Devon Energy Corp. agreed to acquire WPX Energy Inc. in a $2.56 billion all-stock deal, creating one of the largest independent U.S. shale producers and answering investor calls for consolidation at a time of crisis for the sector. Devon shareholders will own about 57 percent of the combined company.
The merger comes after Chevron Corp. agreed to buy Noble Energy Inc. in July for about $5 billion, though that deal wasn’t just about Chevron acquiring additional U.S. shale assets but sizable natural gas operations in the Eastern Mediterranean as well. A Devon-WPX combination is also the most significant transaction between two independent U.S. producers since WPX bought private equity-backed Felix Energy in March.
A deal with WPX would also address Devon’s exposure to federal acreage, and that’s particularly important just a month out from the U.S. presidential election, with Democratic nominee Joe Biden vowing to ban all new fracking on federal lands if he wins.
Devon and WPX both have significant operations in the Delaware sub-basin. Much of the Delaware, however, is located within lands owned by the federal government, and Devon has been fielding analyst questions for months about the potential impact of a Biden presidency. WPX has a smaller percentage of its acreage on federal lands.