Seven Generations Said to Seek Adviser for Sale or IPO This Year

May 09, 2014 10:52 am ET

May 8 (Bloomberg) -- Seven Generations Energy Ltd., an oil and natural gas producer backed by the Ziff family and Canada Pension Plan Investment Board, is interviewing banks to advise on a potential sale or initial public offering this year, people with knowledge of the situation said.

The Calgary-based energy company could be valued at more than $5 billion, said two of the people, who asked not to be identified because the matter is private. Seven Generations’ owners want to explore both options to get the best return on their investment, though they will probably opt for an IPO because there aren’t many buyers for oil and gas companies of its size, said two other people.

Seven Generations may select advisers in the next two months, one person said. That company had previously said it targeted a sale or IPO in 2015.

Chief Executive Officer Pat Carlson founded Seven Generations in 2008, raising more than $300 million from investors including Arc Financial Corp., Natural Gas Partners, Kern Partners, and ZBI Ventures, an investment firm controlled by the Ziff family of New York, whose patriarch William Ziff built a publishing fortune. Canada Pension Plan purchased its initial stake in the company in May 2012.

Carlson didn’t immediately return phone and e-mail messages today seeking comment.

He also founded North American Oil Sands Corp., a closely held company purchased by Norway’s Statoil ASA in 2007 for about $2 billion.

Canada Producers

Encana Corp., Canada’s largest gas producer, is seeking to raise as much as C$861.3 million ($796 million) with its PrairieSky Royalty IPO this month.

Seven Generations has raised about $1.2 billion in debt and equity over the past year to finance drilling in the Montney formation in Alberta, where it’s targeting natural gas liquids and condensate, according to public investor materials. As oil- sands output rises, so does demand for the condensate used to dilute the thick crude so it can flow in pipelines.

Other private-equity backed Canadian producers are also considering IPOs in the Montney as the nation’s public energy companies deliver returns this year that exceed those of their U.S. peers, a person familiar with the talks said last month.

The company will probably be able to boost production this year to the equivalent of 27,000 barrels of oil a day, Moody’s Investors Service said in a February note.

Top Performer

The closing of a C$633 million secondary offering of shares by Arc, Kern, Natural Gas Partners and ZBI reduced their stake in Seven Generations to a combined 31 percent, the company said in a release last month.

A Seven Generations well was one of the top performers in Canada for condensate output in January and February, producing more than 200 barrels a day at the well head, according to public data compiled and released last month by Peters & Co., a Calgary investment bank.

Seven Generations has 50 percent confidence in being able to one day recover 25 or more trillion cubic feet of marketable gas and more than 2.6 billion barrels of liquids from its Kakwa River project in Alberta, the company said last month in a release.