February 22, 2018
The retiring CEO of Pengrowth Energy Corp. says Canadian oil and gas leaders have been too “shy” to speak out in support of their industry and he plans to help fill that vacuum as he leaves the job he’s held since 2009.
The disconnect between average Canadians and the industry in terms of pipeline and drilling technology safety, and their inability to see how importing oil hurts domestic producers, can in part be blamed on the inaction of industry leaders, said Derek Evans.
He blames himself as much as anyone.
“I think we’ve got far too many engineers and accountants running oil and gas companies that don’t feel we need to stand up,” the 61-year-old said in an interview with Canadian Press. “We need to create a real dialogue. That’s one of my hopes as we drive forward…. I just don’t think we’ve given it enough of a shot.”
Pengrowth announced this week that Evans, trained as a mining engineer, would be replaced by oil sands industry veteran Pete Sametz, a mechanical engineer and former interim CEO of oil sands producer Connacher Oil and Gas Ltd. Evans said he will adopt an advisory role during the CEO transition, then take a few months off before looking into an as-yet-undefined way that he can become an advocate for the oil and gas industry.
He said his time at Pengrowth since taking over as CEO from founder Jim Kinnear was a “roller-coaster” with more than $2 billion in oil and gas acquisitions in the first three or four years while oil prices were strong and about the same amount in asset sales over the next few years to pay down debt as oil prices plunged.
The dramatic size changes are reflected in the space it occupies in a downtown office tower — varying from 12 floors and more than 1,000 staff in 2012 to nine floors and 560 staff in 2016. Evans said the company’s workforce is slated to fall from about 175 now to about 125 people by mid-year as it completes the paperwork involved in a series of asset sales last year and pares workers who aren’t needed for development of its two main projects.
The workers are all expected to fit on one floor. In January, the company announced a 2018 capital expenditure budget of $65 million to grow from 19,000 barrels of oil equivalent per day to about 23,000 boe/d.
In Evans’ first budget after becoming CEO in 2009, it said it would spend $285 million to reach production of 75,000 boe/d. Evans said he feels his job is done and its appropriate that someone else take the helm.
“I was hired to transform the company from a pretty sleepy trust that acquired assets and distributed all the cash flow,” he told Canadian Press. “We’ve gone from an asset base with a huge amount of geriatric assets in it — everyone else’s mature production — down to two assets… that today represent 90 per cent of our production and 95 per cent of our reserves.”
Most of Pengrowth’s spending this year is geared to adding incremental production at its Lindbergh steam-driven oilsands project in eastern Alberta and further developing its Groundbirch Montney liquids-rich natural gas play in northeastern B.C. Pengrowth repaid $1.3 billion in debt in 2017, mainly by raising $984 million by selling assets producing 31,500 boe/d, but analysts say it still owes too much to demonstrate the financial flexibility it should.
Evans said he agrees with the criticism but believes that stronger oil prices will allow it to complete repairs of its battered balance sheet.