Encana Corp. agreed to acquire Texas-based Athlon Energy for $6 billion, a move that will give the Canadian firm a foothold in the oil-rich Midland Basin. The acquisition will add 140,000 net acres producing 30,000 barrels of oil equivalent per day to Encana’s portfolio. Encana said it would spend at least $1 billion to ramp up from three to at least seven horizontal rigs by the end of 2015. The company sees the potential for approximately 3 billion barrels of recoverable oil reserves in the play. Encana also holds positions in the Eagle Ford shale in Texas and the Montney and Duvernay shales in Canada.
For Encana, the acquisition is part of a strategic shift from natural gas to oil production. It expects to achieve its previously stated goal of receiving 75% of its operating cash flow from liquids production next year.
