To Michael Culbert, ethical leadership begins with who you are as an individual, how you have been raised and the respect you have for others. As this year’s recipient of the Distinguished Business Leader Award, Culbert, currently vice chairman of PETRONAS Canada, says it’s less about textbook definitions and more about how a person leads – in their business, personal and philanthropic lives. Ethics, he believes, permeates every aspect of life, every day.
“A telltale sign of ethical leadership is whether you’re trusted within the business community,” Culbert offers from his home in Calgary. “Your word is your bond to employees, peers, investors and competitors.” Trust, and ethics, he continues, are not always a given in business or politics. “We’re seeing challenges to ethical leadership across North America currently. So, I believe that it becomes even more important to recognize and celebrate ethical leadership in our business community.”
That is precisely what the Distinguished Business Leader Award does. In its 27th year, the award is co-presented annually by the Haskayne School of Business and Calgary Chamber, along with gala partner, Calgary Foundation, to recognize outstanding leaders in the local business community. Culbert will receive his award at the June 19 gala. The gala is sponsored by PETRONAS. Previous recipients include David Mitchell, Clive Beddoe, Patrick Daniel and Leslie O’Donoghue.
Albeit a worthy candidate, Culbert was nonetheless surprised by the honour. “I was very shocked, pleased and ultimately humbled,” he recalls of being informed by Haskayne dean, Jim Dewald. “By the time I slept on it and actually went and looked at past recipients, I was even more humbled, knowing who had received this over the past 26 years.”
To the award presenters, Culbert is an obvious choice. The former president and CEO of Progress Energy Canada Ltd., now PETRONAS Canada, Culbert was instrumental in growing Progress, which he and two partners recapitalized in 2001, from an initial asset value of approximately $60 million to $6 billion in 2012 when the company was bought by PETRONAS. As president and CEO until 2016, and vice chairman thereafter, he has been a key player in the company’s pursuit of the development of the North Montney natural gas resource and the development of liquefied natural gas (LNG) export market opportunities for Canada.
“Mike Culbert stands out as a business leader whose contributions have made a highly-significant impact on Calgary, Alberta and Canada,” praises Dewald. “He is hugely generous with his time, talent and treasure, moving our city and industry forward through his dedication and engaging hard work.”
Of course, like most people, Culbert started out pretty normal. Growing up in Calgary, the oldest of three children, he loved sports – hockey, baseball and downhill skiing, in particular – and was an average student who needed prodding along the way to keep him engaged.
He began his career at Home Oil Limited’s accounting department in 1979. It was a turbulent time for Alberta’s oil and gas industry. “The national energy program came in a year after I started,” Culbert reminisces. “It really put the energy industry in a headlock and ultimately changed things very dramatically.”
During this period, the young Culbert got his first glimpse of strong, ethical leadership from another Distinguished Business Leader Award recipient, and the namesake of one of its presenters, Richard “Dick” Haskayne.
Haskayne joined Home Oil in 1981 as president and CEO. “Before he arrived, we had a couple of very tumultuous years; you could feel the chaos even at my low level in the organization,” Culbert recalls. “But when Dick joined the company, everything became calm. I saw how a leader can change the tempo and culture of an organization very quickly.”
Culbert spent 17 years at Home Oil, working his way up the ranks. From accounting he moved into planning, business development and then into the marketing group. In 1992, he was transferred to Boston to set up Home Oil’s natural gas marketing arm. “This was a great opportunity because I was able to experience a startup venture from the grassroots and learn about power generation and the associated regulator processes which would be helpful as my career progressed.”
By 1994, Culbert was back in Calgary, leading Home Oil’s natural gas portfolio. In 1995, when Anderson Exploration acquired Home Oil, Culbert left. He joined Encal Energy Ltd. as vice president of marketing and business development.
“We grew Encal at a reasonable pace,” Culbert recalls. “Oil and natural gas prices were sufficient, so we were able to grow every year through our own cash flow.” By the time Encal was sold to Calpine Corp. in 2001 for $1.8 billion, it had compounded production growth of 20 per cent per year resulting in production of close to 50,000 BOE per day.
By the fall of 2001, shortly after 9/11, the market was in turmoil. “Progress didn’t have the greatest assets, but it was a platform that we could use our expertise to build upon,” Culbert reflects. “With the help of FirstEnergy and Peters & Co., and support from ARC Financial, we refinanced the company.”
Culbert assumed the role of vice president of marketing and business development while partners Dave Johnson and Steve Allaire became CEO and CFO respectively. “We were about 2,000 BOE per day when we started, with production spread across four provinces,” he says. “Our business plan for Progress was to focus on tight gas, and build an asset base that would grow with us as we grew, rather than chase small conventional pools as the industry had been doing. Thanks to some substantial Crown land and asset acquisitions and an active drilling initiative, we had grown to about 10,000 BOE per day by 2004.” Part of these assets would eventually form Progress’ largest and most lucrative play in the Montney formation.
In 2004, Progress acquired Cequel Energy, Culbert assumed the role of president, the company converted to a royalty trust structure and spun out two exploration companies, ProEx and Cyries, “We then had a trust and an exploration company with the employees of Progress providing all the services to both Progress and ProEx,” he explains. “We ran the companies with a streamlined team and shared risk appropriately. We essentially built a new type of income trust in that we would have a combination of distributions as well as production growth.”
The company continued to build its land position in northeast B.C., through significant Crown land and asset acquisitions, including the $500-million buyout of British Gas’ Canadian entity. “By 2008, we had a contiguous land position ranging 160 kilometres north to south and about 60 kilometres east to west all along the Alaska Highway,” Culbert says. “We quietly went about testing our Montney position by fracking some existing vertical wells and drilled a few horizontal wells. The results were consistent with what was being seen in some of the U.S. plays.”
With the looming end of the trust era, in 2009 Progress completed a business combination with ProEx and converted back to a corporation. “We had accumulated an industry-leading unconventional natural gas position that, although it needed more de-risking, put us in a highly-desired position with investors,” Culbert recalls.
Early in 2010, after significant effort, Progress purchased some highly-coveted assets from Suncor (previously owned by Petro-Canada) for $400 million. It worked closely with the Canada Pension Plan Investment Board (CPPIB) to support the acquisition and allow CPPIB to take a meaningful equity position in Progress. In conjunction with the acquisition, CPPIB invested $350 million and Progress completed a private placement for $250 million to support the acquisition and fund its growth program. “The level of due diligence that CPPIB did in advance of their investment in Progress was intense,” Culbert says. “We felt we had received the Good Housekeeping Seal of Approval when it was completed.”
By 2010, the North Montney program was progressing well and LNG was on the radar. Culbert saw an opportunity. “I obtained the support of our board to see if we could bring in partners to participate in developing the North Montney,” he says. “Discussions commenced with potential Asian counterparts.”
There was substantial interest and a deal with Malaysian-owned PETRONAS – one of the largest LNG players in the world – was consummated in mid-2011. It saw PETRONAS commit $1.1 billion to be a 50/50 partner in approximately 10 per cent of Progress’ land position. “We quickly commenced the drilling program and the results and costs came in as predicted or better,” Culbert recalls. “PETRONAS was quite pleased. It was the start of a very strong, trustworthy, ethical relationship with them, which ultimately allowed us to go to the next step.”
That being the purchase of Progress by PETRONAS in 2012. “From the start in 2001, we experienced significant growth and stayed true to our original business plan of developing an asset that could grow as we grew,” Culbert reflects on Progress’ record. “We had significant shareholder returns and built a strong technically and financially-skilled team of employees.”
Following the closing of the acquisition, Culbert and the majority of the senior management team stayed on. He retired from the positions of CEO of Progress and president of Pacific NorthWest LNG in 2016, and continues as vice chairman of PETRONAS Canada. In this capacity, one of his primary focuses is to continue to assist PETRONAS and partners move the North Montney natural gas development and LNG file along.
“I really want to see Canada enter the world LNG market; we can’t afford to miss another window of opportunity,” he says. “I think that the most advanced opportunity is the LNG Canada project [in which PETRONAS has a 25 per cent interest]. After close to a decade of effort, we’re on our way to being participants in LNG exports from Canada.”
In addition to his role at PETRONAS, Culbert is member of the Enerplus and Precision Drilling boards, as well as part of the new Energy Stream at the Creative Destruction Lab Rockies at the Haskayne School of Business. “The innovation is incredibly interesting,” he says of the CDL-Rockies participants. “I can help as a business mentor and possibly as an angel investor here and there. I picked the Energy Stream because our industry has been very innovative and resourceful over the years, and we must continue to do that. If I can assist moving things along to commercialization, then that’s a wonderful thing.”
Culbert’s involvement with the United Way is another way he gives back. In addition to monetary donations, he and his family are supporters of the young professionals program, GenNext, as well as the All In for Youth program, which provides resources to assist students finish high school. He also supports the Shaw Charity Classic, which has raised over $34 million for children and youth-based charities across Alberta.
“Mike sets a great example for our next generation of business leaders as he’s been through all the steps,” applauds Sandip Lalli, president and CEO of the Calgary Chamber. “He knows what it’s like to build something from nothing and retain the determination and perseverance that are so essential in today’s business world. Throughout his business journey, he has always maintained his own ethical leadership model that truly does set an example for our future generations.”
Reflecting back on his career, Culbert is unpretentious about his leadership style. “Treat people fairly, as equals,” he says. “I like being involved across all levels of the organization; I always tried to spend time making sure that, whether it was walking the halls or participating in meetings, I got to know everybody in the company. That I think helps the company move forward with a culture that is all-inclusive, positive and optimistic.”
Sage advice from one of Calgary’s distinguished business leaders.