Boston, MA 09/10/2014 (wallstreetpr) – When Encana Corporation (USA)(NYSE:ECA) executed a spin-off transaction with PrairieSky in the month of May, nobody expected that soon it would be looking to rethink about its step. Now the company has decided to sell its stake in PrairieSky. According to reports, it has signed a deal with a syndicate of underwriters in order to sell PrairieSky stake. The deal is expected to generate around C$2.6 billion for ECA.
Insights of this deal:
As per the information revealed by the company, the underwriters would buy Encana Corporation (USA)(NYSE:ECA)’s 54% stake in PrairieSky, which comprise of 70.2 million common shares at C$36.50 per share. The price that has been offered to ECA by these underwriters is close to 30% higher than the IPO price of C$28 per share.
The experts expect this deal to get closed in the month of September, and the expected date is September 26. There are various regulatory approvals that are required to execute this transaction; hence, the closer of this transaction will also depend on various regulatory approvals. Sources of revenue generation for PrairieSky mainly the royalty that it gets from various gas exploration companies that operate in its premises across the country.
The management of Encana Corporation (USA)(NYSE:ECA) has not yet made it clear as how these proceedings will be used by the company, but if one pay close attention to the present strategy of the company, then it’s easy to predict that these offerings are likely to be used for the oil-driven growth. ECA is the second biggest natural gas and oil producer of the country and has its headquarter in Calgary, Alberta. It is very strong in terms of competitive land and resource position across the country. It has resources available at country’s most promising shale, which makes sure that it has a long life, low-risk and sustainable growth profile in a long run.
