As many as 90 percent of Encana shareholders voted in favor of the company's proposed renaming and move to the United States as the company seeks to improve its access to more investment capital in index funds and passively managed funds, Encana said.
The new name of the oil company will be Ovintiv and its headquarter will be in Denver, Colorado.
"We are extremely pleased with the vote of confidence from our shareholders today. With 90% of our securityholders voting "FOR" the resolution, there is clearly support for our efforts to expose Ovintiv to the deeper pools of capital in the U.S.-capturing the value we know exists within our equity," chief executive Doug Suttles said in the company statement. "We will continue to focus on innovation and efficiencies throughout our operations, delivering the financial and operational performance our shareholders expect."
According to the company, the move will not have any impact on day-to-day operations in Canada, where Encana/Ovintiv has an extensive presence in the Montney shale patch. Most of the company's assets, however, are in the U.S., spread across the shale patch.
Encana has been expanding this presence, too. In 2018, it struck a $5.5-billion deal to acquire Newfield Exploration, which catapulted it to the ranks of the largest shale operators in the country.
While the shareholder support for the move to the south was understandably welcome by the management, it also speaks volumes about the investment environment in Encana/Ovintiv's home country. This environment has drawn a lot of criticism from the industry as tight energy sector regulation and bleak growth prospects combine to discourage investors from staying in Canadian oil.
However, the majority of Encana's shareholders-over two-thirds-are in the United Stats anyway, according to Bloomberg data, so it makes sense for the company to go where its shareholders are, despite criticism that the move won't solve all of its problems.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More