Encana Corp., which has undergone a corporate restructuring for much of the past year, has scheduled a conference call for early Wednesday without giving details of the topic, suggesting it may announce a major transaction.
Encana, the country’s largest natural gas producer, said it would issue a news release before the stock market opens. In recent months the company has sold assets in the United States and begun the process of spinning off its Canadian royalty lands in an initial public offering that could raise as much as $860-million in proceeds.
Company spokesman Jay Averill declined to give details. The conference call is scheduled for 6:00 a.m. MT.
Encana chief executive Doug Suttles has been clear about his intentions to build the company’s oil and natural gas liquids production. These products, in recent years, have fetched far better prices than dry natural gas, which remains the heart of the Calgary-based company’s business.
Given Mr. Suttles’s leanings toward oil and natural gas liquids, one banker said he would not be surprised to see an asset acquisition involving those more lucrative commodities, and that Encana had the financial wherewithal to do a deal in the billions of dollars.
However, it would represent a shift for Mr. Suttles, a former BP executive, from what he has done since taking the helm at Encana nearly a year ago. Last year, he sketched out a new strategy that featured a sharp reduction in the number of properties in North America on which it deploys large chunks of capital.
Encana is in the process of spinning off roughly 5.2 million acres of land into a new company, dubbed PrairieSky Royalty Ltd. Encana expects to rake in between $747.5-million and $861.3-million through the initial public offering, while retaining about 75 per cent of the new company.
This deal is the most significant strategic move Mr. Suttles has made since taking over last summer.
He revealed his new plan last November, announcing plans to focus on five plays in North American, down from about two dozen. Mr. Suttles declared the company’s operations in the Montney in northeast British Columbia and northwest Alberta; the Duvernay in west central Alberta; the DJ Basin liquids play in Colorado; San Juan oil zone in northwest New Mexico; and the Tuscaloosa marine shale in Mississippi and Louisiana.
This November makeover marked the third time in three years Encana rewrote its plans. Mr. Suttles then planned to consolidate its offices in Calgary and Colorado, while shutting an office in Texas.
Encana’s 2014 budget, released in February, allowed for $2.4-billion (U.S) to $2.5-billion in spending. At the end of 2013, Encana had about $7.1-billion in debt on the books, according to its annual report. Its debt is 2.5 times its adjusted earnings before interest, taxes, depreciation and amortization, the report said.
The company also has operations in British Columbia’s Horn River; Alberta’s Bighorn; and its Deep Panuke property off Nova Scotia’s shores. In the United States, it controls land in the Collingwood/Utica shale, Haynesville, Jonah, and Piceance plays.