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Encana buys Athlon Energy

September 29, 2014

Canadian gas giant Encana has confirmed it is acquiring Athlon Energy in the US to get better access to oil deposits there. It will be able to tap into Texas' booming Permian Basin and plans huge investments there.

https://p.dw.com/p/1DNCe
Oil field in Texas
Image: AP

Natural resources company Encana said Monday it was buying Texas-based Athlon Energy for $5.93 billion (4.66 billion euros) in a bid to boost its oil production by profiting from the current extraction boom in the Permian Basin.

The Canadian firm added it would also assume $1.15 billion in debt, with the transaction's total value thus standing at $7.1 billion.

A major natural gas producer, Encana has been shifting its focus to more lucrative oil production.

Huge area, huge opportunities

Texas' Permian Basin is crucial for Encana. The territory, which stretches to New Mexico, is undergoing a revival thanks to new - and sometimes controversial - drilling techniques and is one of the biggest new sources of oil production in the US.

"This transformative acquisition further accelerates our strategy and provides us with prime position in what is widely acknowledged as one of North America's top oil plays," Encana CEO Doug Suttles said in a statement.

Corpus Christi in a boom

The Canadians plan to invest at least $1 billion in the Permian Basin and ramp up from three to at least seven rigs by the end of 2015.

Athlon shares had jumped by more than 24 percent on the news in pre-market trading.

hg/cjc (Reuters, AP)