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Encana's PrairieSky IPO May Raise $1.34B

Encana Corp. has increased the size of its initial public offering (IPO) and the price range for Alberta onshore unit PrairieSky Royalty Ltd. on expectations it may fetch up to $1.34 billion (C$1.46 billion), which would be Canada's largest in more than 10 years.

The spinoff would create one of Canada's largest energy royalty companies with 5.2 million acres in Alberta that extend to the U.S. border (see Shale DailyApril 15).

The IPO has been increased to 52 million common shares from 32.5 million. The offering price range was increased to $26.50-28.00/share from a previous range of $23.00-26.50. A final decision on the size and price is expected before the end of this month, the Calgary-based independent said Wednesday.

“We have raised the price and the size of the offering because of the positive reaction of prospective investors to the PrairieSky offering,” spokesman Jay Averill told NGI’s Shale Daily. He said he couldn’t say more because the IPO remains in the preliminary prospectus stage.

PrairieSky is being created from fee simple mineral title lands and associated royalty interests that formed part of the Clearwater business unit in central and southern Alberta. The spinoff of the Clearwater portfolio has been planned since last year and is estimated to be worth $2.5 billion or more (see Shale DailyNov. 5, 2013).

The new company would not directly conduct operations to explore for, develop or produce petroleum or natural gas, but instead would focus on attracting third-party capital investment.Once the offering is completed, Encana would hold the majority interest, and through December, provide some day-to-day administrative services. Encana intends to act only as an investor.

Since the IPO was announced Nov. 5, Encana's share price has risen by more than one-third, from $18.21 to the closing price Tuesday of $22.78. Toronto-Dominion Bank and Canadian Imperial Bank of Commerce are co-leading the sale.

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