I just read six analysts reports and they all see the merger as a "win-win". The two companies seem to be a good match and "size matters" in this business. There are lots of cost savings when two companies of this size complete a stock-for-stock merger.
From Truist this morning by Neal Dingman
Energy - Exploration & Production - Devon-WPX Merger Could Start Wave of Deals -
News reports out yesterday suggest Devon Energy (DVN – Hold) and WPX Energy ((WPX – Buy) are close to announcing a merger. We believe after speaking to various E&Ps and industry executives there could be several more deals to follow given the need for upstream companies to continue to become more operationally efficient & financially resilient as commodity prices remain under pressure and investing scrutiny increases.
The Devon and WPX Merger Makes
We believe the combination makes strategic, operational, and financial sense for numerous reasons despite the material combined federal acreage of the two companies. We are not surprised by the announcement as in our WPX upgrade note just a week ago, we suggested WPX could be an attractive acquisition target.
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Up to now I have not taken a hard look at WPX Energy, so tomorrow I will build a forecast/model for it as a stand alone company and then merge the model with my Devon forecast. The deal is not going to close until 2021, but since this is a stock-for-stock deal, Devon shareholders will benefit from WPX's strong cash flow from operations this year.
Devon + WPX Energy Merger - Sept 28
Devon + WPX Energy Merger - Sept 28
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group