Devon Energy has agreed to acquire rival Oklahoma-based oil and gas company WPX Energy in an all-stock deal worth $2.56 billion.

The merger of the companies is expected to create a major unconventional oil producer in the US with a combined enterprise value of around $12 billion.

The asset base of the enlarged oil and gas company to be called Devon Energy is supported by a premium acreage position of 400,000 net acres in the economic core of the Delaware Basin.

Devon Energy, currently, produces around 140,000 barrels of oil per day, about 575 million cubic feet of natural gas a day, and nearly 80,000 barrels of natural gas liquids per day.

Following the merger with WPX Energy, the company will boost its production to 277,000 barrels per day.

In addition to the Delaware Basin, the enlarged Devon Energy will operate across Anadarko Basin, Williston Basin, Powder River Basin, and Eagle Ford Shale.

Dave Hager – Devon Energy president and CEO said: “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.

“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.”

As per the terms of the deal, WPX Energy shareholders will exchange each of their shares with 0.5165 shares of Devon Energy. Upon completion of the deal, Devon Energy’s shareholders will own around 57% of the enlarged company, while WPX Energy’s shareholders will hold the remaining stake of 43%.

Rick Muncrief – WPX Energy chairman and CEO said: “This merger-of-equals strengthens our confidence that we will achieve all of our five-year targets outlined in late 2019.”

“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.”

The merger deal, which is subject to approvals by both the companies’ shareholders and meeting of other customary closing conditions, is expected to be closed in Q1 2021.

  Dave Hager, Devon Energy, Oklahoma, Rick Muncrief, USA, WPX Energy