Calgary-based petrochemical company Encana Corporation announced on 1 November that it has agreed to purchase Newfield Exploration in a deal worth US$5.5bn
Encana will acquire all outstanding shares of Newfield in the all-stock transaction, with the deal expected to close early next year.
The acquisition will create a leading multi-basin firm with a significant footprint in the Permian, STACK/SCOOP, and Montney.
As a merged company, it will also become the second largest producer of unconventional resources in North America, with an annual synergy of US$250mn resulting from enhanced scale, cube development, and overhead savings.
“This strategic combination advances our strategy and is immediately accretive to our five-year plan,” said Doug Suttles, Encana President & CEO, in the firm’s statement announcing the acquisition.
“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, Chairman, President, and CEO of Newfield, said the move was the most strategically viable way forward for the firm, offering investors a far stronger combination of attributes.
“We strongly believe that the synergies between these two organizations will create a dominant diversified resource player that is positioned to drive future value,” he said.