Calgary-based Encana announced the deal before markets opened this morning.
It was the Canadian energy giant’s first large acquisition after a series of assets sales aimed freeing up cash and focusing on the company’s core natural gas business.
Last week, Encana sold its remaining stake in PrairieSky Royalty Limited for a little more than $2.5 billion to a syndicate of underwriters.
Today’s move gives Encana access to a major Texas oil play and should speed up its shift towards more liquids production.
Reports indicate the purchase will add the equivalent of about 30,000 barrels of oil per day of production focused in the Midland Basin, West Texas.
Encana has been shifting its production to oil and gas liquids amid persistently low prices for natural gas, and by next year, it expects to generate 75 per cent of its operating cash flow from liquids production.
That would be two years ahead of a self-imposed deadline to make the switch, and under terms of this deal, it will pay nearly $6 billion in cash and assume about 1.1 billion of Athlon’s debt.
Encana shares were up more than three per cent but slipped a bit during the time of publication, and are trading at $21.67, an increase of $0.54, or about 2.5 percent.
With files from CBC News