World News – United States – Devon and WPX shares climb on news of oil producer merger


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Actions of

Devon Energy


WPX Energy

were making gains in early trading on Monday after the two exploration and production companies announced they would merge in an all-stock deal

The news was good news for investors in both companies, both based in Oklahoma Their stocks have fallen by more than 60% this year

Devon stock (ticker: DVN) was at $ 9.15 early in Monday, up 4% from Friday’s close WPX was at $ 4 65 and over 46% on

Dow Jones Industrial Average

was up 14%

« The overlapping footprints of the two companies, particularly their acreage in the Delaware Basin, and their respective headquarters in Oklahoma, could provide opportunities for synergies and reduce leverage over time, » according to a Goldman Sachs credit research note on Monday

Devon has a market cap of around $ 3.4 billion, compared to $ 2.5 billion for WPX But in a Devon press release the deal was touted as a peer-to-peer merger The merged company will take the name by Devon

The statement said the deal would pay off in the first year, give the combined company more scale, and provide expected cost savings that « will generate $ 575 million in annual cash flow improvements » from here the end of next year

Dave Hager, President and CEO of Devon, to be appointed Executive Chairman of the Board Rick Muncrief, WPX’s top executive and chairman, will be appointed President and CEO of the combined company

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« The combination of our assets will generate immediate synergies and allow the combined company to accelerate free cash flow growth and return of capital to shareholders, » Hager said in a statement

The stock prices of these two companies have suffered this year, along with those of most energy companies, due to weak commodity prices, including crude oil The economic fallout from Covid-19 has been a big contributor

As of Friday’s close, WPX stock was down almost 70%, compared to a loss of around 65% for Devon on

S&P 500

is up 21% year-to-date through Friday

The Goldman Sachs research note observes that « we see the potential for the resulting [credit] ratings of a combined entity to meet investment quality criteria » – potentially helping to increase the price of debt WPX which is due in the 2030s

Shares of Devon Energy and WPX Energy made gains early in Monday after the two exploration and production companies announced plans to merge in an all-equity deal

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Devon Energy, NYSE: WPX, WPX Energy, Mergers and Acquisitions

Global news – US – Devon and WPX shares climb on oil producer news will merge



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