Encana to Acquire Newfield for $5.5 Billion
(Bloomberg) -- After years of slimming down its oil and gas holdings, Canada’s Encana Corp. is reversing course with a $5.5 billion acquisition of a U.S. shale producer in what will be the company’s biggest-ever deal.
Encana agreed to purchase Newfield Exploration Inc., which will give it positions in the Stack and Scoop shale fields in Oklahoma, the Bakken region of North Dakota and the Uinta play in Utah. The all-stock deal also will create North America’s second-largest shale explorer, the companies said in a statement on Thursday. Encana’s stock plunged the most on record.
The acquisition signals a sea-change for North American oil producers that spent the last few years building so-called pure-play drillers focused on a single shale region such as the Permian Basin on West Texas and New Mexico. For its part, Encana had spent years whittling its holdings to a core group of fields: the Permian, Eagle Ford, Montney and Duvernay.
Since its 2009 spinoff of oil producer Cenovus Energy Inc., Encana has sought to reduce its reliance on gas, and the Newfield acquisition represents the biggest step so far in that direction.
The transaction will enhance Encana’s opportunities for growth outside western Canada, where pipeline constraints have pressured crude prices. Encana pledged significant investor benefits from the deal, including a 25 percent dividend increase and an expansion of buybacks.
Newfield soared as much as 14 percent in New York. Encana shares fell as much as 18 percent to C$11.03 ($8.43) in Toronto.
Encana joins BP Plc, Concho Resources Inc. and Chesapeake Energy Corp. in acquiring assets or entire companies to expand after oil markets emerged from the deepest slump in a generation.
With assistance from James Herron. To contact the reporters on this story: Javier Blas in London at jblas3@bloomberg.net; Kevin Orland in Calgary at korland@bloomberg.net. To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Joe Carroll.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Rooftop Solar Now 4th Largest Source of Electricity in Australia
- US Confirms Reimposition of Oil Sanctions against Venezuela
- EU, Industry Players Ink Charter to Meet Solar Energy Targets
- Analyst Says USA Influence on Middle East Seems to be Fading
- Russian Ships to Remain Banned from US Ports
- Brazil Court Reinstates Petrobras Chair to Divided Board
- EIB Lends $425.7 Million for Thuringia's Grid Upgrades
- Var Energi Confirms Oil Discovery in Ringhorne
- Seatrium, Shell Strengthen Floating Production Systems Collaboration
- An Already Bad Situation in the Red Sea Just Got Worse
- What's Next for Oil? Analysts Weigh In After Iran's Attack
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- EIA Raises WTI Oil Price Forecasts
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Venezuela Authorities Arrest Two Senior Energy Officials
- Namibia Expects FID on Potential Major Oil Discovery by Yearend
- Oil Markets Were Already Positioned for Iran Attack
- Is The Iran Nuclear Deal Revival Project Dead?
- Petrobras Chairman Suspended
- Oil and Gas Executives Predict WTI Oil Price
- An Already Bad Situation in the Red Sea Just Got Worse
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024
- Analysts Flag 'Remarkable Feature' of 2024 Oil Price Rally