Encino oil and gas deal worth $5.6 billion by EOG expands Utica footprint

EOG Resources, a U.S. oil-and-gas producer, announced on Friday that it will acquire Encino Acquisition Partners, a U.S. oil-and gas company, for $5.6 billion including debt to strengthen its Utica assets.

The agreement signed between Canada Pension Plan Investment Board and Encino Energy gives EOG access to an additional 675,000 acres of core land and will expand its multi-basin resource portfolio to over 12 billion barrels.

Encino Acquisition of Houston, Texas, is owned by CPP and operates in Ohio's Utica Shale Basin. It is one of the biggest privately-owned oil and gas exploration companies in the United States.

The deal is part of a decline in mergers-and-acquisitions activity in the U.S. Energy sector, following a number of massive takeovers of oil and gas companies in recent years. These transactions culminated in $192 billion in 2023.

Due to low commodity prices and limited shale acres, deal activity this year is expected to be muted.

EOG will fund the acquisition through $3.5 billion in debt and $2.1billion of cash. The deal is expected to close by the end of the year.

The deal will increase EOG’s EBITDA in 2025 by 10% and its cash flow and free cash flow, by 9%.

Goldman Sachs has been appointed as the financial advisor to EOG. (Reporting by Mrinalika Roy in Bengaluru; Editing by Shilpi Majumdar)

(source: Reuters)