Encana and Athlon Energy announces $7.1 billion acquisition of Encana of shares of common stock of Athlon Energy.
Encana and Athlon Energy Inc. jointly announced that the two companies have decided into a merger agreement for Encana to purchase all of the issued and outstanding shares of common stock of Texas-based Athlon by means of an all-cash tender offer for US$5.93 billion which has been valued at US$58.50 per share. The transaction also mentions Encana assuming Athlon’s US$1.15 billion of senior notes, for a total transaction value of approximately US$7.1 billion. The board of directors of Athlon has unanimously recommended that their shareholders agree with the offer.
Doug Suttles, Encana President & CEO mentioned in an exclusive interview “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.” He added “The Athlon team has built an exceptional asset with massive running room that includes greater than 10 years of drilling inventory with up to 11 potential productive horizons of high-margin liquids.”
Bob Reeves, Chairman, President & CEO of Athlon has commented in an interview “With a commitment to excellence and an unwavering focus on results, the Athlon team has established a track record of acquiring high-quality assets, applying extensive technical expertise as a top-tier operator and creating tremendous value for our shareholders.” He also added “Through tireless dedication and hard work, our team has built a high rate-of-return oil manufacturing process in the heart of the world-class Midland Basin. With Encana’s exceptional resources and the collective expertise of both teams, the next phase will accelerate development and ultimately realize the full potential of the deep inventory of premier projects.”
Encana estimates that this transaction will improve its current production of about 30,000 barrels of oil equivalent per day based on Athlon’s current estimated production including recent acquisitions. The company understands the potential of the transaction with approximately 5,000 horizontal well locations. Each location has an amazing potential recoverable resource at approximately 3 billion barrels of oil equivalent.
Encana has a target of 75 percent of operating cash flow from liquids production to be finished in 2017 but with this acquisition it looks like this will be finished in 2015. In the past year, the company has significantly developed it portfolio through natural gas-weighted assets and the acquisition and development of higher-margin oil and natural gas liquids opportunities.
Suttles has also mentioned in his interview “We’re delivering on the portfolio promises we made for 2017, today.” He added “We believe this acquisition, when combined with other recent portfolio changes, is highly accretive to our long-term cash flow per share projections and our goal of sustainably growing shareholder value. Our portfolio now aligns with our vision of being a leading North American resource play company. Our growth areas now include the top two resource plays in Canada, the Montney and Duvernay, and the top two resource plays in the United States, the Eagle Ford and the Permian.”
The acquisition of Encana stocks has been unanimously approved by the board of directors of both Encana and Athlon. The board of directors of Athlon has also recommended that its shareholders tender their shares to the Offer. Subject to certain conditions, Athlon’s senior management, as well as funds affiliated with Apollo Global Management, LLC (NYSE: APO) have agreed to tender their respective shares to the Offer, which on a combined basis represents approximately 35.8 percent of Athlon shares on a fully diluted basis.
About Encana Corporation
Encana Corporation is an oil company that produces, transports and markets natural gas, oil and natural gas liquids. It is headquartered in Calgary, Alberta. In Canada, Encana has onshore operations in Alberta, northeast British Columbia and an offshore development off the coast of Nova Scotia. Encana’s subsidiary operates in Colorado, Wyoming, Texas, and Louisiana. Encana Corporation stock market evolution: http://www.nasdaq.com/symbol/eca
About Doug Suttles
Doug Suttles is the president and chief executive officer of Encana Corporation. Mr. Suttles has a degree in BSc in Mechanical Engineering from the University of Texas at Austin. He joined the global oil and gas industry in 1983. On June 11, 2013, Suttles was appointed President & CEO of Encana Corporation.
About Athlon Energy
Athlon Energy is an independent exploration and production company, headquartered in Fort Worth, Texas, focused on the acquisition, development and exploitation of unconventional oil and liquids-rich natural gas reserves in the Permian Basin. Athlon Energy stock market evolution: http://finance.yahoo.com/q?s=ATHL
About Bob Reeves
Robert C. Reeves is Athlon’s chairman, president, and CEO. Prior to Athlon’s formation, Reeves was senior vice president, chief financial officer and treasurer of Encore Acquisition Co. and Encore Energy Partners. Mr. Reeves received his Bachelor of Science degree in accounting from the University of Kansas.