U.S. Markets open in 9 hrs 20 mins
  • S&P Futures

    4,088.75
    +7.50 (+0.18%)
     
  • Dow Futures

    34,605.00
    +6.00 (+0.02%)
     
  • Nasdaq Futures

    12,059.25
    +17.00 (+0.14%)
     
  • Russell 2000 Futures

    1,897.70
    +10.20 (+0.54%)
     
  • Crude Oil

    80.42
    -0.13 (-0.16%)
     
  • Gold

    1,793.70
    +33.80 (+1.92%)
     
  • Silver

    22.53
    +0.75 (+3.46%)
     
  • EUR/USD

    1.0445
    +0.0037 (+0.3551%)
     
  • 10-Yr Bond

    3.7030
    -0.0450 (-1.20%)
     
  • Vix

    20.58
    -1.31 (-5.98%)
     
  • GBP/USD

    1.2098
    +0.0036 (+0.2976%)
     
  • USD/JPY

    136.6780
    -1.4020 (-1.0154%)
     
  • BTC-USD

    17,141.60
    +266.99 (+1.58%)
     
  • CMC Crypto 200

    406.12
    +5.42 (+1.35%)
     
  • FTSE 100

    7,573.05
    +61.05 (+0.81%)
     
  • Nikkei 225

    28,282.21
    +313.22 (+1.12%)
     

Encana (ECA) to Sell Remaining PrairieSky Stake for C$2.6B

Natural gas exploration and production (E&P) company Encana Corporation (ECA) announced that it has signed a deal with a syndicate of underwriters to sell its stake in PrairieSky Royalty Ltd., the company that Encana had spun-off in May (Read: Encana's PrairieSky IPO a Success).

The underwriters, who would in turn offer the shares to investors, would buy Encana’s remaining 54% stake in PrairieSky, representing 70.2 million common shares, at C$36.50 per share. Encana is expected to receive C$2.6 billion from the transaction. The offered price is over 30% higher than the initial public offering (IPO) price of C$28 per share.

The secondary offering is expected to close on or around Sep 26, subject to regulatory approvals. PrairieSky generates revenues through royalties collected from other oil and gas exploration companies that operate in its properties.

Encana did not give any details as to how it intends to use the proceeds from the sale of its interest. However, in accordance with the company’s present strategy to move its operations away from natural gas, the proceeds will likely be used for oil-driven growth.

Based in Calgary, Alberta, Encana is the second largest gas producer in North America and has a highly competitive land and resource position in several of the region's most promising shale and tight gas resource plays. This provides the company with a low risk, long-life and sustainable growth profile. However, at the same time, Encana’s sizeable exposure to volatile natural gas prices remains a chief concern.

Currently, Encana carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. market in the next one to three months.

Meanwhile, one can consider better-ranked players from the same industry like Warren Resources Inc. (WRES), Whiting Petroleum Corp. (WLL) and Halcon Resources Corp. (HK). All these stocks hold a Zacks Rank #2 (Buy).

Read the Full Research Report on ECA
Read the Full Research Report on HK
Read the Full Research Report on WLL
Read the Full Research Report on WRES


Zacks Investment Research