CANADA’S Encana Corporation has acquired Texas-focused Athlon Energy in a deal worth US$7.1 billion which the companies say will give Encana a premier oil position in the Permian basin.

Encana paid US$58.50 per share for all of Athlon’s issued capital – a total of US$5.93 billion – as well as assuming Athlon’s US$1.15 billion of senior notes.

The takeover was approved by the boards of both companies, with Athlon chairman Bob Reeves saying the collective experience of both teams would see a new phase of accelerated development and the full realisation of the potential of its projects.

“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,” he said.

Encana said the acquisition would add about 30,000 barrels of oil equivalent to its current annual production, coming from its 56,656 hectares of land – largely in the Midland basin.

“Encana sees the potential for approximately 5,000 horizontal well locations with potential recoverable resources of approximately 3 billion barrels of oil equivalent,” it said in an announcement.

“In 2015, Encana intends to invest at least US$1 billion of capital in the play and ramp up from three to at least seven horizontal rigs by year-end.”

Company president Doug Suttles said Encana saw tremendous opportunities to enhance and accelerate value at the permits.

“We believe this acquisition, when combined with recent portfolio changes, is highly accretive to our long-term cash flow per share projections and our goal of sustainably growing shareholder value,” he said.

“Our growth areas now include the top two resource plays in Canada, the Montney and Duvernay, and the top two resource plays in the United States, the Eagle Ford and the Permian.”

The announcement followed Encana’s sale of its stake in the Bighorn assets in Alberta, which includes 145,687 hectares of land as well as working interests in pipelines, facilities and service arrangements, to Jupiter Resources for US$1.8 billion.

The Bighorn assets were primarily prospective for natural gas, while Encana has moved its attention to oil plays.