Shale producer EOG Resources said on Friday it would acquire U.S. oil and gas firm Encino Acquisition Partners for $5.6 billion, including debt, to bolster its Utica assets.
The deal signed with Canada Pension Plan Investment Board (CPP) and Encino Energy will give EOG access to additional 675,000 net core acres and expand its multi-basin portfolio to more than 12 billion barrels of oil equivalent net resource.
Houston, Texas-based Encino Acquisition, which is majority-owned by CPP, operates in the Utica shale basin of Ohio and is one of the largest privately owned oil and gas exploration and production companies in the United States.
The deal comes amid a downturn in mergers and acquisitions activity in the U.S. energy sector following a series of blockbuster takeovers by oil and gas majors in recent years, which culminated in a record $192 billion worth of transactions done in 2023.
Deal activity is expected to be tepid this year due to weak commodity prices and limited shale acreage.
EOG expects to fund the acquisition, likely to close in the second half of this year, through $3.5 billion of debt and $2.1 billion of cash on hand.
The deal is expected to increase EOG’s 2025 EBITDA by 10%, and cash flow from operations and free cash flow by 9%.
Goldman Sachs is the financial adviser of EOG.
(Reporting by Mrinalika Roy in Bengaluru; Editing by Shilpi Majumdar)