Suttles, 52, was chosen for his “strategic leadership capabilities, demonstrated communications skills, and track record of building strong organizations of similar size and scope,” Clayton Woitas, a board member for Calgary-based Encana, said in a statement today. Suttles replaces Woitas, who took over as interim CEO in January when Randy Eresman retired after seven years in charge.
Suttles was chief operating officer of BP’s exploration and production unit and the face of the company’s effort to halt the flow of oil after the April 2010 explosion at the Macondo field. BP and the U.S. Coast Guard ended yesterday the $14 billion operations to clean up hundreds of miles of coastline soiled by the largest offshore oil spill in U.S. history, the London-based company said in a statement.
Encana, which spun off its oil production business in 2009, has been redirecting spending to boost crude and liquids output after North American gas prices collapsed. The company is seeking to cut costs, sell assets and bring in partners to help fund development.
‘An Outsider’“It’s really key that he’s an outsider and the outsider is not someone in finance but in operations,” said John Stephenson, who helps oversee C$2.7 billion ($2.64 billion) including Encana shares at First Asset Investment Management Inc. in Toronto. The company needs to raise revenue and become self-funded and may be turned around within a year, he said.
Encana had its worst year in 2012, reporting a $2.79 billion net loss after writing down the value of gas assets because of declining prices. The company’s shares, which fell 32 percent during Eresman’s CEO tenure, fell 0.9 percent to C$18.75 at 12:02 p.m. in Toronto.
Suttles will lead a mid-year review next month to assess any required significant changes to the company’s 2013 capital budget, which will be announced with second-quarter results in July, he said on a call today with analysts.
“It will take some time before I am in a position to articulate a clear and concise vision for Encana,” Suttles said. “Our capital efficiency should be amongst the best in the industry and it should improve continuously.”
Encana is directing 80 percent of its capital budget this year to almost double production of oil and petroleum liquids while it keeps gas output unchanged. Gas prices have recovered from a decade-low in April 2012, settling at $3.80 per million British thermal units yesterday in New York.
Smaller Canadian producers, including ARC Resources Ltd. (ARX) and Peyto Exploration and Development Corp., spend less than Encana to produce gas because their operations are more concentrated and they’re not doing as much high-cost exploration, Chris Cox, a Calgary-based analyst at AltaCorp Capital Inc., said in a May 16 phone interview.
“What the company needs is to bring down its costs so it starts generating better returns on its natural gas business,” Cox said. Encana’s new CEO may sell assets or spin off divisions of the company, separating its U.S. and Canadian businesses, he said.
The company made its CEO choice after narrowing a list of more than 150 candidates.
“Doug stood out as the ideal candidate to lead Encana into its next phase of growth and development,” said Woitas, who the company has previously said will become chairman once the new CEO is in place.
Suttles has a degree in mechanical engineering from the University of Texas at Austin and worked for Exxon Mobil Corp. before joining BP. He coordinated BP’s drilling of a relief well to stop the Macondo leak and provided public updates for more than three months after the incident. Suttles returned to his prior role at BP in August 2010 after the well was shut.
Suttles left BP in 2011. He serves as a director of Ceres Inc. (CERE), a California biotechnology company, according to its website.
Suttles is among several BP executives named in a multibillion-dollar lawsuit by investors. The case, which is scheduled for an August 2014 jury trial in a Houston federal court, alleges the company and its executives hid the true size of the spill to limit the effect on the stock price. BP has declined to comment on the suit.
Source: Bloomberg News