Devon Energy Grows Bakken Position With $5 Billion Buyout

Oklahoma City-based Devon Energy said Monday it will expand its already big footprint in the Williston Basin region of North Dakota that encapsules most of the prolific Bakken Shale play. The $5 billion deal to acquire Grayson Mill Energy’s Williston assets will be funded with $3.25 billion in cash and $1.75 billion in stock.

“The acquisition of Grayson Mill is an excellent strategic fit for Devon that allows us to efficiently expand our oil production and operating scale while capturing a meaningful runway of highly economic drilling inventory,” Rick Muncrief, Devon’s president and CEO, said in a release. “This transaction also creates immediate value within our financial framework by delivering sustainable accretion to earnings and free cash flow that will result in higher distributions to shareholders over time.”

Ironically, Devon’s deal to buy the Grayson Mill position comes just two days after Reuters published an article critical of the company’s management for failing to execute a significant acquisition during the current cycle of shale sector consolidation. Today’s announcement should quell any further such criticism, at least for a while.

Devon ranks among the longest-lived of the current population of large corporate independent producers, with a founding that dates back to 1971. It has also consistently ranked among the largest independent players in unconventional oil and gas formation development, dating to the mid-1990s, when it was one of the larger developers of the Fruitland Coal formation in the San Juan Basin of northwest New Mexico.