Going through the Kimmeridge activist deck (err short report?). And they make concise points that I think are black and white 1) poorly timed deals that chase the market 2) governance issues and executive comp. A couple other underlying things

That I observed w/ Canada focus. There also needs to be hard look at how they are structuring their organic growth as well. They have consistently relied on JV’s and third party infrastructure and its neutering their upside and the ability the navigate their forward strategy.

Cutbank ridge partnership w/ Mitsubishi is a good example. Spends years building a valuable land position then give away WI for a upfront payment and some carry? They did the same thing with PetroChina in the Duvernay only to unwind later.

Flash forward and this play should be getting way more capital but it doesn’t because it doesn’t have enough scale (only 60% WI). On top of everything, despite ECA being one of early movers in shale, they can’t build their own gas plants or G&P? Why encumber your assets this way?

There is absolutely no reason why they couldn’t have built/financed their own facilities. It’s not technically hard and they had access to capital. Instead they make shortsighted decisions (gimmie cash right now) that impairs the future. CBP has some amazing lands and they

Won’t be properly capitalized now. So what does Ovintiv do? They shift to Pipestone Montney and repeat the same errors (now with Keyera). The midstreamer’s must love them.

IMHO their board & execs seem to make decisions based on short term thinking. Constantly chasing deals, last to party, etc. so why is that? My pet theory is b/c of confluence of circumstances. Hire US CEO in ‘13 combined w/ a backdrop thinking is anti-energy starting in ‘14

This set-up a perfect scenario with a CEO pre-disposed to the US and a board anchored in their false bias against Canadian E&P. The pace of purchases in the US seemed frantic almost like they wanted to dilute Canada asset concentration as quick as possible and they overpaid

This US shift is also supported by the fact they used third party processing build outs for Canada expansions probably to conserve cash for continued US deals. Postmortem is encumbering the Montney to overpay for US assets that drastically underperformed expectations

Can I point to anything positive? The Montney is still a top tier play and the new President (McCracken) seems like a big asset.

And finally the smartest person at OVV is the anon person who negotiated the fixed $7.7b IFRS capitalization gross-up in 2011 that basically makes it impossible to get offside on credit facilities. I salute you