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Encana Prices Shares Worth US$1 Billion in Public Offering


Canadian energy explorer, Encana Corporation ECA recently announced the pricing of its previously declared public share offering. The company has offered 107 million of its common shares at US$9.35 per share. Encana expects to generate gross proceeds of more than US$1 billion from the offering.

Additionally, Encana has extended an over-allotment option to underwriters to buy an extra 16,050,000 company shares. The option will be valid for 30 days post closure of the offering. The option, if fully exercised, will increase the gross proceeds to US$.15 billion.

Encana had signed the deal with a syndicate of underwriters including Credit Suisse and J.P. Morgan. Also, the offering is expected to close by Sep 23, 2016, subject to necessary approvals.


Encana is expected to utilize nearly half of the net proceeds to lower its long-term debt and strengthen its balance sheet. The remainder will be utilized by the company to fund a portion of its 2017 capital budget, which is mainly focused on boosting oil and petroleum liquids production from Encana's Permian Basin by increasing the number of rigs. This, in turn, is expected to double the number of wells on stream in the Permian in 2017 from that in 2016.

Encana is a focused pure-play natural gas exploration and production company. It is the second-largest gas producer in North America, and holds a highly competitive land and resource position in a number of the region's most promising shale and tight gas resource plays.

Hence, the company currently sports a Zacks Rank #1 (Strong Buy), which implies that the stock will outperform the broader U.S. equity market over the next one to three months.

Other well-ranked players in the broader energy sector include Murphy USA Inc. MUSA, Par Pacific Holdings, Inc. PARR and Evolution Petroleum Corp. EPM. All these stocks sport the same Zacks Rank as Encana. You can see the complete list of today’s Zacks #1 Rank stocks here.

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