Devon Energy and WPX Energy said today that their merger is completed.
Announced in September, the all-stock deal was described as a merger of equals with executives from both companies agreeing to share leadership duties of the newly combined oil and gas company.
Going forward, the combined entity is to be known as Devon Energy.
Rick Muncrief, formerly the CEO of WPX, is now the new president and CEO of Devon.
In a statement issued on the closing, he said, “I want to thank employees for their determined work to complete a transaction of this size and scale in basically just three months. This paves the way for our integration to pick up even more steam and establishes Devon as one of the strongest energy producers in the US.”
In September, Devon and WPX said their merger would create a company with a pro forma output of 280,000 B/D, making it one of the top 5 producers of light tight oil in the US. WPX holdings included more than 180,000 acres of leases in the liquids-rich Delaware Basin in Texas, one half of the prolific Permian Basin.
The merger is also expected to result in an annual savings of $275 million that will come from reducing overhead and infrastructure costs.
“This transformational merger enhances the scale of our operations, builds a dominant position in the Delaware Basin, and accelerates our cash-return business model that prioritizes free cash flow generation and the return of capital to shareholders,” Dave Hager, executive chairman of Devon and the former CEO, said in the statement.
The completion of the merger comes on the heels of production cuts by OPEC+ that seek to balance global crude markets after prices collapsed last March during the onset of the COVID-19 pandemic. 2020 saw many other large US independents consolidate through mergers and acquisitions designed to take advantage of such a rebound.
Oslo-based consultancy Rystad Energy said rising oil prices are “set to create a chain reaction in the US” that will result in a 32% increase in cash from operations this year and encourage producers to ramp up field operations.
“This increased activity has already started to manifest itself, with rig activity for tight oil up 60% since the low point in August last year. Completion activity is also recovering, measured by the number of wells started to be completed by month,” said Espen Erlingsen, head of upstream research at Rystad.
Rystad noted that completion activity bottomed in May with just 300 well completions, down 75% from January 2020. By December, the consultancy reports that US onshore operators completed more than 700 wells.
