Encana Corp., Canada’s second- largest natural gas producer, agreed to buy Athlon Energy Inc. for $5.93 billion in cash, gaining a foothold in the most- prolific U.S. oil producing region.

The $58.50-a-share agreement represents a 25 percent premium to Fort Worth, Texas-based Athlon’s closing price on Sept. 26, Encana said today in a statement. The deal includes the assumption of $1.15 billion in long-term debt. Athlon, whose largest shareholder is private-equity firm Apollo Global Management LLC, produces about 30,000 barrels a day in the Permian Basin in Texas.

This is Encana’s largest purchase since the Calgary-based company was formed in 2002 by the merger of two Canadian energy producers. Encana, which split its oil production into a separate company in 2009, is returning to crude after a supply glut lowered North American gas prices. Chief Executive Officer Doug Suttles has been selling gas-producing assets and buying oil-and liquids-rich properties.

“This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America’s top oil plays,” Suttles said in the statement. “The Athlon team has built an exceptional asset with massive running room that includes greater than 10 years of drilling inventory.”

Encana expects to spend $1 billion on the basin next year, raising production to 50,000 barrels a day. The acquisition, which will add 140,000 acres to Encana’s portfolio, with a potential recoverable resource of about 3 billion barrels of oil equivalent, will be self-funding by 2016.

Permian output will bring Encana to its goal for crude and petroleum-liquids production two years early, Suttles said today on a conference call. The company spent $3.1 billion to acquire shale positions in the Eagle Ford basin in Texas in June. Suttles suggested there are more acquisitions to come.

“Any high-quality exploration and production company has to constantly manage its portfolio,” Suttles said. “Clearly we’ve been doing a lot of that this year and we will continue to do it.”

Athlon is a logical target for Encana, Mason Granger, a portfolio manager at Sentry Investments Inc. in Toronto, told Bloomberg News earlier this month.

“Strategically, a great move,” said David Meats, an analyst for Morningstar Inc., who rates Encanashares equivalent to buy. Encana is “adding another top oil play to the portfolio.”

Athlon gained 25 percent to $58.26 at 9:32 a.m. in New York, the highest in more than a year.Encana climbed 1.14 percent to C$23.86 in Toronto.

“Transaction metrics appear reasonable but are not cheap,” Randy Ollenberger, a Calgary-based analyst for BMO Capital Markets, wrote today in a note to clients. “The ultimate success of the deal relies heavily on Encana’s ability to accelerate capital into the play and prove up its resource estimate.”

The Permian Basin is the largest oil-producing region in the U.S., exceeding output from the Gulf of Mexico last year, according to the Energy Information Administration. Crude production in the basin rose 60 percent to 1.35 million barrels a day in 2013 from 2007 levels.

Earlier this month, Encana sold its controlling stake in PrairieSky Royalty Ltd. following the unit’s initial public offering. The proceeds will bring Encana’s cash reserves to $7 billion, enough to buy Athlon with cash on hand, Suttles said.

Athlon began trading publicly for $20 a share last year. Apollo, which announced its partnership with Athlon in 2010, held a 26 percent stake as of Aug. 6, according to data compiled by Bloomberg.

The transaction is expected to conclude by the end of the year.

Tudor Pickering Holt & Co. and Barclays Plc advised Encana. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Vinson & Elkins LLP and Blake, Cassels & Gradon LLP were legal advisers.

Evercore Group LLC, Goldman Sachs Group Inc. and Latham & Watkins LLP advised Athlon.

Canadian Natural Resources Ltd. is the nation’s largest gas producer.

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