EnCana Corp., the largest independent oil and gas producer in North America, on Thursday said it would acquire western U.S. energy producer Tom Brown Inc. for $2.7 billion in cash.
Shareholders of Denver-based Tom Brown will receive $48 a share in cash, through a tender offer that will begin within the next 10 business days. EnCana's offer represents a 24 percent premium to Brown's closing price on the New York Stock Exchange Wednesday.
Calgary-based EnCana said the purchase will boost its production of natural gas in the United States to 1 billion cubic feet per day at a time of declining domestic output and tight inventories. EnCana said Brown's long-life natural gas reserves and unconventional resource holdings will fuel growth rates in years ahead.
Overall the purchase will add daily production of about 325 million cubic feet-equivalent of gas and oil, 1.2 trillion cubic feet of proved reserves and 2 million undeveloped acres, most of which is located in the U.S. Rockies. EnCana said it anticipates the purchase will generate cash flow in excess of capital investment for seeveral years.
