Wednesday July 23, 2014

Imperial Oil says CEO switch not related to cost overruns at Kearl oilsands mine

Outgoing Imperial Oil CEO Bill March, right, and incoming CEO Rich Kruger speak to the media in Calgary, Alta., Thursday, Feb. 21, 2013.THE CANADIAN PRESS/Jeff McIntosh

CALGARY - A sudden leadership change at Imperial Oil Ltd. had nothing to do with a recent $2-billion cost overrun at the company's Kearl oilsands mine in northern Alberta, the outgoing CEO said Thursday.

Bruce March, 56, is leaving Imperial (TSX:IMO) to run parent company ExxonMobil Corp.'s global chemical operations after nearly five years in the role.

Taking his place is Rich Kruger, the 53-year-old president of ExxonMobil Production Co. who moved up through the ranks in postings throughout the United States, as well as in the former Soviet Union, Africa and Southeast Asia.

The change becomes official on March 1.

"Rich is the right person at the right time at the right company. I can't think of a better guy that I could have any more confidence in than him," March said of Kruger.

The two men have been friends for 10 years.

The transition was "not at all" related to an announcement last month that the first phase of the massive Kearl oilsands mine will cost $12.9 billion, up from a previous estimate of $10.9 million. The project was initially expected to cost $7.9 billion.

Imperial faced legal and regulatory delays in bringing enormous pieces of South Korean-made equipment to the mine site, which were shipped across the Pacific and then through the United States and Canada by river barge and truck.

The 200 modules had to be broken up into smaller pieces so that they could be transported along interstate highways in Idaho and Montana and then put together again near Edmonton.

That work added to the pricetag, as well as harsh winter weather around Fort McMurray while final construction work was being completed.

Kearl is expected to start churning out oil by the end of the first quarter, March said.

He said other factors went into the leadership change announcement, such as the timing of his entrance into the new role at ExxonMobil Chemical Co., which operates in 11 countries.

Kruger added that it's "very natural, logical timing," given where Imperial is with major oilsands projects.

"If you look at the stage of where Imperial is, with the first phase of Kearl being completed here, and now the startup imminent, this is very natural and timely for what we're doing," he said.

"At ExxonMobil and Imperial, we plan succession well in advance."

Exxon Mobil owns about 69.6 per cent of Calgary-based Imperial's common stock, which is listed on the Toronto Stock Exchange.

Imperial is one of Canada's largest oil and gas companies, worth about $36 billion.

Kruger has a mechanical engineering degree from the University of Minnesota and a master's degree in business administration from the University of Houston.

The Minnesota native said he's looking forward to living in Calgary.

"I had hockey skates on at the earliest age and had a stick in my hand," he said.

March, from New York State, said he'll leave Calgary with fond memories, pride in Imperial's safety performance and no regrets.

"I honestly don't really have anything that I regret or I'm disappointed in," said March.

Kruger said not to expect big changes between his management style and his predecessor's.

"I think you'll find that Bruce and I are cut from the same cloth in that regard. You don't need a great memory if you always tell the truth and you tell it straight and we've been developed in the same business model and in terms of honest and ethical behaviour and everything that goes along with that," he said.

"We are all about value, value for the shareholder and doing that in a long-term, safe, environmentally sound, sustainable way. So I think other than some personal style differences that are just natural between individuals, I don't think you'll see a material change in how Bruce and I see the business and approach the business."

Imperial shares fell 27 cents to $42.55 Thursday on the Toronto Stock Exchange.


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