Ovintiv faces investor test on shale after rebranding from Encana
TORONTO (Bloomberg) - The oil and gas producer formerly known as Encana Corp. has completed its corporate overhaul with a new domicile and a new name. It has yet another hurdle to cross.
Now based in Denver, Ovintiv Inc. will update investors Wednesday on its progress for the shale oil assets in Oklahoma it amassed after the $5.5 billion acquisition of Newfield Exploration Co. in 2018. The Stack and Scoop fields in the Anadarko Basin have faced investor scrutiny and operational challenges that sent a handful of small explorers into bankruptcy. The company is also set to host a tour of its Stack operations Thursday.
“We think the focus will be on steps the company has taken to reduce well costs and improve returns to make the play more competitive with other resource plays in North America,” said JPMorgan Chase & Co. analyst Arun Jayaram in a report. “The company will likely face stiff headwinds ‘selling’ the play to the market given the sharp pullback in activity by industry.”
Before its name change, the Canada-listed shares of Encana had been falling for a decade as it faced a rout in commodity prices and a pipeline bottleneck in Alberta. Its purchase of Newfield didn’t help as it reversed course on a strategy of slimming its oil and gas portfolio.
And as Ovintiv started trading with the new symbol OVV in the U.S. on Monday, the shares haven’t done much better -- dropping 9% over two days.