8-KOther Events

DEVON ENERGY CORP/DE 8-K Report, Corporate Update (Dec 22, 2020)

Filed December 22, 2020For Securities:DVN

Summary

This 8-K filing from Devon Energy Corporation (DVN) on December 22, 2020, primarily serves as an update regarding litigation related to its proposed merger with WPX Energy, Inc. Twelve complaints have been filed by purported stockholders of both companies, alleging breaches of fiduciary duty and violations of securities laws. The core allegations revolve around the alleged failure to disclose material information regarding financial projections, the sales process, and the financial analyses of advisors. Devon states it believes these claims are meritless and intends to vigorously defend against them. In an effort to minimize litigation expenses, without admitting any liability, Devon is providing supplemental disclosures. These disclosures include updated financial forecasts for both Devon and WPX on a standalone basis, as well as revised details on the public trading multiples analysis conducted by its financial advisor, J.P. Morgan. Investors should note that these forecasts are based on assumptions made in September 2020 and may not reflect current circumstances, and that the company cautions against placing undue reliance on them.

Key Highlights

  • 1Devon Energy is facing twelve lawsuits related to its proposed merger with WPX Energy, filed by stockholders of both companies.
  • 2The lawsuits generally allege breach of fiduciary duty and violations of securities laws concerning disclosure of financial projections and advisor analyses.
  • 3Devon and its board believe the claims are meritless and intend to defend them vigorously.
  • 4To reduce litigation costs and without admitting liability, Devon is providing supplemental disclosures to its Joint Proxy Statement/Prospectus.
  • 5These supplemental disclosures include updated standalone financial forecasts for Devon and WPX through 2024, based on September 2020 commodity price assumptions.
  • 6Revised information on the public trading multiples analysis performed by financial advisor J.P. Morgan is also included.
  • 7The company cautions investors not to place undue reliance on the forecasted information due to inherent uncertainties and the timing of preparation.

Frequently Asked Questions

The primary purpose of this 8-K filing is to provide an update on the litigation surrounding the proposed merger between Devon Energy and WPX Energy. It also includes supplemental disclosures made by Devon to address these lawsuits and potentially reduce associated litigation costs.

The lawsuits generally allege that Devon and WPX failed to disclose material information in their proxy statements. Specific allegations include inadequate disclosure of financial projections, the sales process, the financial analyses performed by advisors, and in some cases, the merger consideration being inadequate and conflicts of interest.

No, Devon explicitly states that it is providing the supplemental disclosures solely to minimize the expense of defending the lawsuits and without admitting any liability or wrongdoing. The company maintains that its original disclosures were adequate and that the supplemental information is not legally required or material.

The supplemental disclosures include updated standalone financial and operating forecasts for both Devon and WPX for the years 2021 through 2024. This information is based on commodity price assumptions made by management as of September 25, 2020. Additionally, updated details on the public trading multiples analysis by J.P. Morgan are provided.