Encana makes bold move into the Permian with US$7.1 billion Athlon Energy acquisition
We value the deal at US$4.9 billion, which is significantly short of the consideration. There are a number of levers that could materially increase our valuation, including: 1) further downspacing; 2) de-risking of multiple Wolfcamp benches; 3) de-risking of the Spraberry and Clearfork; and 4) higher average EURs across the acquired acreage. Success here could move our valuation above the consideration paid. But the operational and geological challenges should not be underestimated.