Deal Insight

Encana makes bold move into the Permian with US$7.1 billion Athlon Energy acquisition

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03 October 2014

Encana makes bold move into the Permian with US$7.1 billion Athlon Energy acquisition

Report summary

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.

Table of contents

  • Executive summary
  • Transaction details
  • Upstream assets
    • Modelling assumptions
    • Precedent transactions
    • Continuous strong well results
    • Multi-bench development and downspacing
    • Cost reduction
    • Production ramp-up
    • Pricing differential risk
    • Encana
    • Athlon
  • Oil & gas pricing and assumptions

Tables and charts

This report includes 11 images and tables including:

  • Executive summary: Table 1
  • Acquired acreage from Athlon by Wolfcamp sub-play
  • Upstream assets: Table 1
  • Oil & gas pricing and assumptions: Table 1
  • Oil & gas pricing and assumptions: Table 2
  • Upside to valuation - 500 mboe base case type curve
  • Upside to valuation - 600 mboe high case type curve
  • Deal analysis: Table 1
  • Deal analysis: Table 2
  • Deal analysis: Table 3
  • Deal analysis: Table 4

What's included

This report contains:

  • Document

    Encana makes bold move into the Permian with US$7.1 billion Athlon Energy acquisition

    PDF 406.99 KB

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