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Moody’s might lift Athlon
Moody's Investors Service said it affirmed EnCana Corp.’s Baa2 senior unsecured rating and P-2 commercial paper rating.
The outlook remains stable.
At the same time, the agency placed Athlon Holdings LP's ratings on review for upgrade, including its B2 corporate family rating, B2-PD probability of default rating and B3 senior unsecured rating. Athlon's outlook was previously stable.
EnCana and Athlon Energy Inc. entered into a merger agreement under which EnCana will acquire 100% of the outstanding shares of Athlon for roughly $7.1 billion, including the assumption of $1.1 billion of Athlon debt. EnCana will use $5.9 billion of its cash and proceeds from announced asset sales to finance the cash portion of the transaction.
The transaction is expected to close before the end of 2014, subject to finalization of merger documentation and customary closing conditions and the approval of Athlon's shareholders.
"The proposed acquisition of Athlon significantly completes EnCana's portfolio transformation from a predominately natural gas producer to a company that will derive about 80% of its 2015 operating cash flow from oil and natural gas liquids while maintaining a balanced portfolio of oil and gas development opportunities," Moody's senior vice president Terry Marshall said in a news release. "With this and other recently completed acquisitions EnCana will have completed its transition entirely from the proceeds of asset sales while reducing debt."
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