Energy company Seven Generations set to raise C$810 million in IPO

Thu Oct 30, 2014 2:30pm EDT
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By John Tilak and Euan Rocha

TORONTO (Reuters) - Seven Generations Energy Ltd is poised to raise C$810 million ($724.31 million) via an initial public offering that priced at the lower end of a previously anticipated range, according to regulatory documents.

The independent petroleum company, which is selling some 45 million shares, priced the share offering at C$18, compared with an earlier projected range of C$17 to C$21. The offering is set to value the company at over C$5 billion.

The stock, which began trading on the Toronto Stock Exchange on Thursday on a "when-issued" basis, surged more than 16 percent, indicating robust investor appetite for energy stocks despite the recent selloff in the price of oil.

"We have strong confidence that it’s a fairly explosive growth story," said Paul Taylor, chief investment officer at BMO Asset Management, which owns shares of Seven Generations. "It has a lot of the positive attributes that we look for, in terms of a growing production profile, strong management team and good assets."

Calgary-based Seven Generations focuses on a liquids-rich natural gas property in northwest Alberta, with almost all of it in the highly sought-after Montney region.

Natural gas liquids are hydrocarbons used as vehicle fuel blends and inputs at petrochemical plant. Liquids-rich natural gas fields such as the Marcellus and Utica shale plays in the United States tend to be more lucrative than "dry" gas fields, and there has been a rush to drill in these areas.

The company's major shareholders include the Canada Pension Plan Investment Board and Calgary-based private equity firms ARC Financial and KERN Partners.

Some large initial investors in the company including ARC and KERN that were considering selling down a portion of their stake via a concurrent secondary offering appear to have chosen not to do so at this time. ARC and KERN could not immediately be reached for comment.   Continued...