Encana Fuels Up On Oil: Acquires Athlon Energy Inc.

Encana Fuels Up On Oil: Acquires Athlon Energy Inc.

With the clean energy business gaining momentum in recent times and a glut in the supply of crude oil in the US, Encana has taken advantage of both the factors to score a winning deal for itself. The company is looking to spend $1 billion on acquiring the potential to increase production by as much as 50,000 barrels per day. This will add to the company's resources.

Encana, Canada's second largest natural gas company has just announced that it will be paying $5.93 billion for acquiring ATHL (Athlon Energy Inc.). Now, the Canadian gas company has gained a strong position in the Texan oil fields. This acquisition holds the record for being the largest announced purchase of a US natural gas and crude oil company by a Canadian group.

The Canadian firm has acquired the Texan oil company after separating its crude oil producing unit into a separate company. Based in Calgary, the company had split its oil production into a separate firm in 2009. A Reuters report cites information from the Energy Information Administration saying that the Permian Basin where ATHL is sourcing oil from is now the largest oil producing region in North America.

Encana paid a premium of $58.50 a share cash acquisition which implies a 25% premium to the closing price of ATHL on September 26. ATHL is based in Forth Worth, Texas and it its largest shareholder is private equity company APO/Apollo Global Management LLC, according to Reuters

This Canadian company was the largest producer of natural gas till Suttles changed the strategy to focus on liquid and oil production instead. "With Encana's exceptional resources and the collective expertise of both teams, the next phase will accelerate development and ultimately realise the full potential of the deep inventory of premier projects," Bob Reeves, Athlon's chairman, president and chief executive, said in a joint statement to the press, as quoted by CBC news.

Encana has been quoted by the Financial Post as saying that the 2015 production of this company will remain weighted towards natural gas in a majority percentage (64%). Meanwhile, Moody is expecting the total production of Encana to drop as a result of recent asset sales.

Currently, ATHL is in debt to the tune of USD 1.15 billion. Encana will be taking charge of this as well. The company is on the road to more acquisitions, as its CEO Dough Suttles as per the conference call with media persons. He has also been quoted as saying “Any high-quality exploration and production company has to constantly manage its portfolio. Clearly we’ve been doing a lot of that this year and we will continue to do it.”