Shareholders of PanCanadian Energy and AEC Corp. approved PanCanadian’s $6.4 billion purchase of AEC and the renaming of PanCanadian to EnCana Corp. The merger will form the largest independent producer in terms of reserves and production with an enterprise value (including debt) of $18 billion (C$30 billion). The deal is still subject to receipt of Canadian court approval.
“Today, shareholders of two industry leaders have voted to create one, even more compelling corporation — one of the world’s largest independent oil and gas companies. Now we seek approval from the court to proceed,” said AEC CEO Gwyn Morgan.
On Jan. 27, the boards of both companies approved the merger of equals. The combined company will have daily production of 2.4 Bcf of gas and about 190,000 bbl of oil and gas liquids. It will have 2.3 billion boe of reserves (7.2 Tcf of gas reserves), and will be the lowest cost producer with one of the lowest debt/book capitalizations in the industry.
During recent presentations to Wall Street analysts, Morgan predicted the new company would reach 3.5 Bcf/d in gas production in three years with 390 MMcf/d coming from the Deep Panuke project offshore Nova Scotia and 310 MMcf/d of incremental production growth in the Rocky Mountain region. The company also expects 190 MMcf/d of incremental growth in both northeastern British Columbia and Alberta.
Morgan said EnCana will sell about C$1 billion in assets this year, up from a previous estimate of C$400 million. He said most of the assets on the block are gas-gathering and processing plants. The company expects $300 million in synergies from the combination.
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