Canada's Encana Corp has announced that it intends to buy U.S. firm Newfield Exploration for US$7.7 billion in an all-stock deal.
Encana said that it will acquire all of the outstanding shares of common stock of Newfield in an all-stock transaction valued at $5.5 billion. In addition, Encana will assume $2.2 billion of Newfield net debt.
In a statement Encana said that the strategic combination will create a leading multi-basin company and allows the Canadian company to gain assets in Anadarko and Permian basins in the U.S.
The deal is subject to regulatory and shareholder approvals by both companies. The deal is expected to close in the first quarter of 2019.
Doug Suttles, Encana President & CEO said: "I am very excited to lead the combined company and want to congratulate the team at Newfield on doing a tremendous job building premium positions in the core-of-the-core in each of their assets, particularly in the world-class, oil-rich, STACK/SCOOP. When combined with our cube development model, expected synergies and relentless focus on efficiency, we are positioned to deliver highly efficient growth and quality returns."
Lee K. Boothby, Newfield Chairman, President and CEO, stated: "The new organisation will be capable of efficiently developing high-value growth assets while delivering significant cash to shareholders. Throughout our 30-year history, Newfield has worked to create a strong portfolio of assets managed by some of the best and brightest people in the business. The merger will accelerate the development of these assets and as a result, capture full value for our owners."
Roy Martin, senior analyst, corporate upstream, at Wood Mackenzie said: "“Encana has a long track record of ambitious acquisitions, but the Newfield purchase tops its US$7.1 billion Permian purchase of Athlon Energy in 2014. It also makes Encana one of the top five unconventional producers in North America. Under its ‘Back to winning’ strategy spawned in 2013, Encana has been focused on re-engineering its portfolio with a weighting toward liquids. More than US$17 billion in acquisitions, in the Eagle Ford, Permian and now the Mid-Continent, have been matched with US$11 billion in non-core asset sales since launching this strategy."