A pumpjack sucks oil out of the ground in a serene setting near Longview, Alberta, on April 8, 2000.Jeff McIntosh/The Globe and Mail
Journey Energy Inc., a junior energy producer with production in central and southern Alberta, is going public in a deal that could fetch as much as $248-million, as the oil patch revival gains more steam.
Journey, led by former NuVista Energy Ltd. CEO Alex Verge, is selling 16.5 million shares at between $13 and $15 apiece, according to the preliminary prospectus filed this week. The initial public offering is being led by BMO Nesbitt Burns and CIBC World Markets Inc.
The company produces 10,500 barrels of oil equivalent a day, with an emphasis on oil-weighted targets and water-flood recovery techniques. That is up from 4,000 a day in 2012, when it completed a reorganization. The gains came from a combination of drilling and acquisitions, according to the filing.
Journey expects production increases of 7 per cent to 10 per cent annually, and aims to provide both growth and dividends to investors.
Demand for the shares is expected to be strong with investors reacquainting themselves with the smaller market-cap end of the sector, according to a source close to the offering. It could be priced in about six weeks.
Executives with the company were not available for comment.
Following a weak 2013, financings have roared back to life in the Canadian oil patch as commodity prices have strengthened. In the first quarter, the industry raised $6-billion, including $3.3-billion of equity and $2.7-billion of debt, according to Sayer Energy Advisors. The total amount of capital raised last year was $15.9-billion, with 41 per cent of that done in the fourth quarter.
In terms of recent IPOs, Journey joins Cardinal Energy Ltd., which went public in late 2013, and PrairieSky Royalty Ltd., the Encana Corp. spin-off on the verge of its initial public offering. A handful of other Calgary-based exploration and production companies are said to be readying IPOs as well.
The IPO consists of 14 million shares from Journey's treasury and 2.5 million from major shareholder Infra-PSP Partners Inc., a unit of the Crown-owned public-sector pension fund, according to the prospectus.
Jeffrey Jones