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Sep 20, 2016

Encana shares slump after unveiling plan to raise US$1B in public offering

Encana

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CALGARY - Encana Corp. says it will issue up to 107 million new common shares in a public offering designed to allow it to put more rigs to work in a promising Texas oil field.

After markets closed Monday, the Calgary-based producer said the offering, underwritten by Credit Suisse Securities (Canada), Inc. and J.P. Morgan, was priced at US$9.35 per share.

That means it would raise just more than US$1 billion.

It would also increase Encana's (ECA.TO) share total by nearly 13 per cent.

Encana said it will put about half of the funds on its 2017 capital budget. The company said it will double the number of wells it has in the Permian oil field of Texas by the end of the year by increasing the number of drilling rigs it employs there.

The remaining proceeds from the share sale are to be used to repay debt.

Shares in Encana fell 6 per cent to $12.25 in Tuesday morning trading.