This article was last updated on April 16, 2022
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Canada’s Encana Corp has mentioned in an announcement on Monday that it plans to buy out Athlon Energy Inc. for $5.93 billion in cash in a deal primarily focused on Athlon’s oil-rich lands in Texas’s Permian Basin and giving the company a jump-start in its plan to boost output of lucrative oil and natural-gas liquids.
Canada’s largest natural-gas producer, Encana, has allegedly agreed to $58.50 per Athlon share, i.e. a 25 percent premium on the stock’s Friday closing price. The deal will allow Encana to control almost 140,000 acres in the oil-rich Permian Basin, i.e. where Encana claims to raise liquids output by two thirds, to 50,000 barrels per day, by 2015. The Athlon’s deal will add another core region to the six shale fields of Canada and the United States already in control of Encana. Furthermore, the acquisition will enhance Encana’s transformation from a gas-heavy company to a major oil produce as promised earlier by Chief Executive Doug Suttles.
The senior vice-president of the company holding almost 3.17 million of Encana shares, Canoe Financial, Robert Taylor alleged that “we like the deal” because “strategically it’s exactly what the company said it would do … (The price) is a little bit rich relative to what a lot of people would have expected but it’s a high-quality asset.” The announcement sored up Encana shares by 2.3 percent at C$24.13 late on Monday morning on the Toronto Stock Exchange, while Athlon’s rose 11 percent to $58.21 in New York.
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