Shareholders of PanCanadian Energy and AEC Corp. last week approved PanCanadian’s $6.5 billion stock purchase (excluding debt assumption) of AEC and the renaming of PanCanadian to EnCana Corp. The Alberta Court of Queen’s Bench put the final seal on the transaction on Friday. The merger forms the largest independent producer in terms of reserves and production with an enterprise value (including debt) of $18 billion (C$30 billion).

“This closes a multitude of remarkable chapters in the stellar histories of two great Canadian companies, and opens the page on a new era that creates a leading super-independent with the strategy, assets and people to compete globally,” said EnCana CEO David O’Brien.

On Jan. 27, the boards of both companies approved the merger of equals. Under the terms of the merger, AEC shareholders will receive 1.472 PanCanadian common shares for each AEC common share they own. 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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