Shares of Encana Corporation were trading down sharply Thursday after the company announced it will acquire U.S. oil and gas producer Newfield Exploration Company in an all-stock deal valued at US$5.5 billion.

Encana also said it intends to raise its dividend by 25 per cent and expand its share buyback program to $1.5 billion after the transaction closes.

“This strategic combination advances our strategy and is immediately accretive to our five-year plan,” said Encana President and CEO Doug Suttles in a release.

“Our track record of consistent execution gives us confidence to accelerate and increase shareholder returns.”  

“We strongly believe that the synergies between these two organizations will create a dominant diversified resource player that is positioned to drive future value,” Newfield president and CEO Lee Boothby said in a release.

News of the acquisition came as Encana, which keeps its books in U.S. dollars, reported a profit of US$39 million or four cents per share for the quarter ended Sept. 30.

The result compared with a profit of US$294 million or 30 cents per share in the same quarter last year.

Revenue totalled US$1.26 billion, up from US$861 million.

Production in the quarter totalled 378,200 barrels of oil equivalent per day, up from 284,000 in the third quarter of 2017.

With files from the Canadian Press 

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