8-KSecurities & Listing

DEVON ENERGY CORP/DE 8-K Report, Unregistered Securities Sale (Dec 11, 2015)

Filed December 11, 2015For Securities:DVN

Summary

Devon Energy Corporation (DVN) filed an 8-K on December 11, 2015, detailing a significant asset acquisition and a portion of the payment being made in stock. The company's wholly-owned subsidiary, Devon Energy Production Company, L.P., entered into a purchase agreement to acquire substantially all assets of NewWoods Petroleum, LLC, Renos Land & Minerals Company, and REMI Midstream, LLC, primarily located in the Powder River Basin, Wyoming. The total consideration for this acquisition is $600 million, subject to adjustments. Of notable interest to investors, Devon Energy has elected to pay $300 million in cash and issue approximately 6.86 million shares of its common stock to one of the sellers, NewWoods Petroleum, LLC, as partial consideration for the acquisition. This transaction, expected to close around December 17, 2015, represents a strategic move into the Powder River Basin and a significant use of equity in the purchase. The issuance of stock is being conducted under an exemption from registration, relying on Section 4(a)(2) of the Securities Act.

Key Highlights

  • 1Devon Energy is acquiring substantially all assets of three entities in the Powder River Basin, Wyoming, for a total consideration of $600 million.
  • 2A portion of the purchase price ($300 million in cash) will be paid with newly issued Devon Energy common stock.
  • 3Approximately 6,857,488 shares of common stock will be issued to NewWoods Petroleum, LLC, subject to anti-dilution adjustments.
  • 4The acquisition is expected to close on or about December 17, 2015, subject to customary closing conditions.
  • 5The stock issuance is being made in reliance on the exemption from registration requirements under Section 4(a)(2) of the Securities Act of 1933.
  • 6This transaction indicates strategic expansion into the Powder River Basin, a key oil and gas producing region.

Frequently Asked Questions

Devon Energy is acquiring substantially all of the assets of NewWoods Petroleum, LLC, Renos Land & Minerals Company, and REMI Midstream, LLC, which are primarily located in the Powder River Basin in Wyoming.

The total consideration for the acquisition is $600 million. Of this amount, $300 million will be paid in cash, and the remaining portion will be paid through the issuance of approximately 6,857,488 shares of Devon Energy's common stock to NewWoods Petroleum, LLC.

The issuance of approximately 6.86 million shares will represent a dilution to existing shareholders. However, the exact impact will depend on the total number of outstanding shares at the time of issuance and the potential anti-dilution adjustments to the stock consideration prior to closing.

The Powder River Basin is a significant oil and gas producing region. Acquiring assets here suggests a strategic expansion for Devon Energy into an area known for its resource potential, likely aligning with their overall exploration and production strategy.