January 12, 2013 / 12:30 AM / 5 years ago

UPDATE 1-Encana says chief executive to retire immediately

* Encana CEO to retire immediately

* Board member to take duties while replacement sought

* Decision unexpected

By Scott Haggett

CALGARY, Alberta, Jan 11 (Reuters) - Encana Corp, Canada’s No. 1 natural-gas producer, said on Friday Chief Executive Randy Eresman will retire immediately, with board member Clayton Woitas taking over his duties until a permanent replacement is found.

Eresman’s decision was unexpected. He said in a release that he believes the company is financially and operationally sound and that Encana’s effort to move away from its focus on natural gas and produce more oil was on track.

“Now is the right time for me to step down and to turn over leadership of Encana to someone with the focus, drive and commitment to complete the transition,” Eresman, 54, said.

Eresman, who led the Calgary, Alberta-based company for seven years, faced criticism from investors because of a poor share price performance and U.S. Department of Justice probe into whether the company illegally colluded with Chesapeake Energy Corp to lower the price of Michigan exploration lands.

However, the company had begun to benefit from improving natural gas prices, and last month PetroChina agreed to pay C$2.2 billion ($2.24 billion) for a 49.9 percent stake in a prospective Alberta shale gas property.

“I think the strategy is reasonably well set, with the increased emphasis on liquids and ... given the joint venture they just signed,” said Randy Ollenberger, an analyst at BMO Capital Markets.

“The company is on the right track, but I suspect the market will react positively (to Eresman’s departure) just because it’s a change and, presumably some fresh eyes might perceive some additional opportunities.”

Encana shares closed at C$19.50 on the Toronto Stock Exchange. They have risen 4.8 percent over the past 12 months compared with an 8.3 percent drop in the exchange’s energy index over the period.

Interim-CEO Woitas is best known as the former chief executive of Renaissance Energy Ltd, a publicly traded natural-gas producer he left a few months before it was bought by Husky Energy Inc for C$4.3 billion in 2000.

He went on to found Profico Energy Management and sold it in 2006 to Focus Energy Trust for C$1.1 billion. He has been on Encana’s board since 2008.

Eresman will remain on the company’s board until the end of February in order to assist with the transition to a new chief executive, Encana said.

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