Oil & Gas News

Devon agrees to buy Tulsa-based WPX Energy

Devon, Earnings


  • Merger of equals creates a leading unconventional oil producer in the U.S.
  • Builds a dominant Delaware Basin acreage position totaling 400,000 net acres
  • All-stock transaction accretive to per-share metrics in year one and maintains financial strength
  • Expect to achieve cost savings that will drive $575 million of annual cash flow improvements by year-end 2021
  • Maintenance capital funding requirements in 2021 improve to $33 WTI and $2.75 Henry Hub pricing
  • Enhanced operating scale accelerates transformation to a cash-return business model
  • Combined company to implement “fixed plus variable” dividend strategy
  • Dave Hager to serve as executive chairman of the board; Rick Muncrief to serve as president and CEO

By: Rhett Morgan – Tulsa WorldDevon Energy has agreed to buy Tulsa-based WPX Energy for $2.56 billion in an all-stock deal that will send WPX to Devon’s headquarters in Oklahoma City.

WPX employs 400 people in Tulsa. The combined company will be named Devon Energy, and closing is scheduled for the first quarter of 2021.

The merger will create a leading unconventional oil producer in the U.S., with an asset base underpinned by a premium acreage position in the economic core of the Delaware Basin.

Under the terms of the agreement, WPX shareholders will receive a fixed exchange ratio of 0.5165 shares of Devon common stock for each share of WPX common stock owned. The exchange ratio, together with closing prices for Devon and WPX on Sept. 25, 2020, results in an enterprise value for the combined company of about $12 billion.

Upon completion of the transaction, Devon shareholders will own approximately 57% of the combined company and WPX shareholders will own approximately 43% of the combined company on a fully diluted basis.

“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,” Dave Hager, Devon’s president and CEO, said in a statement. “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.'”

Rick Muncrief is WPX’s chairman and CEO.

“This merger-of-equals strengthens our confidence that we will achieve all of our five-year targets outlined in late 2019,” Muncrief said in a statement. “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 agreement leaves in flux what was to be WPX’s new 11-story, 260,000-square-foot headquarters under construction at 222 N. Detroit Ave.

In a letter to friends and neighbors, WPX said it will be exploring options to leverage the office in a way that benefits Greenwood and the Arts District.

“There are a number of possibilities, all of which would be mere speculation at this point, including a sale of the building or leasing office space to other tenants,” the letter read. “We’ve already received numerous unsolicited expressions of interest for leasing since the project began.”

The integration period of the deal closes will take several months, WPX spokesman Kelly Swan said. The company also 200 additional employees at offices in Killdeer, N.D., and Carlsbad, N.M.

“The realities of global energy markets necessitate moves like the one announced (Monday),” Tulsa Mayor G.T. Bynum said in a statement. “Earlier this year, WPX’s decision to remain and invest in Tulsa was based upon their recognition of the value their employees bring to the company’s overall success.

“WPX recognized that it was human capital that drove success and laid the foundation for growth. As a city, we remain committed to working with the new leadership team to ensure Tulsans continue to play a critical role in shaping the success of the merged company, and that those displaced by (Monday’s) announcement are able to quickly transition and continue their contributions to the growth of Tulsa’s economy. Further, we are already working aggressively to ensure one of downtown’s most transformational projects continues moving forward and new tenants are identified.”

To Top
Lease or Sell Your Minerals Rights in Oklahoma or Texas ➡️(405) 492-6277

Have your oil & gas questions answered by industry experts.