Devon Energy Announces Bolt-On Acquisition in the Williston Basin
June 08 2022 - 4:05PM
Devon Energy Corp. (NYSE: DVN) announced today it has entered into
a definitive purchase agreement to acquire the leasehold interest
and related assets of RimRock Oil and Gas, LP, a Warburg Pincus
portfolio company, in the Williston Basin for total cash
consideration of $865 million. The transaction is subject to
customary terms and conditions and is expected to close in the
third quarter of 2022, with an effective date of April 1, 2022.
“This bolt-on acquisition is highly complementary to our
existing position in the Williston Basin and is immediately
accretive to our financially-driven strategy,” said Rick Muncrief,
president and CEO. “RimRock’s directly adjacent acreage offers
strong operational synergies, adds to our high-quality inventory in
the core of the play and positions us to further increase the
return of cash to shareholders.”
TRANSACTION HIGHLIGHTS
- Immediately accretive to financial metrics –
The transaction, attractively valued at 2.2-times cash flow with a
free cash flow yield of greater than 25 percent at strip pricing
over the next year, is expected to be immediately accretive to all
relevant per-share metrics in the first year, including earnings,
cash flow, free cash flow, and net asset value.
- Increases return of capital to shareholders –
Due to the accretive nature of this transaction to free cash flow,
Devon’s board intends to approve a 13 percent increase to the fixed
quarterly dividend following the closing of the transaction. The
company also expects this transaction to be accretive to the
variable dividend payout in 2022 and beyond.
- Maintains top-tier balance sheet – Devon’s pro
forma leverage metrics will remain relatively unchanged, ranking
among the lowest in the industry, preserving the company’s
financial and operational flexibility and allowing for the
accelerated return of capital to shareholders.
- Enhances Williston Basin asset quality and
scale – This transaction adds a contiguous position of
38,000 net acres (88% working interest) directly offsetting and
overlapping Devon’s existing position. RimRock’s first-quarter
production was approximately 15,000 Boe per day (78% oil), with
volumes expected to increase to an average of 20,000 Boe per day
over the next year. Devon estimates approximately $100 million of
capital expenditures to be incurred post-closing in 2022. The
transaction also adds more than 100 highly economic undrilled
inventory locations, positioning the company’s Williston Basin
assets to maintain high-margin production and strong cash flow for
several years.
Supplemental slides covering the transaction are available on
the company’s website at www.devonenergy.com.
ABOUT DEVON ENERGY
Devon Energy is a leading oil and gas producer in the U.S. with
a premier multi-basin portfolio headlined by a world-class acreage
position in the Delaware Basin. Devon’s disciplined cash-return
business model is designed to achieve strong returns, generate free
cash flow and return capital to shareholders, while focusing on
safe and sustainable operations. For more information, please visit
www.devonenergy.com.
Investor Contacts |
Media
Contact |
Scott Coody, 405-552-4735 |
Lisa Adams, 405-228-1732 |
Chris Carr, 405-228-2496 |
|
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of the federal securities laws. Such statements are
subject to a number of assumptions, risks and uncertainties, many
of which are beyond the control of the company. These risks
include, but are not limited to: the delay or failure to consummate
the transaction due to unsatisfied closing conditions or otherwise;
the ultimate amount of cash consideration to be paid in the
transaction due to purchase price adjustments or otherwise; changes
in commodity prices, market conditions or other circumstances that
could negatively impact the company’s ability to declare and pay an
increased dividend; and the other risks identified in the Company’s
2021 Annual Report on Form 10-K and its other filings with the
Securities and Exchange Commission (SEC). Investors are cautioned
that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from
those projected in the forward-looking statements. The
forward-looking statements in this press release are made as of the
date hereof, and the company does not undertake any obligation to
update the forward-looking statements as a result of new
information, future events or otherwise.
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