The energy company that financier Brad Griffiths was building when he met an untimely death is getting ready for a stock listing in what would be one of the oil-and-gas sector's biggest initial public offerings of the year.
Griffiths Energy International Inc., which is developing oil fields in Chad, is getting set to sell $300-million or more of shares, sources said. The company has publicly said it is targeting a fourth-quarter public offering, and sources said that it has hired bankers to lead the deal and is ready to move ahead in coming days as long as volatile markets co-operate.
Griffiths Energy was the last act in the storied business career of Mr. Griffiths, who was one of the founders of investment bank GMP Securities.
Mr. Griffiths was chairman and co-founder of Griffiths Energy. He had just finished a conversation this past summer with one of his partners when he set off in his boat to go fishing on a lake north of Toronto where his family owned a cottage. He never returned. A few days later, his body was recovered from the water. He had drowned in a boating accident.
Mr. Griffiths was known for a career of blockbuster deals, and Griffiths Energy is set to be another big one. Selling $300-million worth of shares would make a Griffiths Energy IPO the second-largest energy IPO this year in Canada, trailing only the $409-million debut of Parallel Energy Trust, according to figures from Thomson Reuters.
The IPO "will be a tribute to what he [Mr. Griffiths]was doing," said one person familiar with the deal. Griffiths executives did not return calls seeking comment.
The IPO market has been slow in recent months as investors have been spooked by volatile share prices and political and economic upheavals, especially in Europe. But there are signs that with equity markets and oil prices rallying on hopes that the European Union will solve its sovereign debt mess, the window may be opening for more deals.
Griffiths Energy is one of a number of international oil plays looking to go public in Canada, sources said. Canada has become a prime launch pad for small companies that are based here, with Canadian executives and investors, but operations in countries such as Syria, Turkey, Albania and other far-flung locales.
Investors are lukewarm on North American oil companies because crude produced on the continent is priced at a discount to Brent crude, the European benchmark. With production in Africa, Griffiths Energy will rake in the Brent premium, which could give it an edge.
Just two years after the company was founded, Griffiths Energy is valued at more than $600-million. That's based on trades of its closely-held shares on the grey market, according to a presentation the company made at Canaccord Genuity's Global Energy Conference in Miami Beach on Oct. 12 and 13. Those shares trade between $6.75 and $7 apiece, Trevor Peters, Griffiths' chief financial officer, told the audience at the conference.
Griffiths Energy's presentation lists a fourth-quarter IPO as a "key milestone." The company then plans to start drilling its first development well at its Mangara property in Chad in early 2012.
"We are looking at embarking on an IPO probably over the next several weeks and are looking to raise capital to bring Mangara online," he said at the time. He said that the company estimated that "we need on the order of about $300-million to get ourselves to a self-sustaining cash flow position – that's Mangara."
Griffiths Energy expects to produce its first drops of oil from Mangara, one of its three blocks, in the third quarter of 2012.
The company's properties were all once under Exxon Mobil Corp.'s control, Mr. Peters said. The super-major relinquished the land to the government, however, because the blocks were too small for it to develop, he added. Canaccord Genuity led a transaction that raised $180-million for Griffiths earlier this year. That cash was used to secure the company's three contracts in Chad.