The Canadian Pension Plan Investment Board announced Friday the sale to Houston-based EOG Resources of its 98 percent stake in Encino Acquisition Partners, a major E&P in Ohio’s Utica shale.
The all-cash deal price tag is $5.6 billion, including debt.
CPP Investments has held a 98 percent ownership position in EAP alongside Encino Energy since 2017. Encino Energy will also exit from EAP, representing a full sale to EOG Resources.
EAP was established by CPP Investments and Encino Energy in 2017 to acquire high-quality oil and gas assets with an established base of production in mature basins across the lower 48 states.
EOG expects to fund the acquisition through $3.5 billion of debt and $2.1 billion of cash on hand.
EOG Resources says the deal will have no effect on its commitment to provide stockholders with a $1.02 per share dividend in October and no material impact on its commitment to a one-times ratio of debt-to-EBITDA at bottom cycle WTI oil prices of $45pbl.
“This acquisition combines large, premier acreage positions in the Utica, creating a third foundational play for EOG alongside our Delaware Basin and Eagle Ford assets,” said Ezra Y. Yacob, EOG chairman and CEO. “Encino’s acreage improves the quality and depth of our Utica position, expanding EOG’s multi-basin portfolio to more than 12 billion barrels of oil equivalent net resource.”
Wachtell, Lipton, Rosen & Katz is advising EOG, along with Akin Gump Strauss Hauer & Feld.
The Akin lawyers involved include John Goodgame (Houston) Ian Goldberg (Houston), Alan Laves (Dallas), Eric Muñoz (Houston), Andrew Lehman (Houston), David Quigley (Houston) and Emily Mallen (Washington, D.C.)
CPP is advised by a Latham & Watkins team led from New York and Houston by partners David Allinson (New York), Justin T. Stolte (Houston) and Thomas Brandt (Houston). The team also included counsel James Robertson (Houston) and associates Ransel Potter (New York) Ziyad Barghouthy, Kevin Donovan, Armaan Bhimani (Houston), Emily Brown (Houston), and Robert Cunningham (Houston). Advice was provided on securities by partner Ryan Maierson (Houston) on capital markets matters by partners David Miller (Austin) and Samuel Rettew (Austin) with associates Sarah Rodrigue (Houston) and Lewis Ntolla (Houston) on tax matters by partners Tim Fenn (Houston) and Jim Cole (Houston) on antitrust matters by partner Jason Cruise (Washington, D.C.) on environmental matters by partner Joshua Marnitz (Los Angeles) with associate Nolan Fargo (San Diego) on benefits and compensation matters by partner Adam Kestenbaum (Washington, D.C.) and counsel Krisa Benskin (Houston); on finance matters by partner Nathan Whitaker (New York), on insurance matters by partner Harrison White (Los Angeles) and on regulatory matters by counsel Timothy McCarten (Washington, D.C.)
Goldman Sachs is EOG’s financial advisor, with financing provided by Goldman Sachs Bank.
The deal is immediately accretive to 2025 EBITDA by 10 percent, and cash flow from operations and free cash flow by 9 percent. The deal also adds 235,000 acres to EOG’s core oil acreage to create a position of 485,000 acres, and 330,000 acres natural gas production with firm transportation exposed to premium end markets.
EOG holds assets in all the major producing basins in the United States.