A pump jack pulls crude oil from the Bakken region of the Northern Plains near Bainville, Mont.Matthew Brown/The Associated Press
A rapid deterioration in energy markets has prompted one privately held Canadian oil producer to hold off on plans for an initial public offering, while another tests conditions as it sells its IPO plans to prospective investors.
Teine Energy Ltd., with operations in the Viking light oil play in Saskatchewan, had been expected to launch an IPO worth up to $500-million by around the end of this month, but has decided to postpone the effort for now, according to sources.
The company's major shareholder, the Canada Pension Plan Investment Board, supports the decision, given the market swoon in recent weeks, one source familiar with the situation said.
For its part, Teine said it had not formally announced an IPO, so it was not a matter of a specific deal getting delayed or cancelled.
"Certainly we have indicated for a while that we'd be interested in 'IPO-ing' at a point in time that makes sense to both CPP and management, but we have not announced," said Ken Hillier, Teine's chief financial officer.
The company had hired Canadian Imperial Bank of Commerce and Toronto-Dominion Bank to lead the offering.
Between the beginning of September and this week, the S&P/TSX energy group had lost 24 per cent of its value, as investors, frightened by sharp drop in world oil prices, rushed to sell oil and gas holdings. The group has made up some lost ground in the past two sessions.
"As with any private company, we watch the market conditions and there are alternatives that are available to us, but at this point in time it's not a necessity. We'll continue to watch the markets," Mr. Hillier said.
Another source said Teine was watching closely as the big oil-patch IPO story of this fall, Seven Generations Energy Ltd., proceeds with its process, rather than competing for investors in a weak market.
Seven Generations, known for a large position in the Alberta Montney liquids-rich gas play, has filed a preliminary prospectus for an initial public offering and secondary offering of shares. It has already trimmed its price and size expectations, as market conditions worsened.
The company has said it is aiming for proceeds from the treasury offering at $800-million.
Seven Generations has its eyes fixed on market conditions, as its executives are now on a roadshow to explain the company's prospects to would-be investors, said spokesman Lee Corbett.
"I understand the story has been very well received in the investment community. Obviously the markets aren't awesome right now," Mr. Corbett said.
"We'll know better, probably in a couple of weeks, whether we have an IPO to do or if there is a Plan B that will have to be investigated."
The company has said it plans to price the offering during the week of Oct. 27.
With a file from Boyd Erman
Jeffrey Jones