CALGARY – The CEO of oil and gas giant Encana Corp. (TSX:ECA) said he believes Alberta’s incoming NDP government appreciates the importance of a healthy oilpatch.
“I think you’d almost have to be from another planet not to understand how important oil and gas is to Alberta and Albertans,” Doug Suttles said following the company’s annual meeting Tuesday. “I think clearly the industry’s having a tough time right now.”
At the meeting, Suttles fielded questions from shareholders about what the NDP election win could mean for the company.
One woman, who holds Encana shares in her retirement portfolio, said she was particularly worried about the NDP’s campaign promise to raise corporate taxes to 12 per cent from 10 per cent, putting Alberta on par with Saskatchewan and one percentage point higher than British Columbia.
“How are you going to going to combat this?” the shareholder asked.
Suttles replied that, so far, it seems the new government will be “cautious” about any changes.
The NDP said during the campaign it would also review the province’s royalty structure to ensure Albertans are getting their fair share of the province’s resource wealth. Shortly after her win, incoming premier Rachel Notley said she would reach out to executives to reassure them that no big decisions would be made without their input.
Notley said Tuesday those discussions have been “really good.”
“My guiding principle is the economic health of Alberta, job creation and maintenance, and as a result of that, the sustainability of the industry,” she said at the legislature in Edmonton.
Suttles said he and Notley had a brief chat over the phone.
“We just talked about meeting and making sure that the lines of communication and the contacts are open so that both the industry and government can talk about if there were policy change, what would be the impacts and implications of those changes?” he said.
Lately Encana has been focusing most of its spending on Texas and Western Canada, however, only about 20 per cent of its production comes from Alberta. A good chunk of that is on land that isn’t held by the Crown and wouldn’t be subject to provincial royalties.
Suttles said it’s too soon to say whether a hike in royalties would cause Encana to shift around its spending. He said he understands that people can get jittery about change, but “we all just need to take a deep breath and pause.”
In the days following the election, oilpatch leaders expressed a willingness to work with the new government, but some reactions have been more negative than others.
Last week, the president of Canadian Natural Resources Ltd. (TSX:CNQ), took aim at the plans to raise taxes and review royalties, warning “there are many alternatives for global investment.”
Asim Ghosh, the CEO of Husky Energy Corp. (TSX:HSE), meanwhile, said it’s “business as usual” for that company.
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