Encana Corp. to Purchase Athlon Energy Inc. Back to Blog
Encana Corp. has agreed to pay $5.93 billion for Athlon Energy Inc.. This goes on record as the biggest announced purchase of a U.S. crude and natural gas producer by a Canadian company. The $58.50-a-share cash acquisition represents a 25 percent premium to Athlon’s closing price on Sept. 26, Encana said today in a statement. Fort Worth, Texas-based Athlon, produces about 30,000 barrels a day in the Permian Basin in western Texas. Canada’s second-largest gas producer has been piling up $7 billion in cash as it sells assets in favor of added crude output. Calgary-based Encana, which split its oil production into a separate company in 2009, is returning to crude after a supply glut lowered North American gas prices. The Permian Basin surpassed the Gulf of Mexico last year to become the biggest oil-producing region in the U.S., according to the Energy Information Administration. Encana expects to spend $1 billion on the basin next year, increasing production to 50,000 barrels a day. The acquisition will add 140,000 acres to Encana’s portfolio, with a potential recoverable resource equivalent to about 3 billion barrels of oil. Encana will assume $1.15 billion of Athlon debt. Permian Basin output will bring Encana to its goal for crude and petroleum-liquids production two years early, Chief Executive Officer Doug Settles said today on a conference call. The company spent $3.1 billion to acquire shale positions in the Eagle Ford basin in Texas in June and Suttles suggested there are more acquisitions to come.