Encana’s operations at a drilling site located in the Montney basin in Canada. Credit: Copyright © Encana Corporation. All rights reserved.

Canadian firm Encana has closed the previously announced acquisition of US-based exploration and production company Newfield Exploration Company in an all-stock transaction worth C$7.7bn ($5.81bn).

The agreement for the transaction was signed by the parties last November.

Including the assumption of C$2.2bn ($1.66bn) of Newfield net debt, the deal aims to create a multi-basin company with premium positions in three major North American plays, the Permian, STACK/SCOOP and Montney.

Encana president and CEO Doug Suttles said: “This acquisition creates North America’s premier resource company with large-scale positions in the core of the Permian, Anadarko and Montney.

“Our multi-basin portfolio provides tremendous investment optionality to deliver liquids growth and free cash flow to support the continued return of capital to shareholders.”

“This acquisition creates North America’s premier resource company with large-scale positions in the core of the Permian, Anadarko and Montney.”

Under the terms of the agreement, Newfield shareholders received 2.6719 Encana common shares in exchange for each share of Newfield common stock.

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The transaction makes Encana one of the largest producers of unconventional resources in North America, with pro-forma third quarter 2018 production of 577,000boed.

As part of a five-year plan to enhance production by more than 60%, the company is targeting liquids-rich production from the Montney basin in Canada and the Permian basin in the US.

Encana expects liquids production to be the major driver of the growth potential, contributing more than half of the total output.

The company intends to implement its previously announced C$1.25bn ($944.67m) share buyback programme this year once the required regulatory approvals are obtained.

By raising dividends by 25%, the firm will expand its buyback programme to C$1.5bn ($1.13bn).

The completion of the transaction comes a day after the strategic combination was approved by shareholders. The combination is expected to deliver projected annual synergies of C$250m ($188.93m).