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Encana has announced its intention to increase its dividend by 25% and extend its share buyback program to $ 1.5 billion following the Newfield Exploration transaction, scheduled for the first quarter of 2019.
Photo:
jim urquhart / Reuters
Encana
Corp.
ACE 1.74%
Thursday he agreed to buy an oil and gas company
Newfield Exploration
Co.
NFX 3.96%
in an exchange of shares valued at about $ 5.5 billion.
Encana of Calgary announced the issuance of 2,667 common shares for each Newfield share. The transaction values Newfield at about $ 27.36 per share, a premium of about 35% based on Wednesday's US closing price of $ 10.24 for Encana and $ 20.20 for Newfield.
Newfield shares jumped 18.5% to $ 23.93 in pre-market trading on Thursday.
Encana's shareholders will own approximately 63.5% of the amalgamated company, while the shareholders of Newfield, based in Woodlands, Texas, will hold approximately 36.5%.
Encana said it plans to increase its dividend by 25% and extend its stock repurchase program to $ 1.5 billion at the end of the transaction. , expected in the first quarter of 2019. Companies expect annual synergies of $ 250 million.
Encana, which will also assume Newfield debt of $ 2.2 billion, announced that the deal would create a multi-basin company with significant positions in the Permian, Stack / Scoop and Montney weighted groups.
In the third quarter, the two companies produced 577,000 barrels of oil equivalent per day, of which approximately 300,000 barrels per day. Encana said it expects liquid production to account for more than 50% of total production once the acquisition is made by Newfield.
Write to Colin Kellaher at [email protected]
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