The largest Canadian natural-gas producer EnCana reported Thursday it going to buy Tom Brown Inc., a Denver-based oil and gas company, for $2.35 billion to capitalize on growing production and rising prices in the Rocky Mountains.
EnCana will pay $48 a share and will assume $350 million in Tom Brown debt. That is a 24 percent premium to Wednesday's closing price for Tom Brown. According to EnCana?s optimistic calculating, the purchase would increase its 2004 U.S. output by as much as 48 percent.
Shares of Tom Brown shot up $8.92, or 23 percent, on Thursday, to $47.69 in late New York trading. Most of Tom Brown's wells are in the Rockies, where pipeline expansions making gas from the region easier to transport.
EnCana said it would sell as much as $1.5 billion in Canadian oil and gas wells that have declining production to help pay for Tom Brown.
The company plans to raise output from the Tom Brown properties through increased drilling.
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Canadian Gas Producer To Buy U.S. Company
According to EnCana's optimistic calculating, the purchase would increase its 2004 U.S. output
