Encana Corp. (ECA) agreed to buy Athlon Energy Inc. for $7.1 billion, including debt, as Canada’s second-largest natural gas producer tries to increase oil production.
Encana will pay $5.93 billion in cash and assume $1.15 billion in long-term debt to buy Athlon, the Calgary based-company said today in a statement. Athlon produces about 30,000 barrels a day in the Permian basin in Texas, 80 percent of which is oil and liquids.
Encana is shifting production toward oil as Chief Executive Officer Doug Suttles seeks to re-balance the company’s production after a glut of supply lowered North American gas prices. He’s been selling gas-producing assets and buying oil-and liquids-rich properties.
“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,” Suttles said in the statement. “The Athlon team has built an exceptional asset with massive running room that includes greater than 10 years of drilling inventory.”
Earlier this month, the company sold its controlling stake in PrairieSky Royalty Ltd. following the unit’s initial public offering. Earlier this year, it bought shale positions in the Eagle Ford basin in Texas.
Canadian Natural Resources Ltd. is the nation’s largest gas producer.