y Doug Alexander and Jeremy van Loon Oct 10, 2014 6:00 AM GMT+0200 0 Comments Email Print
Seven Generations Energy Ltd., a company fracking for shale gas in western Canada, plans to raise about C$800 million ($715 million) in an initial public offering to fund its drilling investments.
The Calgary-based company backed by Canada Pension Plan Investment Board and the Ziff family of New York plans to sell shares for C$17 to C$21 apiece and list the stock on the Toronto Stock Exchange, according to a regulatory filing yesterday. The treasury offering will amount to between 38.1 million and 47.1 million shares and the sale is expected to be priced during the week of Oct. 27, the company said.
Canadian oil and gas companies have raised about $2.24 billion in four IPOs this year as they sought to tap investor appetite for companies that were benefiting from rising energy demand. That’s more than four times the $482.2 million raised in two deals last year, data compiled by Bloomberg show.
The Seven Generations sale is being held in the midst of a slump in international crude prices as global supplies surge. West Texas Intermediate futures for November delivery fell 1.8 percent yesterday to $85.77 a barrel on the New York Mercantile Exchange, the lowest close since December 2012. Prices are down 5.8 percent this week and 14 percent this year.
Encana Corp.’s initial sale of shares in PrairieSky Royalty Ltd. raised C$1.46 billion in May in Canada’s largest IPO in 14 years, when WTI crude was trading at more than $100.
The ranges Seven Generations provided yesterday for price and amount of shares put the treasury sale at C$648 million to C$989 million. That compares with an earlier anticipated range of C$800 million to C$1 billion when the company initially filed with regulators in September, according to people familiar with the transaction
Seven Generations hired Schlumberger Ltd. (SLB) in August to provide hydraulic fracturing services at its 330,000-acre (133,546-hectare) property in the Montney formation in northern Alberta. Fracking, as the technique is known, consists of injecting chemicals and liquids at high pressure to fracture rocks and extract crude and natural gas.
Seven Generations’ land holds 649 million barrels of oil equivalent in proved and probable reserves, with about 3,000 drilling locations, the company said in a Sept. 23 filing.
Royal Bank of Canada, Credit Suisse Group AG and Peters & Co. are leading the sale. The banks have the option to sell an additional 15 percent of the offering after the deal closes.
Chief Executive Officer Pat Carlson founded Seven Generations in 2008, raising more than $300 million from investors including Arc Financial Corp., Natural Gas Partners, Kern Partners and ZBI Ventures, an investment firm controlled by the Ziff family of New York, whose patriarch William Ziff built a publishing fortune. Canada Pension bought its initial stake in May 2012.
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