CALGARY/HOUSTON (Reuters) - Encana Corp (ECA.TO) named former BP Plc (BP.L) executive Doug Suttles, who played a major role in responding to BP’s disastrous 2010 Gulf oil spill, as its new chief executive on Tuesday as Canada’s largest natural-gas producer searches for a new course following years of strategic missteps.
Suttles, a nearly three-decade veteran of the oil and gas industry, is taking the reins from interim CEO Clayton Woitas, a board member who replaced former CEO Randy Eresman temporarily when Eresman left the company unexpectedly in early January. Suttles was also named an Encana director.
Encana shares have dropped 41 percent over the past two years as the company weathered low gas prices and a balance sheet weakened by a focus on growth despite falling revenue. Investors will look to Suttles to reverse the company’s course, but no one expects quick moves.
“It will take time to turn the ship around so I don’t expect miracles,” said John Stephenson, a portfolio manager at First Asset Investment Management, which owns Encana shares. “But I think it’s really positive. I think it good that he’s an outsider. Taking someone off the bench (internally) would have viewed much more negatively.”
Indeed, Suttles said he plans to study Encana, which operates in Canada and the United States, before making any decisions on where he’ll take the company.
“My goal over the coming months is to gain an in-depth understanding of the company’s assets, capabilities of the staff, and how we are currently performing in each of our key areas,” he said on a conference call. “With that understanding ... I will be in a position to formulate a compelling vision for Encana’s future.”
Eresman led Calgary, Alberta-based, Encana for seven years. He faced criticism from investors over strategic changes that included spinning off the company’s oil operations as oil prices strengthened and accelerating natural gas production even as new shale-gas supplies flooded the market and pushed prices down.
Encana also faces a U.S. Department of Justice probe into whether the company illegally colluded with Chesapeake Energy Corp (CHK.N) to lower the price of exploration lands.
Suttles was one of BP’s most prominent public faces in the weeks after the disastrous 2010 oil spill in the Gulf of Mexico, when the company’s deepwater Macondo well ruptured and spewed more than 4 million barrels of oil into the sea over nearly three months.
As chief operating officer of the company’s exploration and production division, he was involved in efforts to try to cap the well, and fielded hundreds of questions about what went wrong and about BP’s frenzied and failed efforts to stop the flow. He also directed the clean-up effort.
Among the most high-profile failures were the so-called “top kill” and “junk shot” attempts in late May 2010, after the well had been spewing for more than a month. The top kill, publicly described by then-CEO Tony Hayward as having a 60 percent to 70 percent probability of pushing back the oil, involved pumping drilling fluids heavier than oil into the well so BP could then plug it.
The junk shot, which came amid the top kill attempt, injected solid materials such as rubber balls, shredded fibrous materials and metals into the well. The effort was to last 48 hours, but stretched over nearly four days until Suttles appeared at a news conference to concede it had failed.
“I can also say this scares everybody. The fact that we can’t make this well stop flowing, or we haven’t succeeded in that so far,” he said at the time.
Suttles, a mechanical engineer, retired from BP in January 2011 after more than 22 years with the company. He had been COO of global exploration and production since 2009. Before that he was president of BP’s Alaska division, having been appointed in 2007, the year after two crude oil spills from BP’s pipeline operations there.
Encana shares were down 16 Canadian cents at C$18.74 at midday on the Toronto Stock Exchange in a market that was sharply lower.
Additional reporting by Euan Rocha; Editing by Peter Galloway