Pump jacks pump oil at an Encana well near Standard, Alta., May 12, 2014.
When Encana Corp. wanted to raise money by selling its royalty business, it turned to Canadian banks. But when it wanted to spend it in a very big way, the Calgary energy producer looked elsewhere for advice.
Toronto-Dominion Bank and Canadian Imperial Bank of Commerce were the lead underwriters when Encana took PrairieSky Royalty Ltd. public, and TD, CIBC and other Canadian banks led the secondary offering that resulted in Encana selling any remaining shares a few weeks ago.
But for all their success raising money, the Canadians missed out on helping Encana putting that cash to work. On its $7.1-billion acquisition of Athlon Energy Inc., Encana used a global bank and a U.S. energy specialist.
Encana hired Tudor, Pickering, Holt & Co. and Barclays PLC as financial advisors. Athlon used Evercore Group LLC and Goldman, Sachs & Co. Barclays also did a fairness opinion for the Encana board.
Encana has not always gone this way. It used RBC on a recent divestiture, and Scotia Waterous on the its $3.1-billion purchase of Eagle Ford assets last year.
But this is the really big fish – the biggest outbound exploration and production deal ever – and the Canadian banks missed out. That's going to sting.
On the legal side, the only Canadian firm on the file was Blake, Cassels & Graydon LLP for Encana. Paul, Weiss, Rifkind, Wharton & Garrison LLP and Vinson & Elkins LLP also worked for Encana.
Latham & Watkins LLP gave legal advice to Athlon.
(Update: there is no go-shop for Athlon, nor, it seems, did the target board do a market test. Potential bidders will have to step up on their own now that the Encana offer is public.)