EnCana completes Tom Brown acquisition

Allen Baker

Petroleum News contributing writer

EnCana Corp. has completed its acquisition of Tom Brown Inc. after shareholders tendered in excess of 95 percent of the outstanding shares by the May 18 deadline, the Calgary-based gas giant announced May 19.

With EnCana paying US$48 per share, the value of the deal is about $2.7 billion. The takeover has been a speedy one. EnCana announced its bid April 15, offering a premium of 24 percent over the April 14 closing price, and began its tender April 21. The deal is scheduled to close June 1.

With the addition of Tom Brown’s 325 million cubic feet daily, EnCana’s output from the Rockies will increase to a billion cubic feet each day.

The Tom Brown assets, concentrated in the Rockies, the Permian Basin, East Texas and Western Canada, hold the equivalent of 1.2 trillion cubic feet of reserves. In addition, Tom Brown holds rights to 2 million net acres of undeveloped land.

When it announced the deal, EnCana said it would sell non-core assets producing the equivalent of 40,000 to 60,000 barrels of oil daily in Western Canada. The company hopes to raise $1 billion to $1.5 billion from those transactions.

At the end of 2003, EnCana had reserves of 8.4 trillion cubic feet of gas and 957 million barrels of oil and liquids, producing 2.57 billion cubic feet of gas and 222,500 barrels of oil and gas liquids daily.