Canadian oil and gas producer Encana said on Thursday it will buy Newfield Exploration Co. for $5.5 billion, for greater access to North America's biggest oil patches and making it one of the largest shale oil producers in the region.
As part of the all-stock deal, Encana will get greater access to the Anadarko basin as well as the Permian and Montney areas.
Encana is focusing on high-margin, liquids-rich production from the Montney and Duvernay oilfields in Canada and the Eagle Ford and Permian in the United States as part of a five-year plan to boost output.
"This strategic combination advances our strategy and is immediately accretive to our five-year plan," Chief Executive Officer Doug Suttles said in a statement.
EnCana said liquids production will contribute over half of the combined company's production and help expand margins. Under the terms of the deal, Newfield shareholders will receive 2.6719 Encana common shares for each share of Newfield common stock.
Separately, the Calgary, Alberta-based company said total production rose 33 percent to 378,200 barrels of oil equivalent per day (BOE/d) in the third-quarter ended Sept. 30.
Oil and oil equivalent production rose 40 percent to 178,700 barrels per day.
Shares of Newfield rose about 19 percent to $24.06 in pre-market trading. U.S. listed shares of Encana were trading slightly up at $10.30, having closed at $10.24 on Wednesday.