Devon Energy In $865MM Bolt-On Deal

Devon Energy Corp (NYSE: DVN) has announced that it has entered into a definitive purchase agreement to acquire the leasehold interest and related assets of RimRock Oil and Gas LP in the Williston Basin for a total cash consideration of $865 million.

The deal 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, Devon noted. It 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, according to Devon.

Devon outlined that the transaction adds a contiguous position of 38,000 net acres directly offsetting and overlapping Devon’s existing position. The company noted that the deal 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”.

“This bolt-on acquisition is highly complementary to our existing position in the Williston Basin and is immediately accretive to our financially-driven strategy,” Rick Muncrief, the president and CEO of Devon Energy, said in a company statement.

“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,” he added in the statement.

RimRock had made no mention of the deal on its website at the time of writing. The company’s latest news release was made in February 2021 and related to the completion of an exchange agreement between RimRock and XTO Energy Inc. Under the terms of that deal, RimRock and XTO exchanged approximately 5,500 net acres and associated production located in Dunn County, North Dakota. 

In January 2021, Devon Energy announced the successful completion of its all-stock merger of equals with WPX Energy Inc. In a company statement at the time, Devon said the deal created a leading energy producer in the U.S. with an asset base underpinned by a premium acreage position in the economic core of the Delaware Basin.

In October 2020, Devon announced that it had completed the sale of its assets in the Barnett Shale to Banpu Kalnin Ventures (BKV). Devon received a cash payment of $320 million from BKV at closing, the company revealed at the time.

Devon Energy describes itself as a leading independent oil and natural gas exploration and production company whose operations are focused onshore in the United States. RimRock describes itself as an independent oil and gas company focused on the acquisition and development of North American oil and gas assets. The business is a portfolio company of Warburg Pincus.

To contact the author, email andreas.exarheas@rigzone.com