sad-sack Suncor in the early 1990s; when he made a big bet on the oil sands in the late 1990s; and when he bought Petro-Canada in a $19-billion deal in the depths of the 2008-09 meltdown.
The Petrocan deal was seen by some as a desperate act. Suncor and Petrocan had talked a number of times about merging but never could pull the trigger. Then, in the midst of a brutal recession that took the price of oil from $147 to less than $40, they were forced to the altar. Suncor was reeling from declining demand and too much debt. Bulking up would provide the scale to finance spending plans, however reduced in scale.
He pulled off the merger, and the timing was right. In time, oil prices moved up again. Yesterday, Mr. George said it was “the most successful merger in the history of the country.” A more sober assessment: It was a smart deal, but absolutely necessary in preserving his legacy.
Two years later the company is still coping with some of the inefficiencies of merging. “Internally, in the company, we no longer even discuss the merger,” Mr. George said yesterday, but clearly investors are still interested.
All the time, he was a non-conformist swimming against the tide of conventional wisdom. “If you don’t make those tough decisions, you will never get anywhere,” he said, and there were clearly some bad guesses – like a $100-million losing investment in Australia.
But on the big stuff, he guessed right. “He recognized the potential of the oil sands before others did, and he positioned the company well,” says Mike Tims, chairman of Calgary investment bank Peters & Co.
Although he ran a company synonymous with Canada, Mr. George was actually born in Brush, Colo. He was an engineer and lawyer who climbed the ladder at U.S.-based Sun Co. and joined its Canadian arm, Suncor, to salvage a mess – a struggling oil sands business and a string of gas stations and other operations.
He moved hard and fast, introducing technologies to create greater efficiencies. But the turning point came in January, 1999, when he persuaded Suncor’s board to make a $3.4-billion investment in the Millennium oil sands project in Fort McMurray. It was based on a confidence that, sooner or later, the oil price would rise above the then $12 (U.S.) a barrel.
“Rick was always an optimist,” says Mike Ashar, a Suncor executive for many years and now president of Irving Oil Ltd. Luck, good and bad, played strongly in his story. Just two months after the board’s go-ahead for Millennium, the price of oil bottomed and started its ascent.
Mr. George and Suncor prospered, and he became much more than an energy executive, but also an industrial statesman – as a leader of the North American Competitiveness Council, the Canadian Council of Chief Executives and the Governor-General’s Leadership Conference. In these roles and others, his quiet persuasiveness and optimism were effective.
“He’s very competitive, he’s extraordinarily competitive, but I’ve never met anybody who is so good at galvanizing a room in a common cause,” says Jim Prentice, the former federal environment minister and now vice-chairman of Canadian Imperial Bank of Commerce. “He has a gift for inspiring a group of people to work together as a team.”
Throughout his tenure, Mr. George has worked hard at building the brand as an environmentally-aware company. Ed Whittingham , executive director of the Pembina Institute, an environmental think tank, says Mr. George created a major energy company while taking a leadership role in environmental technology and renewable energy.
But Mr. George has been living a paradox, said Mr. Whittingham , in trying to run a sustainable company while producing oil that has a more intensive environmental impact than other energy forms. “Suncor is fundamentally an oil sands company now,” he says.
Mr. George has pursued the goal of a cleaner oil sands, but the industry is under intense pressure, reflected in the shelving of the Keystone XL pipeline project and the rising tide of opposition in Europe and the U.S.
There is never a perfect time to retire, and Mr. George would prefer to go out on a stock-market high. But investors are leery of Suncor’s cost structure, the pace of merger integration, and its reliance on old oil sands mining technology (although Mr. George has moved increasingly into projects that use steam-assisted gravity drainage, or SAGD.) When the Petrocan deal was done, the board wanted him to stay on to finish the job. Mr. George agreed to a three-year transition, while his successor Steve Williams, the chief operating officer, was working with him.
Mr. George is an ardent hunter and fly fisherman who has a place in Montana. But he emphasized yesterday he would stay in Canada, and get involved with smaller companies and new technologies. He and his wife Julie, who have been married 40 years, are now “proud Canadians.”
With files from reporters Carrie Tait, Dawn Walton, Shawn McCarthy