Seven Generations Energy Ltd. has filed a preliminary prospectus for an initial public offering that some industry sources have speculated could be worth as much as $1-billion.
Seven Generations, known for its growing production in the Alberta Montney liquids-rich shale gas region, did not include a price and number of shares it will offer in what is expected to be the second-largest energy IPO this year after that of PrairieSky Royalty Ltd. Those details will be in the final prospectus.
The issue will comprise an initial offering of shares as well as a secondary offering by two major shareholders, ARC Financial and Kern Partners. ARC currently has a more than 15 per cent stake in Seven Generations and Kern more than 10 per cent. They plan to sell their entire interests. Canada Pension Plan Investment Board, meanwhile, intends to hold on to its 19 per cent stake, according to the filing.
The deal is being co-led by RBC Dominion Securities, Credit Suisse Securities and Peters & Co. Ltd.
Although privately held, the company has made a name for itself in the oil patch for success with horizontal drilling and hydraulic rock fracturing on a land spread that is yielding impressive volumes of high-value liquids-rich gas and light oil along with natural gas. Its Kakwa River project is located about 100 kilometres south of Grande Prairie, Alta.
The company said it expects production in 2015 to average between 55,000 and 60,000 barrels of oil equivalent a day.
The energy industry has been fertile ground for initial stock offerings since late last year, with four done to date. The Seven Generations deal comes as another company, Teine Energy Ltd., plots an IPO, reportedly for the end of October.
The Globe and Mail reported early this month that a Seven Generations offering was drawing close. Since then, weakness in Canadian energy shares that began in June has intensified as oil and natural gas prices have fallen.
In its preliminary prospectus the company did not say when it expects the IPO to close, other than it will be this year.