Devon Energy (NYSE: DVN) and WPX Energy (NYSE: WPX) reported entry into an agreement to combine in an all-stock merger of equals transaction. The combination will create a leading unconventional oil producer in the United States with an asset base underpinned by a premium acreage position in the Delaware Basin. The combined entity will be named Devon Energy.
WPX shareholders will receive an exchange ratio of 0.5165 shares of Devon common stock for each share of WPX common stock owned. The exchange ratio which includes closing values for both Devon and WPX on September 25th, 2020 will result in an enterprise value for the combined entity of a total of USD 12 Billion. Upon completion of the transaction, Devon shareholders will own 57% of the new company and WPX shareholders will own 43%.
The transaction is expected to close in the first quarter of 2021. The transaction has been approved unanimously by boards of both companies.
“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 Dave Hager, Devon’s president and CEO. “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.”
“This merger-of-equals strengthens our confidence that we will achieve all of our five-year targets outlined in late 2019,” said Rick Muncrief, WPX’s chairman and CEO. “The combined company will be one of the largest unconventional energy producers in the U.S. and with our enhanced scale and strong financial position, we can now accomplish these objectives for shareholders more quickly and efficiently. We will create value for shareholders of both companies through the disciplined management of our combined assets and an unwavering focus on profitable, per-share growth.”