Jim Kinnear has loomed large in creating modern Calgary-as a saviour of the NHL Flames, a volunteer with an affinity for sponsoring golf tournaments, and founder of Pengrowth Energy Trust in 1988. He gave up the CEO's job in September, shifting to a less hands-on role in the energy trust sector he helped build, and defended in vain against Ottawa's scheduled elimination of tax breaks in 2011. We caught up to him in Scotland, where he had just come off St Andrews' hallowed links.
Are you a native Calgarian? I was born in Toronto, grew up in Montreal, where I was in the securities business, and I've been in Calgary since 1980. When I moved here, I put all my furniture and belongings in a Jim Ryder truck, and drove it out. It's a Horatio Alger story-I didn't start with much.
Why leave Pengrowth now? In the first year we produced fewer than a thousand bb's [barrels of oil equivalent]a day. Now we're close to 80,000. So I'm retiring from day-to-day operations. I'm still on the board and I'm not retiring from business. We've got a company called Kinnear Financial. It will be involved with innovative financial solutions for the resource sector, focusing on small- to medium-sized firms. You'll hear a lot about it as time goes on.
Will this be a growth area? A significant growth area. I'm the guy who starts businesses and grows them. Not that there isn't potential growth at Pengrowth, but for the last three to four years we've been bringing in top executives at the senior level to manage it. It's a natural progression.
Will Kinnear Financial become a big company? We don't know. Maybe. We think there's a very good potential for our new business model in Canada, and maybe globally. We're starting from a small base. Of course, we started Pengrowth that way-$12.5 million was the value of our IPO.
Does the energy trust model still have a future? We're not sure. It's too early to say. I'm still optimistic. Of course, I'm biased because I am one of the founders of the whole sector.
How can you be hopeful in the face of the removal of tax benefits? Some trusts have announced conversions back to corporations, but the trust structure is a very efficient allocator of capital. When you have to pay a monthly distribution to unitholders, it puts a remarkable discipline on your business model. The trust sector has to focus on projects that are highly economic.
Was it a huge disappointment that Ottawa didn't buy that argument? Yeah, there was the big concern about the floodgate theory-that everybody would be forming a trust.
What is your greatest legacy? What we've done in the community. We got involved in the Saddledome and the Flames in 2000, when the team wasn't doing very well. They hadn't been in the playoffs for a few years, and they'd lost their title sponsor, Canadian Airlines. We came in to provide financial support when they needed it.
Will the Pengrowth name come off the Saddledome? We have until next summer on our existing 10-year term as title sponsor. Between now and then we'll be talking to the Flames organization about what happens next.
So will you actually have more free time? A lot of my friends have been saying "You're not retiring, Kinnear. You may never retire." Yeah, I'll still be very active. I might have a bit more time, but I'm on a couple of other boards, like the Banff Centre.
Do you still see yourself as a young guy? I'm 61, and I've got lots to go. Remember those great words of J.P. Morgan: "Do first-class business in a first-class way." That's our motto.
Do you want to play more golf in places like Scotland? The golf courses are there. Someone has to play them.