TransCanada veteran Alex Pourbaix has been named as the new chief executive officer of Cenovus Energy.The Associated Press
Cenovus Energy Inc. surprised investors by appointing a former pipeline executive with no operational experience in the oil sands to lead the company's turnaround effort.
Cenovus said on Monday that onetime TransCanada Corp. chief operating officer Alex Pourbaix will take over as president and chief executive officer starting Nov. 6, replacing Brian Ferguson in the top job at the Calgary-based oil sands producer.
The appointment is a step out for Mr. Pourbaix, 52, a lifelong TransCanada employee best known for leading the company's initial bid to gain approval for its contentious Keystone XL pipeline in the United States. The project was subsequently approved by U.S. President Donald Trump.
He inherits the CEO job at Cenovus as the company struggles with investor blowback tied to its pricey acquisition last spring of oil sands and natural-gas assets from ConocoPhillips Co.
Mr. Ferguson had led Cenovus since it was founded as an oilfocused spinoff from Encana Corp.
in 2009. He announced his resignation from the company in June, pressured by a nosediving share price and widening criticism that the company had piled on too much debt to fund the $17.7-billion deal.
A spokesman for Cenovus said Mr. Pourbaix was out of the country and unavailable for interviews on Monday. In a release, the company highlighted his 27 years at TransCanada, including development of its power and oil-pipeline business.
But the appointment surprised analysts and investors, many of whom had expected the company to hire from a competitor in the oil sands, given its increasing focus in the region. The search by headhunting firm Korn Ferry had included external and internal candidates.
"I think that we did expect somebody with some oil sands experience, and certainly [exploration and production] experience," said Laura Lau, a senior portfolio manager at Brompton Funds in Toronto.
Cenovus shares traded flat in Monday's session on the Toronto Stock Exchange, even as West Texas intermediate oil climbed above $54 (U.S.) a barrel.
The stock is down almost 30 per cent from levels in March, when the deal with ConocoPhillips was announced.
The company is one of three major Canadian players that have consolidated holdings in Northern Alberta. Rivals Suncor Energy Inc. and Canadian Natural Resources Ltd. have also made multibillion-dollar acquisitions, hoping to trim costs as crude prices stay choppy.
It is unclear how Cenovus's strategy might change under Mr. Pourbaix. Mr. Ferguson's last day in the role is Nov. 2, and several analysts said on Monday they did not expect a major shift in priorities.
Hiring a non-oil sands executive signals the company is committed to debt reduction and expanding operations in both the oil sands and its newly acquired lands in the Deep Basin region of Alberta, Barclays PLC analysts, led by Paul Cheng, said in a note to clients.
"In this light, our expectation is that Mr. Pourbaix could offer fresh perspective on non-essential activities and expenditures, especially on the corporate level (which we feel is still relatively bloated at CVE despite recent cost reductions)," the analysts said.
Cenovus is expected to announce a deal for its carbon-injected Weyburn oil project in coming weeks, adding to $2.8-billion (Canadian) in sales proceeds the company has generated since March. It has also indicated it could sell some infrastructure in the Deep Basin, seen by some as a departure from its core business in the oil sands.
Investors are also looking for deeper changes from Mr. Pourbaix, including a renewed focus on shareholder returns, Ms. Lau said.
The market will "give him a chance and see what happens," she said.
"You certainly need fresh eyes on this company, there's no doubt about that."