Devon Energy Corp. buying Ocean Energy for $3.5 billion in stock
HOUSTON (AP) – Devon Energy Corp. is buying rival Ocean Energy Corp. for $3.5 billion in stock in a deal that will create the largest U.S.-based independent oil and gas exploration and production company. The combined companies, which will be based in Oklahoma City, will have production of about 2.4 billion cubic feet of natural gas and 250,000 barrels of oil and natural gas liquids per day.
Under the deal announced Monday, Oklahoma City-based Devon will issue 0.414 shares of common stock for each share of stock held by Ocean shareholders. Based on Devon’s closing stock price Friday of $48.23 per share, that would value Ocean shares at $19.97 a share, or a slim 2.6 percent premium over Ocean’s closing price of $19.27 on Friday.
In addition, Devon will assume $1.8 billion of Houston-based Ocean’s debt and other obligations.
The transaction is subject to shareholder and regulatory approvals, but the Devon statement said the company expects to complete the transaction by the spring or summer.
Ocean chairman, president and chief executive James T. Hackett said the merger “combines the strong North American portfolio of Devon with the growth profile of Ocean.”
Devon chairman, president and chief executive J. Larry Nichols said that combining the two companies “creates a balanced portfolio with North American and international assets, increased oil and gas production capabilities and greater internal growth opportunities through an active exploration program.”
Nichols will retain the chairman’s and CEO title of the combined companies, while Hackett will become president and chief operating officer.
The board of directors will consist of nine members from Devon and four members from Ocean.
The companies expect general and administrative cost savings of at least $50 million annually as a result of the deal.
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On the Net:
Devon site: http://www.devonenergy.com
Ocean site: http://www.oceanenergy.com.