Accountability Capital Urges Underperforming Canadian Oil and Gas Companies to Prioritize Shareholder Return
December 14, 2017
Many Canadian oil and gas companies have seen their share price decline at least 50% so far in 2017. These companies (which include Crescent Point, Cenovus, Peyto, Baytex, Bonavista, Seven Generation and others) tend to have debt-heavy balance sheet, high cost structure/low margin operations, or lack of credibility in the capital markets as they often over promise and under deliver.
It is time for these companies to re-build shareholder confidence by prioritizing shareholder return rather than production growth, for instance. Boards must ensure management is aligned with shareholders’ interest. This means no stock options especially at these depressed share price levels. It also means curtailing bonuses and other incentives until significant earnings improvement and/or debt reduction is achieved.
Our message and advice to these companies’ boards and managements is simple: in order to attract capital and re-gain shareholder confidence, you must deliver on share price performance by pursuing strategies that enhance value for shareholders. Leadership changes may be necessary to achieve this objective.
Accountability Capital is the leading active investment holding company in Canada. Our objective is to drive positive result by engaging boards and managements, and working to change the leadership of underperforming companies, when necessary. We believe there are too many directors who fail in their number one priority which is to work for the benefit of shareholders and to increase shareholder value in a timely manner. Entrenched, inept and arrogant directors often enable poor strategy or execution by management and lead to share price destruction.