Canadian natural gas company Encana has purchased Athlon Energy for $5.9 billion, giving Canada’s second largest natural gas producer a gateway into Texan oil. As part of the deal, Encana has also assumed $1.15 billion in debt from the oil company. This brings the transaction total to $7.1 billion.
Encana has been moving towards oil production over the past year in order to enter the more lucrative resource. Encana is now ensured a portion of the Permian Basin that stretches from Texas to New Mexico. The basin, once practically depleted, has seen resurgence thanks to new drilling practices. Athlon now produces about 30,000 barrels/day from 140,000 acres of land in the basin. Encana plans to spend at least $1 billion in the basin, increasing the number of rigs from three to seven and by the end of 2015.
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,” said Doug Suttles, Encana President & CEO.
The company has operations in parts of Colorado, Wyoming, Nebraska, and Louisiana for natural gas acquisition. In 2010, it reported paying more than $32 million in federal and state royalties and $37 million in personal property tax.
Read More – Encana Buying Athlon for $5.9 billion (ABCNEWS)