Encana announce filling of preliminary prospectus for initial public offering of PrairieSky Royalty
Encana Corporation (“Encana”) (TSX:ECA)(NYSE:ECA) announced today that PrairieSky Royalty Ltd. (“PrairieSky”), a wholly-owned subsidiary of Encana, has filed and obtained a receipt for a preliminary prospectus in respect of its initial public offering of common shares with the securities regulatory authorities of all provinces and territories in Canada (the “Offering”). The Offering is being conducted by way of a secondary offering by Encana, which will receive the net proceeds of the Offering.
Consistent with its strategy announced in November 2013, Encana is establishing PrairieSky to provide investors with the opportunity to invest directly in a royalty business, which includes approximately 5.2 million acres of fee simple mineral title lands in central and southern Alberta with petroleum and/or natural gas rights. The creation of PrairieSky, from Encana’s fee simple mineral title lands and associated royalty interests that formed part of its Clearwater business unit, gives Encana the opportunity to unlock value from its royalty business.
PrairieSky does not intend to directly conduct operations to explore for, develop or produce petroleum or natural gas. Instead, the company will focus on attracting third party capital investment to develop PrairieSky’s properties which is expected to provide PrairieSky with royalty revenues as petroleum and natural gas are produced from those properties.
Upon closing of the Offering, Encana is expected to hold a majority interest in PrairieSky. Although Encana will provide certain day-to-day administrative services on a transition basis until December 31, 2014, Encana intends to act only as an investor in, and not as a manager of, PrairieSky.
The Board of Directors of PrairieSky have been appointed and will be led by James M. Estey, as Chair, and includes Sherri A. Brillon, Brian G. Shaw, Sheldon B. Steeves, Bruce G. Waterman and Andrew M. Phillips. The executive management team of PrairieSky is led by Mr. Phillips, as President & Chief Executive Officer, and includes L. Geoffrey Barlow, as Vice-President, Finance & Chief Financial Officer, and Cameron M. Proctor, as Vice-President, Legal & Corporate Services and Corporate Secretary.
Completion of the Offering is subject to, and conditional upon, the receipt of all necessary approvals, including regulatory approvals. The Offering is expected to close in early June, 2014.