Devon Energy Corp., Oklahoma City, Okla., agreed to acquire the Williston basin business of Grayson Mill Energy, Houston, an EnCap Investments LP company, in a $5-billion deal expected to expand oil production and operating scale.
The cash (65%) and stock (35%) deal, reported by the operator last week, is also expected to provide a “meaningful runway of highly economic drilling inventory,” said Rick Muncrief, Devon’s president and chief executive officer, in a release July 8.
Pro forma for the transaction, Devon estimates its oil production to average 375,000 b/d, with total production reaching an average of 765,000 boe/d across its portfolio. The estimate is based on a combination of Devon’s 2024 guidance and Grayson Mill’s 2025 estimated volumes of 100,000 boe/d (55% oil).
Williston basin
With the deal, Devon will add 307,000 net acres (70% working interest) across western North Dakota and eastern Montana, for a total 430,000 net acre position. The addition is expected to triple the operator’s in-basin production to about 150,000 boe/d. Production from the acquired properties is expected to be maintained at 100,000 boe/d (55% oil) in 2025.
Devon expects to realize up to $50 million in average annual cash flow savings from operating efficiencies and marketing synergies. The deal also adds 500 gross locations and 300 refrac candidates that compete for capital, the company said. On a pro forma basis, Devon expects to hold an inventory life of up to 10 years in the basin at a constant development pace of three operated rigs.
Grayson Mill Energy also owns and operates midstream infrastructure to capture and transport oil, gas, produced water, and freshwater from its operations. The company holds ownership in 950 miles of pipeline, 24 interconnected SWD wells, and 6 crude storage terminals providing a throughput capacity of over 280,000 bbl of capacity.
The deal is expected to close by the end of this year’s third quarter, subject to customary terms and conditions, including various purchase price adjustments.
