Keeping with the energy industry’s current consolidation theme, Devon Energy and WPX Energy plan to merge into one large scale player as part of a $12 billion deal. This news came as early as this past September; however, it is far from being the only re-group of forces.
“Our proposed merger is on track and is proving to be a transformational event not only for our two companies but for our industry as a whole, based on events that have unfolded since our announcement,” said WPX’s CEO, Rick Muncrief. “Consolidation is a strategic step that reduces costs, improves margins and accelerates the return of capital to shareholders in very meaningful ways. WPX has been a leader in our peer group, and the combined company will provide us with even more strength and capacity to deliver value through disciplined management and an unwavering focus on profitable, per-share growth.”
Similar mergers and acquisitions
- Chevron purchased Noble Energy for $13 billion.
- Concho Resources went to ConocoPhillips for $9.7 billion.
- For nearly $4.5 billion, Pioneer Natural Resources obtained Parsley Energy Inc.
- Cenovus Energy Inc. bought Husky Energy for a price of $3.8 billion.
- For $400 million, Tulsa’s Mid-Con Energy belongs to Contango Oil and Gas Co.
- EQT Corp announced a $735 million deal to purchase Chevron’s Appalachian assets.
Partnership specifics
Creating a powerful stake within the Delaware Basin, a Devon and WPX combination will form a leading, yet unique, oil producer with 400,000 asset acres. Cost savings are estimated to be responsible for $575 million in improvements in cash flow, thereby maintaining financial strength. The combination of the two companies will allow for a fixed plus variable dividend plan and create a cash-return operating scale business model.
Additionally, the president and CEO responsibilities will be given to Muncrief. Dave Hagler of Devon will reside as the board’s executive chairman.
“This merger is a transformational event for Devon and WPX as we unite our complementary assets, operating capabilities and proven management teams to maximize our business in today’s environment while positioning our combined company to create value for years to come,” said Hagler. “Bringing together our asset bases will drive immediate synergies and enable the combined company to accelerate free cash flow growth and return of capital to shareholders. In addition to highly complementary assets, Devon and WPX have similar values and a disciplined returns-oriented focus, reinforcing our belief that this is an ideal business combination.”
Consolidation destiny
A transition team consisting of individuals from both Devon and WPX will spearhead the unification directive. Their focus will be monopolizing the strengths of each company, with implementation slated after the start of 2021’s first quarter.
“Our teams are committed to closing the transaction as quickly as possible in order to begin executing on the performance improvement opportunities we know already exist today,” said Muncrief.
Nick Vaccaro is a freelance writer and photographer. Besides providing technical writing services, he is an HSE consultant in the oil and gas industry with eight years of experience. He also contributes to Louisiana Sportsman Magazine and follows and photographs American Kennel Club field and herding trials. Nick has a BA in Photojournalism from Loyola University and resides in the New Orleans area. 210-240-7188 [email protected]
