US oil company Devon Energy has announced a definitive agreement to acquire the Williston Basin business from Grayson Mill Energy in a cash and stock deal valued at $5bn.
Devon intends to finance the acquisition through $3.25bn in cash and by issuing 37 million shares of common stock valued at $1.75bn.
This move will bolster Devon’s presence in the Williston Basin, adding 307,000 net acres with a 70% working interest.
The assets being acquired are projected to maintain a production level of around 100,000 barrels of oil equivalent per day (boepd), with 55% being oil, in 2025.
Devon anticipates this addition will contribute to an average of up to $50m in annual cash flow savings, driven by operational efficiencies and marketing synergies.
The deal also includes 500 gross locations and 300 refrac candidates.
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By GlobalDataWith this acquisition, Devon’s inventory life in the Williston Basin could extend to up to ten years, maintaining a steady development pace with three operated rigs.
On a pro forma basis, considering the acquisition, Devon’s oil production is estimated to average 375,000 barrels per day.
The company’s total production across its diversified asset portfolio is expected to reach an average of 765,000boepd.
Devon president and CEO Rick Muncrief said: “The acquisition of Grayson Mill is an excellent strategic fit for Devon that allows us to efficiently expand our oil production and operating scale while capturing a meaningful runway of highly economic drilling inventory.
“This transaction also creates immediate value within our financial framework by delivering sustainable accretion to earnings and free cash flow that will result in higher distributions to shareholders over time.”
The completion of the transaction is subject to customary terms and conditions including purchase price adjustments.
Earlier in the year, Reuters reported that Devon Energy is planning to acquire Enerplus, a Canadian independent oil and gas producer with assets in the Bakken region of North Dakota and the Marcellus natural gas shale region in north-east Pennsylvania.
