The Swan Hills story
Patricia Lee was not the only geologist to find this massive field
Patricia Lee, now famous for her sustained conviction that the Caroline Swan Hills area was host to at least 1 Tcf of natural gas and the winner of the prestigious Stanley E. Slipper award so prized by geoglogists, began her storied career after graduating from McGill in 1978 and joining Shell’s team. After years of doggedly advising Shell of the potential of this unique basin - and against the views of most geologists of the day - she eventually persuaded Shell to drill an exploratory well in the formation in 1985 that found significant natural gas. Shell went on to buy up some 55% of that acreage and it became one of the largest natural gas finds in Canada comprising as much as 10% of Alberta’s total natural gas and 15% of the Province’s condensate reserves. Ms. Lee earned her place in history through diligence and persistence and her discovery contributed billions of dolllars to Shell and to the province of Alberta.
A lesser known executive named JimPletcher was employed by Numac Oil & Gas Ltd. (“Numac”), a company founded by legendary oilman Bill McGregor. Pletcher was in charge of “special projects” in Numac, and one of those projects was a proposal to buy from Encor Energy that company’s acreage in Caroline Swan Hills. Pletcher made the proposal at a board of directors meeting of Numac on December 6, 1988, my 43rd birthday. I was at that meeting, at the time as President and Chief Executive Officer of The Enfield Corporation Limited (“Enfield”), the largest shareholder of Numac with an approximate 42% interest. I was the founder of Enfield and held an approximate 17% interest in Enfield. I had caused Enfield to purchase its Numac interest in 1988 for about $100 million.
After hearing the presentation which set out the size and scale of the natural gas field in Caroline Swan Hills (with amazing accuracy given how little was then known about the field) I brought a motion to authorize Numac to bid up to $80 million for Encor’s 6.58% interest in the field operated by Shell.
Pletcher’s proposal laid out the expected reserves in the field which was described as 22 miles long and only 1.5 miles wide but containing 2 TCF of natural gas and considerable condensate and natural gas liquids at 155 barrels per million cubic feet of gas. Numac did ultimately buy an interest in Caroline Swan Hills which has turned out to be a bonanza by any measure.
The following year, on July 20, 1989, Canadian Express Limited (“Express”) - a 29% shareholder of Enfield, surprised the Enfield annual meeting by nominating Timothy Price (“Price”) from the floor of the meeting to replace me as a director. I chaired the meeting and on advice from Osler Hoskin & Harcourt, Enfield’s corporate counsel, disallowed the votes for Price and a brouhaha erupted that lasted 16 years. Immediately following the meeting, the Tory law firm acting for Express brought a successful motion to have me enjoined from acting as a director while the legality of the votes for Price was litigated and I filed a shareholder requisition for the directors to call another shareholder meeting where fully-informed shareholders could decide the composition of the board. At that meeting, on October 31, 1989, Price was elected and I was removed from the board. In the interim Express and its supporters kept buying shares and had a majority by the meeting date.
Before the shareholders’ meeting, I brought actions for libel, wrongful dismissal and illegal takeover (alleging that Express, Conrad Black (through Ravelston Corporation), James Meekison, and Andrew Sarlos (through funds he managed) had acted jointly or in concert to acquire a deemed controlling interest in Enfield without meeting their obligation to make such an offer to shareholders generally, and the defendants to those actions brought a number of claims against me alleging inter alia breach of fiduciary duty and a host of other complaints about how Enfield was managed during the 5 years I was its President and CEO. I also brought a claim for indemnity under Enfield’s articles for my legal costs of the annual meeting litigation.
I lost most of the litigation in the courts of first instance, and won the same actions on appeal or through settlements. Having run low on cash after a few years of costly litigation, I began acting in person in 1992 and on October 6, 1993 I won my first appeal at the Court of Appeal for Ontario overturning a decision of Carruthers J. who found I my decision at the July 20, 1989 meeting was self-interested and not in the best interests of Enfield. Based on Carruthers’ judgment, Express had proceeded to execute its approximately $300,000 costs order against me personally and the COA decision ordered those costs repaid. Enfield appealed the Court of Appeal decision to the Supreme Court of Canada who dismissed Enfield’s appeal and ordered solicitor and client costs payable to me not only for the appeal but for my costs in all the courts below. The turmoil threatened Numac’s plans.
Not for long. Enfield sold Numac to Westcoast Energy in 1993 for about $250 million, and Numac merged with that company with the merged company named Numac Energy. In 2001, Anderson Energy acquired Numac Energy for $960 million.
In 1995, parties opposite paid me $5 million to settle some of the litigation including the libel and wrongful dismissal actions while the illegal takeover action continued with my new company - Algonquin Mercantile Corporation (“Algonquin”) as plaintiff. I had transferred my Enfield shares to Algonquin shortly after buying control. In 2011 Enfield paid Algonquin a further $11 million settling the last outstanding action.
Bill McGregor’s prescience and the genius of Jim Pletcher helped make Numac very valuable but I no longer participated in its success. The takeover of Enfield cost me about ~$50 million. Life has ups and downs.
Enfield had grown from its founding on April 6, 1984 with an initial equity capital of $400,000 to a company in 1989 with assets approaching $1 billion, over 9,000 employees and a record of substantial profits.
I have many wonderful memories of those days. A large part of the growth was funded from profits earned in the energy investments I had made on behalf of Enfield, (which would have been even greater had the takeover not interfered with the company’s future) and Numac been retained. For a couple of years, those investments included Enfield becoming the largest shareholder of Renaissance Energy, a company run by legendary oilman Clayton Woitas. I caused Enfield to sell its Renaissance holding on the eve of the takeover, protecting Renaissance from disruption.
I have been an energy investor ever since, continuing to earn millions of dollars in the oil patch.