Connacher Oil and Gas Ltd. shares fell nearly 17 per cent in early trading Wednesday after the company shook up its executive team and said it would suspend its hunt for a joint venture partner for its Great Divide oil sands project.
Connacher stock fell 15 cents to 74 cents, a drop of 16.9 per cent, in early trading on the TSX as investors reacted to the company's latest moves – which also included a prediction of strong fourth-quarter operating and financial results.
The executive shakeup comes less than a month after the Calgary oil and gas producer and oil sands operator rejected an unsolicited takeover offer from an unnamed company.
The rejection came as one of Connacher's biggest shareholders urged a sale of the energy company.
No reason was given for the departures announced Wednesday, which included the exit of president and chief operating officer Peter Sametz.
Also going out the door were Richard Kines, the company's vice-president and chief financial officer, and Grant Ukrainetz, vice-president of corporate development.
Chairman and CEO Richard Gusella said he has assumed the responsibilities of president and interim chief operating officer, effective immediately.
"Mr. Gusella is in discussions with candidates for the position of chief operating officer and also intends to hire and appoint a new vice-president (of) production," the company said in a release.
Other changes in the management include appointing Brenda Hughes, formerly assistant corporate secretary, as chief financial officer, also effective immediately.
On an interim basis, Steve Marston, vice-president exploration and Merle Johnson, vice-president, engineering, will now report directly to Mr. Gusella, as will Connacher's refining, marketing and sustainability groups, the company said in a release.
Meanwhile, Connacher said preliminary information suggests the company will be posting strong results in its most recent quarter and expanding its previously announced capital budget for 2012.
"The gains are primarily due to a significant increase in crude oil and bitumen prices and continued strong performance by ... (the company's) heavy oil refinery in Great Falls, Mont," Connacher said.
Assuming current strong operational conditions persist, the company said it anticipates an expanded total capital spending plan, including its previously announced $37-million 2012 maintenance budget.
"The expanded capital program is primarily designed to boost 2012 bitumen production, which will still be ramping up into 2013, which will enable further volume growth," the company said.
Connacher projects that its 2012 exit rate for upstream bitumen and conventional sales will surpass 16,000 barrels of oil equivalent per day, up 15 per cent from the year-end 2011 level of 14,000 barrels.
"We expect the crude oil and bitumen price trend will continue in 2012, positioning us for attractive growth, solid results, increased capital spending and also planned debt repayment, as scheduled," Mr. Gusella said.
"With our positive leverage to strong bitumen prices, we can accomplish expanded plans without new financing arrangements, excluding any possible acquisition activity," he added.
Meanwhile, Connacher has decided to suspend its proposed Great Divide oil sands joint venture initiative, primarily as a result of its improved outlook for 2012 and the stronger financial results in the fourth quarter.
The process is expected to remain suspended until mid-February when it receives an updated reserve report from GLJ Petroleum Consultants.
Connacher initiated the Great Divide joint venture process in July just prior to significant challenges for the capital markets and the onset of the European debt crisis.
During the suspension, Connacher said it would revisit the proposed development plan and joint venture structure, taking into account improved pricing and stronger financial results along with regulatory approval delays and higher costs.
Connacher owns 100 per cent of two steam-assisted gravity drainage oil sands projects –– Pod Lake and Algar – at its Great Divide oil sands lease in northeastern Alberta.
The company also has conventional reserves, undeveloped land and production in central Alberta and owns and operates a 9,500 barrel per day heavy oil refinery in Great Falls, Mont.
Under steam assisted, or SAGD, technology, oil sands companies pipe steam underground to melt thick tar-like oil sands deposits.
The oil is then collected through a second pipeline and pumped to the surface.