[Editor’s note: This story was updated at 4:38 a.m. CT Jan. 27.]
Kimmeridge Energy Management Co. launched a proxy fight on Jan. 26 against Ovintiv Inc. to win three seats on the North American energy producer's board.
The private investment firm urged Ovintiv to alter its capital spending and focus on governance and said the board had allowed Ovintiv to become an environmental laggard, trailing peers on key environmental metrics.
Speaking to Reuters, Mark Viviano, managing partner and head of public equities at Kimmeridge, said the move came after months of attempting to engage with the Denver-based producer.
Kimmeridge has nominated its founder, Ben Dell, Cambiar Investors' Katherine Minyard and Columbia University research scholar Erin Blanton as independent directors for Ovintiv's 12-member board.
Viviano said Kimmeridge was not currently pushing to replace Ovintiv CEO Doug Suttles.
Ovintiv, responding to the Kimmeridge notice, said in a statement it would carefully review the nominations.
"We have made significant changes to our board since 2019, including adding three new directors, appointing a new independent chairman, and realigning our committee composition to more closely align with each element of our ESG (environmental, social and governance) strategy."
Kimmeridge, one of Ovintiv's top 10 shareholders with 2.5% of its common shares, warned earlier this month it could launch a proxy challenge if the company did not address its concerns, including high levels of executive compensation.
Management remuneration has emerged as a hot topic in U.S. shale in recent months, after the industry produced years of lackluster shareholder returns versus other sectors of the economy.
Kimmeridge wanted to see the company sell some operations to concentrate drilling in the Permian Basin of Texas, with proceeds from asset sales used to pay down debt, Viviano added.
Ovintiv had $7.1 billion of long-term debt as of Sept. 30, according to a regulatory filing. Reuters reported in November the company had put its Eagle Ford acreage in South Texas up for sale.
One of the largest independent producers in North America, Ovintiv operates a multibasin portfolio anchored by large, contiguous positions in the heart of the Permian and Anadarko basins, and Canada Montney's shale.
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