By Chester Dawson
CALGARY--Canadian natural-gas producer Encana Corp. said Monday
it has taken the first step toward an initial public offering of
its oil and gas royalty business in Western Canada, which it
previously pledged to spin off by mid-2014 as part of a broader
restructuring.
Encana said it has filed a preliminary prospectus for the
stand-alone entity and expects the share offering to close by early
June. It will retain a majority stake in the unit, known as
PrairieSky Royalty Ltd.
The Calgary company had announced plans for the spin-off in
November as part of an effort to cut costs and boost profitability
under newly appointed Chief Executive Doug Suttles, a former
executive at BP PLC. Encana has struggled to cope with a sharp
decline in recent years in natural-gas prices, which makes up the
bulk of its revenue.
The IPO, which will be handled by the securities units of
Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, will
create a company overseeing the rights to mineral fee titles and
royalties including 5.2 million net acres of land in Southern
Alberta.
PrairieSky won't conduct any operations on its own, Encana said,
but will instead seek to farm out exploration, development and
production of oil and natural gas to royalty-paying third
parties.
Earlier Monday, Stabilis Energy LLC, Beaumont, Texas, said it
had agreed to purchase Encana's liquefied natural-gas business in
the U.S. Terms of the deal weren't disclosed.
Write to Chester Dawson at chester.dawson@wsj.com
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