CALGARY, Alberta, May 29 (Reuters) - Encana Corp, Canada’s No.3 independent oil and gas producer, said on Thursday it has completed the spinoff of PrairieSky Royalty Ltd, which holds the company’s wholly owned lands in Western Canada, through an initial public offering that raised C$1.46 billion ($1.35 billion).
Shares in the new company were at C$36.22 on volume of 17.7 million shares by midday on the Toronto Stock Exchange, while Encana was up 17 Canadian cents to C$25.11.
Encana, Canada’s largest natural-gas producer, said it sold 52 million PrairieSky shares priced at C$28 to a group of underwriters led by TD Securities Inc and CIBC. The underwriters have an option to acquire another 7.8 million shares, pushing Encana’s gross proceeds to C$1.67 billion if exercised.
PrairieSky will hold 5.2 million acres of fee simple lands in Western Canada, collecting royalties from oil companies operating on the properties and paying dividends from that cash flow. Much of the property dates back to railway land grants awarded to an Encana predecessor company in the 19th century.
Encana, which retains a 54 percent stake in PrairieSky, spun out the company as part of restructuring away from natural gas as it looks to increase its output of more valuable oil and natural gas liquids.
At least one other producer has said it is also considering spinning off royalty lands into a separate company. Canadian Natural Resources Ltd said earlier this month it will make a decision later this year.
$1 = 1.0839 Canadian Dollars Reporting by Scott Haggett; Editing by Dan Grebler