Devon Energy to Acquire Grayson Mill Energy’s Williston Basin Business for $5 Billion
Devon Energy, a leading oil and gas producer in the U.S., has announced a major acquisition that is set to transform its operations in the Williston Basin. The company has entered into a definitive purchase agreement to acquire the Williston Basin business of Grayson Mill Energy in a transaction valued at $5 billion. This acquisition is expected to significantly enhance Devon’s scale and scope of operations, positioning it as one of the largest oil producers in the country.
According to Rick Muncrief, Devon’s president and CEO, the acquisition of Grayson Mill is a strategic fit for the company that will allow for the efficient expansion of oil production and operating scale. The transaction is expected to be immediately accretive to Devon’s key financial metrics, including earnings, cash flow, and free cash flow. This will result in higher distributions to shareholders over time.
The acquisition of Grayson Mill’s Williston Basin business is expected to bring a number of benefits to Devon. It will add a high-margin production mix, expand the company’s position in the basin, and provide opportunities for operational efficiencies and marketing synergies. The transaction also includes midstream infrastructure ownership, which will enhance margins and provide marketing optionality.
To fund the $5 billion acquisition, Devon will use $3.25 billion in cash and issue 37 million shares of common stock valued at $1.75 billion. The company plans to finance the cash portion of the purchase price through a combination of cash on hand and debt. Devon expects the transaction to be accretive to its dividend payout in 2025 and beyond.
Devon will provide updated forward-looking guidance for 2024 upon closing of the transaction. The company’s board of directors has also expanded its share repurchase authorization and plans to allocate a portion of its annual free cash flow towards reducing debt over the next two years.
Overall, the acquisition of Grayson Mill Energy’s Williston Basin business represents a significant strategic move for Devon Energy, positioning the company for growth and increased shareholder value in the years to come.