Encana is only the latest example of the exodus of capital since 2015
Encana’s announcement last week that it was acquiring Texas-based Newfield Exploration may be good news for the Calgary-based company, but it is not good news for Canada. It is the most recent chapter in an unfolding story of capital flight from the Canadian energy sector.
First the big internationals, and now Canadian-based firms like Encana, are moving their operations and/or capital budgets out of Canada and relocating their money to the U.S. and elsewhere. And it’s no mystery why. Thanks to government policies adopted by the governments of Prime Minister Justin Trudeau and Alberta premier Rachel Notley since their respective elections in 2015, Canada has become a less and less competitive place to invest and do business.
EnCana’s $7.7-billion deal for Newfield’s oil assets is its most recent U.S. acquisition. Encana had already made significant new investments in the U.S. in the Permian and Eagle Ford fields over the past three years. This spring Encana CEO Doug Suttles moved to the company’s Denver office, sparking fears that Encana’s head office — with its 1,000 employees in Calgary — may soon move with him.
Encana insists that this will not happen. We’ll see. Half its board of directors are now U.S.-based, and with the Newfield acquisition, 60 per cent of Encana’s production is now in the U.S.
Encana is only the latest example of the exodus of capital since 2015. Initially it was primarily large international companies. In 2016–17, seven international energy companies, including Statoil (Norway), Total (France), Shell (Netherlands-U.K.), Conoco Phillips (U.S.) and Marathon (U.S.), dumped all or most of their Western Canadian assets — over $37 billion in sales.
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