Seeking to shift from natural gas
Encana bought Athlon for $5.93 billion and assumed $1.15 billion in debt to become a big player in the Permian Basin in West Texas.
Encana, an early player in the Barnett Shale natural gas fields, is seeking to shift from natural gas to the more lucrative drilling for oil. Encana sold its Barnett Shale properties to EnerVest Ltd. in late 2011, and shut down its Irving offices in 2013.
Under the terms of the agreement, Athlon shareholders will get $58.50 per share, a 25 percent boost from its closing price Friday of $46.73 and 28 percent more than its average trading price for the last 20 days. When Athlon (ticker: ATHL) went public in August 2013, the stock sold for $20.
Athlon was created in 2010 by executives including Bob Reeves, previously a chief financial officer of Fort Worth-based Encore Acquisition backed by Apollo Global Management. Encore, which was founded and run by veteran Fort Worth oilman Jon Brumley, was sold to Denbury Resources in 2010.
“The Athlon team has established a track record of acquiring high-quality assets, applying extensive technical expertise as a top-tier operator and creating tremendous value for our shareholders,” Reeves, Athlon’s chairman, president and CEO, said in a statement. “Through tireless dedication and hard work, our team has built a high rate-of-return oil manufacturing process in the heart of the world-class Midland Basin.”
Encana, Canada’s second-largest natural gas producer, has been shifting its focus from natural gas to oil production in recent months. Athlon marks the Calgary-based company’s largest purchase since it was formed in 2002 by the merger of two Canadian energy producers.