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The Incredible Shrinking Asset

|Includes: Suncor Energy Inc. (SU)
By Peter McKenzie-Brown
About 20 years ago I wrote a speech for Bill Hopper, who was then chairman and CEO of Petro-Canada. He had just taken on a one-year term as chair of the Canadian Petroleum Association (the CPA; now CAPP), which I then worked for.

The process was strange beyond imagination. Instead of simply going to his office to find out what he wanted to say, I learned at the last minute that I was to go with an entourage: CPA president Ian Smyth; vice president Hans Maciej; and my boss, Norm Elliott. Among the other members of the CPA’s board of governors, Hopper alone demanded that amount of attention. The interview took place in Hopper’s palatial offices in Petro-Canada Centre. Not surprisingly, the interview was a flop – a waste of time for all concerned.

This vignette is a reasonable caricature of the early years for the most controversial petroleum company in Canadian history. Especially under Hopper’s leadership, Petro-Canada set the national standard for self-importance, arrogance and underperformance. Although the worst times are long behind us, the company’s epitaph cannot be written without reference to those bad old days. In some ways, they were with the company to the end.

For example, if you believe that markets are inherently rational, try graphing the company’s share price to those of its peers. Every large Canadian oil company has done better than the People’s Oil Company, as it was once unaffectionately known.

When the crash came a year ago, Petro-Canada collapsed more deeply than most. This left it vulnerable to regime change, which quickly came in the form of a takeover encouraged by complaints from a large shareholder, The Ontario Teachers’ Pension Plan, which wanted to increase shareholder value.

Article continues here: languageinstinct.blogspot.com/2009/10/pe...

I own some of the successor to Petro-Canada, Suncor.