Canadian oil and natural gas producer Encana Corp (TSE:ECA, Mkt cap 9.57B, Div/yield 0.02/0.65, EPS -4.41, Shares 849.89M) has announced a public offering of common shares which it hopes will raise gross proceeds of just over US$1bn.
The Calgary-based company said late Monday that the offering of 107,000,000 shares, underwritten by Credit Suisse Securities (Canada), Inc. and J.P. Morgan, was priced at US$9.35 per share. An additional 16,050,000 shares are available as part of an over-allotment option.
Encana intends to use about half of the net proceeds to help fund its 2017 capital program, which is focused on growing its production in the Permian Basin in West Texas. The company hopes to double the number of wells it has in the oilfield in 2017 by increasing the number of drilling rigs operating there.
The remaining proceeds from the share sale will be used to repay debt.
Encana established its presence in the Permian Basin in 2014 with its acquisition of Athlon Energy Inc. for US$7.1bn, which gave the company a 140,000 net acre position.
The company says on its website that it “believes the Permian’s unconventional production potential will exceed the Eagle Ford and the Bakken combined”.
Bloomberg reported that Encana joins other producers including Crescent Point Energy Corp. in selling shares in recent weeks to fund drilling as oil prices rebound. U.S. crude is up 65% from its February low, the news provider said.
The offering is expected to close on or about September 23, 2016.
Encana Corp (TSE:ECA) is a Calgary, Alberta based company engaged in the exploration, development, production and marketing of natural gas, oil and natural gas liquids. Encana operates 3 business segments: Canadian Operations, which includes the exploration for, development of, and production of natural gas oil and NGLs and other related activities within Canada; USA Operations, which includes the exploration for, development of, and production of natural gas oil and NGLs and other related activities within the United States and Market Optimization, which includes third-party purchases and sales of products that provide operational flexibility for transportation commitments, product type, delivery points and customer diversification. Market Optimization sells all of the Company’s upstream production to third-party customers. More from Reuters »
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