• Friday, Oct 23, 2020
  • Last Update : 03:12 am

US shale producer Devon in talks to acquire peer WPX

  • Published at 09:51 am September 27th, 2020
Devon Energy Production Company
A pump jack operates at a well site leased by Devon Energy Production Company near Guthrie, Oklahoma. REUTERS

Such mergers allow companies to remove duplication and create economies of scale

US shale producer Devon Energy Corp is in talks to acquire rival WPX Energy Inc in an all-stock transaction that would create a company worth around $6bn, people familiar with the matter said on Saturday.

The deal talks show how consolidation in the oil and gas industry is picking up, as low energy prices drive some independent producers to seek scale through mergers. In July, Noble Energy Inc agreed to be acquired by Chevron Corp for $5bn in stock.

The deal, which would value Tulsa, Oklahoma-based WPX at a small premium to its current share price, could be announced as soon as next week, according to one of the sources.

The sources, who requested anonymity to discuss the private talks, cautioned that an agreement was not guaranteed.

Also read: Oil falls on fuel demand growth concerns as coronavirus lingers

Devon and WPX did not immediately respond to requests for comment.

Buffered by reduced demand for hydrocarbons amid coronavirus lockdown measures, which helped push US crude prices briefly into negative territory for the first time earlier this year, US oil and gas producers are seeking out combinations.

Such mergers allow companies to remove duplication and create economies of scale, while structuring them at a small premium or none to existing valuations to retain as much cash as possible.

Oklahoma City based Devon was valued at $3.4bn as of the end of Friday. WPX shares closed on Friday at $4.44, giving the company a market capitalization of $2.5bn.

Both companies have substantial operations in the Delaware portion of the Permian basin, the heart of the US shale revolution across parts of Texas and New Mexico.

Devon also holds acreage in the Eagle Ford play of south Texas, Oklahoma and Wyoming. Outside of the Permian, WPX has land in North Dakota.

blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail