I love now more the PEC deal...Encana - 17% Encana Corp. (ECA.T, ECA) on Thursday said it agreed to buy fellow oil-and-gas company Newfield Exploration Co. (NFX) in a stock swap valued at about $5.5 billion.
Calgary-based Encana said it will issue 2.6719 common shares for each Newfield share. The deal values Newfield at about $27.36 a share, a roughly 35% premium based on Wednesday's U.S. closing prices of $10.24 for Encana and $20.20 for Newfield.
Newfield shares jumped 18.5% to $23.93 in premarket trading Thursday.
Encana shareholders will own about 63.5% of the combined company, while shareholders of Woodlands, Texas-based Newfield will own about 36.5%.
Encana said it plans to raise its dividend by 25% and expand its stock-buyback program to $1.5 billion upon completion of the transaction, expected in the first quarter of 2019. The companies expect annual synergies of $250 million.
Encana, which will also assume $2.2 billion of Newfield debt, said the deal creates a multi-basin company with large positions in the Permian, Stack/Scoop and Montney oil and liquids weighted plays.
The companies had combined third-quarter production of 577,000 barrels of oil equivalent a day, including liquids output of about 300,000 barrels a day. Encana said it expects liquids production will contribute more than 50% of total production after it completes the Newfield acquisition.