Encana Corp Buying Athlon Energy for $5.93 Billion

Encana Corporation., the largest natural gas producer of Canada, announced Monday that it has entered into a definitive agreement with Texas-based Athlon Energy Inc for a deal worth $5.93 billion.

Encana has agreed to take over all outstanding and issued common stocks of Athlon and has also offered to assume the company's $1.15 billion worth of senior notes. That rounds the deal off to $7.1 billion.

Boards of both the companies unanimously approved the deal and have recommended a merger to the shareholders. The deal is being dubbed logical by analysts and will help both companies take maximum advantage of each other's resources.

"This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America's top oil plays," Doug Suttles, CEO and president of Encana said in a statement.

VIDEO: #Encana CEO, Doug Suttles, announces transformative acquisition of #Athlon Energy https://t.co/KBnQQf5U2L $ECA #ECA

— Encana Corporation (@encana) September 29, 2014

"The Athlon team has built an exceptional asset with massive running room that includes greater than 10 years of drilling inventory with up to 11 potential productive horizons of high-margin liquids," he added.

"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. With Encana's exceptional resources and the collective expertise of both teams, the next phase will accelerate development and ultimately realize the full potential of the deep inventory of premier projects," Bob Reeves, chairman, CEO and president of Athlon added in the statement.

With the acquisition, Encana hopes to add 140,000 net acres to its already vast portfolio. Encana has been focused on divesting its natural gas fields and investing in oil fields to boost profitability. Earlier this year, it sold its Bighorn assets in Alberta to Jupiter Resources, a prominent natural oil and gas producer in Canada for a deal worth $1.8 billion.

Encana hopes to complete the Athlon transaction by the end of this year and also claims that it will immediately yield results in its cash flow, The Wall Street Journal reports.