Calgary’s Encana Corp. will buy Athlon Energy for US$7.1 billion dollars.
The deal is considered a friendly takeover designed to give Encana access to major Texas oil play and speed its shift towards more liquids production.
"This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America's top oil plays," Doug Suttles, Encana president and CEO, said in a statement Monday.
"We're delivering on the portfolio promises we made for 2017, today," Suttles said.
Encana scheduled a conference call for its investors at 6:00 a.m. Monday morning.
The Calgary-based company, which has been shifting its production to oil and gas liquids amid persistently low prices for natural gas, will pay nearly US$6 billion in cash and assume about US$1.15 billion of Athlon's debt.
The acquisition includes 140,000 net acres focused solely in the heart of the oil-rich Midland Basin in Texas.
According to a new release from Encana it ”expects that the transaction will add current production of about 30,000 barrels of oil equivalent per day (boe/d) based on Athlon's current estimated production including recent acquisitions.”
Athlon's shareholders are being offered US$58.50 per share cash, for a total of US$5.93 billion.
Athlon shares (NYSE:ATHL) closed Friday at US$46.73 on the New York Stock Exchange. Encana's closed at C$23.59 on the Toronto Stock Exchange.
(With files from Canadian Press)
