Cenovus Energy Inc. has hired bankers to explore the possible sale or initial public offering of some of its oil and natural gas lands in Western Canada.

The so-called royalty lands, which generate revenue from drilling by other companies, are located across Alberta, Saskatchewan and Manitoba. The deal could raise as much as C$1.6 billion ($1.3 billion), according to one analyst’s estimate.

Cenovus has retained Toronto-Dominion Bank to advise on the process, Brett Harris, a spokesman for the Calgary-based company, said in an interview. He declined to comment on timing.

“We’ve been looking at a number of options for those fee lands, including a potential IPO and a potential sale,” he said.

The decision to monetize the properties comes after the dramatic drop in oil prices affected Cenovus’s business. Cenovus raised C$1.5 billion in a share sale in February as it sought to weather the slump.

Shares in the company rose as much as 4.5 percent and closed 2.3 percent higher at C$23.44 in Toronto.

Last May, Encana Corp. spun off its own royalty lands, raising C$1.46 billion in the initial public offering of PrairieSky Royalty Ltd. An additional C$2.6 billion was obtained in a secondary offering of PrairieSky’s shares last September.

TD, Canada’s second-biggest bank, also led the PrairieSky offerings.

Cenovus, spun off from Encana in 2009, has 3.1 million net acres of royalty lands that produce the equivalent of 7,600 barrels a day. The properties also generated C$150 million in pretax operating cash flow for the company, according to Shailender Randhawa, a Calgary-based analyst with RBC Capital Markets.

Randhawa estimates the value of the properties at between C$1.5 billion and C$1.6 billion. He said potential bidders would include other royalty companies like PrairieSky, Freehold Royalties Ltd., or mining royalty firm Franco-Nevada Corp. It may also draw bids from pension plans or private-equity players.

Royalty companies collect payments from producers that drill on their land and don’t depend on oilprices to be at a certain level to cover their costs.

Freehold, for example, agreed to buy two royalty packages last week from Penn West Petroleum Ltd. for C$321 million.

“If you own the land, it’s a real-estate/finance company,” Randhawa said. “It’s hard to lose a dollar.”

Canadian Natural Resources Ltd. has also said it will look to sell or spin off its own royalty lands in 2015. Those properties could be worth as much as C$2.5 billion, according to an estimate from Canaccord Genuity.