With blinding speed, Alberta Energy Co. Ltd. and PanCanadian Petroleum Corp. said today they have locked up their merger deal, barely 48 hours after talks were announced.
The end result is a new C$27 billion energy giant, EnCana Corp., with a bulging portfolio of domestic and international assets.
As widely expected, AEC's current chief executive officer Gwyn Morgan has been rewarded for his ambitious expansion moves with the same post at EnCana.
"This isn't about job cuts and this isn't about getting smaller and trying to squeeze cost cuts - there will be some of that," he told reporters.
"We're talking about one of the highest growth companies - if not the highest growth company - in the business," Morgan said.
The growth plans include assembling an offshore team to steer the exploitation of reserves off Nova Scotia's coast and the British North Sea.As well, EnCana will become a powerhouse in northern Alberta's oil sands, Western Canada's gas fields, the U.S. Rocky Mountains, the Gulf of Mexico and Ecuador.
The entity also has interests in Alaska, both the North Slope and foothills plays, and the Mackenzie Delta, which were acquired by AEC for what it calls "new ventures exploration."
Assuming shareholders approve the merger in early April, EnCana will easily be Canada's largest energy producer, hurdling over the long-time leader, Imperial Oil Ltd., which is 69.6 percent owned by ExxonMobil Corp. and has assets worth about C$12 billion. The deal includes a C$350 million break fee, but neither company expects a hostile bid to surface.
David O'Brien, named chairman of EnCana, said the transaction is designed to give Canada a flagship, world-class independent energy company. He said that only by becoming big enough and growing consistently can companies attract the higher multiples on the stock markets that will reduce their cost of capital and help future growth.
EnCana will have one of the fattest reserve bases of any independent in the world. The list includes 7.8 trillion cubic feet of gas and 1.3 billion barrels of oil and gas liquids.
A task force will be created to review the consolidated holdings and consider selling off up to C$1 billion in non-core assets.