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)- - The initial public offering of

Lone Pine Resources


priced at $13 on Thursday, significantly lower than the $18 to $20 range previously anticipated. The Canadian energy assets were spun out of U.S. exploration and production company

Forest Oil



In their first day of trading, Lone Pine Resources shares dipped below the $13 mark, recently down 3.5% to $12.55, even as the energy sector moved up on Thursday. Lone Pine shares had dipped as low as $12.20 on Thursday morning.

Forest Oil shares declined by 2% on Thursday.

The Lone Pine IPO raised $178 million.

While the Lone Pine IPO went off at a lower than expected price, there had been some criticism of the deal leading up to its pricing, with it being noted that Lone Pine only represented 11% of Forest Oil earnings but was being assigned with a price-to-earnings ratio much higher than its earnings profile merited. In addition, Forest Oil shares had been in a declining trend ahead of the IPO -- over the past month they are down 15% -- and a declining parent company stock floating an IPO is typically seen as an IPO red flag.

Another disappointing aspect of the Lone Pine deal is that it poked a minor hole in the idea that breaking out energy assets from larger companies and floating them as a stand-alone Canadian operation leads to a much higher valuation than if the assets are kept within the larger company.

In recent years, several IPOs, spinoffs and sales of stakes in Canadian energy assets have bolstered the argument that the sum of the parts is greater than the whole, energy analysts noted in commenting on the planned Lone Pine deal. In particular, analysts who could not be quoted during the Lone Pine IPO period noted that recent Canadian energy asset IPOs had debuted in an existing energy peer group at a much higher valuation than the peer companies.

In April of last year,


(COP) - Get ConocoPhillips Report

sold its 9% stake in Canada's Syncrude for $4.6 billion. The Conoco sale implied a total value in the mid-$40 billion range for SynCrude. Conoco sold the 9% stake to Sinopec, one of the Chinese petroleum giants that have been paying hefty prices for North American energy assets.

In February,


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sold a 50% interest in its Cutbank Ridge business assets in British Columbia and Alberta to


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for $5 billion, a deal viewed by the market as valuing a limited number of Canadian assets at attractive price.

In 2010,

Royal Dutch Shell


had acquired East Resources for $4.7 billion, a mark topped by the Encana joint venture value.

Canada's Athabasca Oil Sands went public last April, at the same time as the Conoco sale, in a $1.4 billion deal that was one of Canada's largest IPOs.

All of the IPO proceeds are being repaid to Forest Oil, which spun off 18% of its ownership of Lone Pine through the IPO. Forest Oil still owns approximately 82% of Lone Pine and has said it will distribute those shares to Forest Oil shareholders in four months.

If the Lone Pine deal didn't reach its pricing goal, it still accomplished another goal of Forest Oil in terms of transparency of operations to the investor community. Analysts following the deal said that the spinoff of Lone Pine made it easier for investors to "get their hands around" Forest Oil.

-- Written by Eric Rosenbaum from New York.

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