The Calgary Herald: Generation Next: There’s a changing of the guard taking place in the oilpatch.

A seismic shift is taking place in the boardrooms of the country’s biggest and most powerful energy producers as new CEOs take control of the oilpatch

Deborah Yedlin, Calgary Herald
Published: Sunday, June 03, 2007

The first sign, was the departure of of EnCana Corp. one of North America’s largest independent oil and gas companies in 2005, and his replacement by a much younger (48) — and very different — Randy Eresman.

Not long after, Hank Swartout, chairman, president and chief executive of Precision Drilling, one of North America’s foremost land drillers, decided to hand over the position of president to his 30-something son-in-law, Gene Stahl.

Earlier this month, Swartout said he was leaving the company entirely.

Clive Mather, the chief executive of Shell Canada is also leaving his post — but that move is arguably more the result of Royal Dutch Shell buying the minority stake in Shell Canada than it is anything else.

The most recent chapter in the book of oilpatch succession was the announcement Wednesday by Talisman president and chief executive Jim Buckee, 61, that he is leaving the post he has held for the last 16 years.

Each of these departures raise the question: Who might be next to call it quits and how are companies preparing for the inevitable?

After all, it’s not like the individuals running these outfits are getting any younger, especially in the world of big caps — companies with market valuations of more than $5 billion. Add to this the hundreds of millions in unexercised stock options for many executives at the top and it’s not a stretch to suggest that within the next two years what has been a steady stream of departures will turn into a virtual torrent of exits among the elder statesmen of the oilpatch.

They will be leaving behind an energy world that is very different than the one in which they began their careers.

When Morgan started as an engineer with EnCana’s predecessor company, Alberta Energy Co. more than 30 years ago, natural gas was still a regulated business. The oilsands were barely on the radar screen. Conventional production — for both oil and natural gas — ruled the day. National oil companies were insignificant players on the world’s energy stage. And the royalty trust had yet to be invented. Leaders like Morgan dealt with the fallout from the National Energy Program, the collapse in oil prices in 1986 and 1998, a stock market crash in 1987 and of course, the horrors of 9/11.

Nevertheless, it was a time in which energy companies used huge amounts of capital for mergers, acquisitions and exploration activities.

The new generation of oilpatch leaders face a western Canadian basin that is increasingly yielding smaller pools of oil and natural gas reserves. As a result, they are being increasingly pushed into the unconventional world — be it oilsands, deep gas in the Alberta foothills or the Gulf of Mexico, or oil in politically charged parts of the world where the competition comes in the form of NOCs with unlimited chequebooks and political agendas. In other words, the skill set needed by the oilpatch’s Generation Next will need to be different than that brought to bear by their predecessors. Not only is the environment more challenging, the human resources side of the equation demands different capabilities than it did as little as a decade ago.

Looking at the significant departures that have taken place so far, it appears the succession planning that is arguably aimed at keeping companies competitive in this new environment has taken three distinct forms. In the case of EnCana, the company promoted from within.

When Eresman was named chief operating officer in 2002, it was a clear indication of who was in line to replace Morgan. Those who thought they might have been in the running, like EnCana president of offshore and international operations, Dave Boone, left. That left Eresman to be mentored by Morgan.

A different story has unfolded at Precision Drilling.

In fact, there was much chatter around town when Stahl was parachuted into the presidential suite, having run a very minor division that accounted for two per cent of company revenues at the time.

Eyebrows and questions were raised about the effectiveness of Precision’s board; talk to anyone in the recruiting business and they will tell you one of the most important tasks a board undertakes is to find a new person to run the company.

Talisman, unlike EnCana and Precision, opted to go outside to find a replacement for Buckee. The board engaged a headhunter who literally scoured the globe and came up with John Manzoni — who is from BP PLC. The odd twist here, of course is that BP was where Buckee began his storied oilpatch career.

After this week’s surprising news at Talisman, the obvious question is who’s next?

© The Calgary Herald 2007

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