Canada's Encana to buy Texas oil company for $7.1bn

GMT 15:11 2014 Monday ,29 September

Arab Today, arab today Canada's Encana to buy Texas oil company for $7.1bn

Canadian energy company Encana
Montreal - AFP

Canadian energy company Encana on Monday said it has agreed to buy Texas's Athlon Energy for $7.1 billion, in a bid boost the Calgary-based natural gas producer's shift into oil.
Encana would pay $5.93 billion in cash for the US company, as well as assume $1.15 billion of Athlon's debt, according to a statement.
The proposed price, $58.50 a share, is 25 percent higher than Athlon's Friday closing price on the New York Stock Exchange of $46.73.
Athlon currently produces 30,000 barrels of oil equivalent per day in the Permian basin, a key oil-producing region in western Texas.
After the takeover, Encana hopes to meet its target of generating up to 75 percent of operating cash flow from liquids production, including oil and natural gas liquids, next year instead of 2017.
Encana started as a natural gas producer but it has been shifting its priorities toward oil as the North American gas market has become saturated with the boom in shale gas.
"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," says Encana chief Doug Suttles.
The company said it sees potential for another 5,000 oil wells in the Permian basin, which could produce up the three billion barrels of oil equivalent.
According to the terms of the agreement, shareholders will have 20 trading days in October to decide whether to sell their shares to Encana at the deal price, and the acquisition should be completed by the end of the year.
Encana also said Athlon executives and the structures linked to Apollo investment fund have already pledged to sell their shares, which represent a total of 35.8 percent of the company.



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