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Shareholders bless merger Devon-Ocean stock deal creates largest U.S.-based independent producer Petroleum News Houston Staff
Shareholders of Devon Energy and Ocean Energy have voted overwhelmingly to merge the two exploration and production companies, displacing Anadarko Petroleum as the largest U.S.-based independent producer.
Devon, the survivor in this blockbuster merger, now has a combined enterprise value of $20 billion and reserves of about 2.2 billion barrels of oil equivalent, 84 percent in North America.
“Our merger with Ocean gives us a wealth of talent and participation in a broad array of drill-bit growth opportunities in the Gulf of Mexico and abroad,” said Larry Nichols, chairman and chief executive officer of both the old and new Devon.
Devon and Ocean shareholders, meeting separately April 25 in Oklahoma City, approved the merger by more than a 98 percent margin. The deal was first announced Feb. 24.
Under terms of the merger, each Ocean common share was converted into 0.414 of a share of Devon stock and Ocean became a subsidiary of Devon.
Essentially a stock swap The merger essentially was a no-premium stock swap valued at $5.3 billion, including assumed Ocean debt of $1.8 billion. Conversion required the issuance of 74 million additional Devon shares, resulting in a total of about 231 million common shares. The transaction is being accounted for as a purchase of Ocean by Devon.
James Hackett, formerly chairman, president and chief executive officer of Ocean, is president and chief operating officer of the new Devon.
“This merger gives Ocean shareholders valuable North American natural gas exposure and a stake in a company with the financial strength to accelerate our exploration and development activities,” Hackett said.
The new Devon has production of about 653,000 barrels a day of oil equivalent, 63 percent of which is natural gas and 37 percent liquids. Ninety percent of the production is located in North America.
Devon comes out of the merger as a stronger exploration and production company when it comes to the offshore, particularly in West Africa and the Gulf of Mexico.
In the Gulf alone, Devon now has more than 500 deepwater blocks, making it the largest independent deepwater leaseholder in the region. Worldwide, the combined company holds 29 million acres of net undeveloped acres.
In North America, Ocean operated in the Gulf of Mexico, Rocky Mountains, Permian Basin, Anadarko Basin, East Texas, North Louisiana and the Gulf Coast. Internationally, the company operated in Equatorial Guinea, Angola, Nigeria, Cote d’voire, Egypt, Indonesia and the Russian Republic of Tatarstan.
The old Devon operated in the United States, Canada, Azerbaijan, China and West Africa.
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