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Updated from 8:27 a.m. EDT

NEW YORK -- Shares of Texas-based Athlon Energy (ATHL)  were surging almost 25% to $58.27 in trading Monday after reaching a deal to be acquired by Canadian natural gas producer Encana (ECA) - Get Encana Corporation Report  for $5.93 billion in cash, or $58.50 a share, the companies announced on Monday.

Encana was gaining 2.3%.

The deal, which also includes Athlon's debt, brings the size of the acquisition to about $7.1 billion. The offer price of $58.50 is a premium of 25% to Athlon's closing price on Friday of $46.73. The acquisition will add Athlon's land position of about 140,000 net acres in the oil-rich Permian Basin in Texas.

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"This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America's top oil plays," said Doug Suttles, Encana president and CEO, in a statement on Monday.

"The Athlon team has built an exceptional asset with massive running room that includes greater than 10 years of drilling inventory with up to 11 potential productive horizons of high-margin liquids."