CALGARY - Encana Corp. spinoff PrairieSky Royalty Ltd. (TSX:PSK) made an impressive debut Thursday on the Toronto Stock Exchange, with its shares surging about 32 per cent over their initial public offering price.
PrairieSky's stock closed at $37 on Thursday and was the most actively traded issue on the exchange. The IPO of 52 million shares was priced at $28, itself an increase from an earlier expected range of between $23 and $26.50.
As part of a sweeping new strategy unveiled last fall, Calgary-based energy producer Encana (TSX:ECA) decided to separate a big chunk of its royalty lands into a new publicly traded company. It aims to bring in revenues by allowing other energy companies to develop oil and gas on its land, which spans 5.2 million acres in southern and central Alberta.
"This is an exciting day for our company, marking the creation of PrairieSky, owner of one of the largest and most concentrated independently owned, fee simple mineral title positions in Canada," said Andrew Phillips, PrairieSky's president and CEO.
"It gives me great satisfaction to announce that PrairieSky is officially open for business."
As of the IPO's closing on Thursday, Encana had a 60 per cent stake in PrairieSky and had raised $1.46 billion.
The offering's underwriters, led by TD Securities and CIBC, have been granted the option to buy 7.8 million shares, which would increase Encana's proceeds to $1.67 billion if exercised in full and would leave Encana with a 54 per cent stake.
"The successful launch of the PrairieSky IPO marks the achievement of a major objective in our 2014 plan that was laid out at the time of our strategy announcement in November 2013. The creation of PrairieSky has unlocked value from our royalty business, which is a great example of the quality assets in our portfolio," said Encana CEO Doug Suttles, who took the helm nearly a year ago.
"I am confident that PrairieSky's strong leadership team will capture the full potential of this unique asset base."
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