Encana Corporation (ECA - Free Report) recently announced that 90% of its shareholders have voted in favour of the reorganization resolution wherein it intends to redomicile in the United States under the new name, Ovintiv Inc. The company had earlier confirmed the plan to relocate.
Through this restructuring, Encana with approximately 71% of its shareholders in the United States and 20% in Canada will effectively exchange five common shares of Encana for each Ovintiv common stock.
The transition will take place this year after which, shares of the company will be dually traded on both the Toronto and New York stock exchanges under the ticker symbol, OVV.
Oil production is surging in Canada but producers are far from happy as their profit margin is sinking. They are struggling to stay competitive due to pipeline bottlenecks. Notably, pipeline construction in Canada failed to keep pace with the rising domestic oil, forcing producers to sell their products at a discounted rate.
Despite the distress in Canada’s oil industry, Encana’s move to switch its head office from Calgary to Denver will enable it to avail of larger avenues of capital resources for investment including the U.S. index funds and passively regulated accounts as well as create a better connectivity with its U.S. peers.
In a similar news in 2018, another company from the oil and energy industry got rechristened. Statoil ASA, a Norway-based major international integrated oil and gas company rebranded itself as Equinor ASA (EQNR - Free Report) . The company’s board of directors wanted to chuck out "oil" from its name, expecting this strategic action to reflect the player's growing interest and reach beyond petroleum.
Encana, one of the leading North American oil and natural gas exploration and production (E&P) entities, was founded in 2002 through the merger of Alberta Energy Company Ltd. The company is expected to release fourth-quarter 2019 results shortly. The current Zacks Consensus Estimate for the to-be-reported quarter is earnings of 16 cents on revenues of $1.9 billion.
Zacks Rank & Key Picks
Encana currently carries a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include Cenovus Energy Inc. (CVE - Free Report) and Suncor Energy Inc. (SU - Free Report) , each carrying the same solid Zacks Rank as Encana. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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