Devon Energy has acquired Grayson Mill Energy from EnCap Investments for $5 billion in cash and stock, becoming the fourth-largest producer in the Williston Basin. This acquisition marks Devon’s first significant move in the current consolidation cycle, emphasizing a conservative M&A strategy that values existing production over undeveloped inventory.
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Devon Energy Wells Drilled 2024
The deal underscores a shift in focus beyond the Permian Basin, with Devon now poised as a key player in the Williston, where it might have otherwise been a seller without this scalable opportunity. This acquisition positions Devon behind Chord Energy, Continental Resources, and the combined ConocoPhillips-Marathon Oil entity in the region’s production hierarchy.
Deal Summary
- Devon Energy acquires Grayson Mill Energy from EnCap Investments for $5 billion in cash and stock.
- This acquisition makes Devon the fourth-largest producer in the Williston Basin.
- Marks Devon’s first significant move in the current consolidation cycle.
- Emphasizes Devon’s conservative M&A strategy, valuing existing production over undeveloped inventory.
- Shift in focus beyond the Permian Basin, with a significant new presence in the Williston.
- Positions Devon behind Chord Energy, Continental Resources, and the combined ConocoPhillips-Marathon Oil entity in Williston production.
- Grayson Mill had around 500 remaining drilling locations and over 100 Mboed production.
- 70-80% of the deal’s value is for existing production, aligning with Devon’s prior acquisitions of RimRock and Validus.
- The acquisition could make Chord Energy an attractive target for future mergers or acquisitions.
Conclution
In conclusion, Devon Energy’s acquisition of Grayson Mill Energy for $5 billion significantly strengthens its position in the Williston Basin, making it the fourth-largest producer in the region. This strategic move aligns with Devon’s conservative M&A approach, focusing on deals supported by existing production. The acquisition highlights Devon’s shift beyond the Permian Basin to capitalize on scalable opportunities in a more consolidated market. With this deal, Devon not only enhances its operational footprint but also potentially reshapes the competitive landscape, positioning itself among the top producers in the Williston and setting the stage for future growth and consolidation in the energy sector.
