Oklahoma is generating big noise today with a stunning announcement from two of the state’s largest independent oil and gas companies. Reese Energy Consulting is following news from Okla. City-based Devon Energy and Tulsa-based WPX Energy, which will merge in an all-stock deal to create a single producer powerhouse valued at $12 billion. Wall Street is practically giddy; stock prices have zoomed north for both companies at a time that’s been anything but kind to the oil and gas industry. We think a parade is in order. The merger makes Devon a force to be reckoned with in the Delaware-Permian with 400,000 net acres and production of 277,000 BPD. But this merger but also raises the bar for energy operators looking to return to the good graces of shareholders. The new, New Devon will be fixated on “consistently generating free cash flow” to drive down debt, and will offer a “fixed plus variable” dividend strategy—an industry first, by the way—that ensures regular quarterly returns with a bonus kick of 50% of the company’s remaining cash flow. What a novel idea.
Devon Energy Corporation is a company engaged in hydrocarbon exploration in the United States. It is organized in Delaware and headquartered in the 50-story Devon Energy Center in Oklahoma City, Oklahoma.