Several dissenters criticized the divorce of one of Canada’s largest corporations during yesterday’s special meeting of EnCana shareholders in Calgary.
But the few objections quickly drowned in the vast sea of support for splitting the energy giant into two separate companies.
More than 99% of shareholders supported the transaction, which will see the creation of an oil-focused company called Cenovus and the “new” EnCana, which will focus on natural gas.
EnCana CEO Randy Eresman, who’ll also head the “new” EnCana, called yesterday’s vote a “very exciting moment in the evolution of EnCana.”
Both companies, he said, “will be ideally positioned for the future” once the split becomes official Nov. 30.
But it was exactly this point that a handful of shareholders questioned during the meeting: will the two companies have a future or will they, because of their smaller sizes, become easier prey for deep-pocketed foreign-owned oil companies stalking the globe for fossil-fuel reserves?
One shareholder described the split as “one strong corporation that will result in two weak ones,” while another said he’s concerned one or both companies will swallowed up by another player and see the corporate headquarters leave Canada.
EnCana’s board chairman David O’Brien, who moderated the meeting, said a takeover is “certainly possible, but possibly not likely.”
He repeatedly stressed that “over time” the share prices of both companies will appreciate by enough to make the value of the two separate companies greater than the value of the old EnCana.
One factor that’ll weigh on the value of the new EnCana are stubbornly low natural gas prices, which have refused to rise in tandem with oil prices over the past year.
“We think over time, that this will clear itself up,” Eresman told reporters after the meeting. “There will be continued volatility. The markets have difficulty balancing themselves all the time.”
Benchmark NYMEX natural gas futures are trading at about $5 per thousand cubic feet. Eresman said he expects them to rise to about $6.50 over the course of next year.
EnCana’s CFO Brian Ferguson is poised to become CEO of Cenovus and head one of the country’s largest oil companies.
“From the moment of its creation, we expect Cenovus to be an industry leader,” he said, that’ll compete against the likes of Suncor Energy and Imperial Oil.
