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$5 Billion Grayson Mill Deal Expands Devon Energy's Williston Operations
07/09/2024![5-Billion-Grayson-Mill-Deal-Expands](https://images2.rextag.com/public/blog/292_Blog_5 Billion Grayson Mill Deal Expands Devon Energy's Williston Operations.jpg)
Based in Oklahoma City, Devon Energy is expanding its operations in the Williston Basin with a major $5 billion acquisition of Grayson Mill Energy, a company supported by the Houston-based EnCap Investments LP. This deal includes $3.25 billion in cash and $1.75 billion in Devon stock. Announced before the markets opened on July 8, this strategic move aims to boost Devon's oil production and operational scale significantly.
With this acquisition, Devon will add an impressive 307,000 net acres to its Williston Basin holdings, where it already has a 70% working interest. This expansion is expected to bring Grayson Mill's production to an estimated 100,000 barrels of oil equivalent per day (boe/d) by 2025, with oil making up 55% of this production.
This deal not only increases Devon’s oil production to an average of 375,000 barrels per day but boosts its total production to about 765,000 boe/d. Additionally, owning Grayson Mill's extensive midstream infrastructure, which includes 950 miles of gathering systems and various storage and disposal facilities, is projected to add over $125 million to Devon's annual EBITDAX. This infrastructure ownership also enhances Devon's market access and pricing capabilities.
In response to the acquisition, Devon's board has also increased the company’s share repurchase authorization by 67%, extending it to $5 billion through mid-2026, reinforcing the company's commitment to shareholder value.
This acquisition comes at a time when the U.S. upstream oil and gas sector is seeing significant merger and acquisition activity. Devon had previously explored expansion opportunities in the Permian Basin with Endeavor Energy Resources and CrownRock LP, though these companies were later acquired by other major players for substantial sums.
The Williston Basin itself has been a hotbed for energy deals, demonstrated by Chord Energy’s recent $4 billion acquisition of Enerplus Corp., which positioned it as a leading producer in the region. Additionally, TXO Partners LP has entered the Williston scene with two new acquisitions.
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Exploring the Energy Lifeline: A Tour of Williston Basin's Midstream Infrastructure
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The Williston Basin, which spans parts of North Dakota, Montana, Saskatchewan, and Manitoba, is a major oil-producing region in North America. In order to transport crude oil and natural gas from the wells to refineries and other destinations, a vast pipeline infrastructure has been built in the area. The pipeline infrastructure in the Williston Basin consists of a network of pipelines that connect production sites to processing facilities, storage tanks, and major pipeline hubs
Chord Energy Corp. Expands Williston Basin Footprint with $375 Million Acquisition from Exxon Mobil
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/160Blog_Chord Energy Corp to acquire Williston Basin acreages.png)
Chord Energy Corp.'s subsidiary has entered into an agreement to purchase assets in the Williston Basin from Exxon Mobil, and its affiliates for $375 million. Chord Energy, a US independent company, is strategically expanding its presence in the Williston Basin of Montana and the Dakotas. While industry attention remains fixated on the Permian Basin, Chord Energy recognizes the potential of the Williston Basin and is capitalizing on the opportunity to enhance its reserve portfolio. Chord Energy successfully completed the acquisition of 62,000 acres in the Williston Basin from XTO Energy for a substantial cash consideration of $375 million.
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The United States government has announced a significant investment of $7.3 billion from the 2022 Inflation Reduction Act (IRA) to support clean energy initiatives led by rural electric cooperatives. These projects aim to reduce energy costs, enhance reliability, and promote sustainability for rural communities, where energy costs tend to be higher than in urban areas. This investment marks a substantial effort toward decarbonizing rural America while supporting job creation and infrastructure improvements.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/306_Blog_Decline in US Oil and Gas Rigs Signals Continued Supply and Price Stability.jpg)
The U.S. oil and natural gas rig count experienced a slight decline, falling by four to a total of 633 rigs for the week ending August 21. Despite this modest drop, industry analysts have noted a surprising resilience in both oil supply and natural gas prices as the year progresses, suggesting that the market may be more robust than previously anticipated.
Investors remain strongly bearish on petroleum prices, even as confidence grows that the U.S. Federal Reserve will cut interest rates to boost consumer and business spending. Last week, fund managers returned to selling oil futures and options, as the brief rally from the previous week quickly lost steam and negative sentiment took hold once again. Hedge funds and other money managers offloaded 48 million barrels across the six major futures and options contracts in the week ending August 20. This marks the sixth time in seven weeks that funds have been sellers, reducing their positions by a staggering 346 million barrels since early July, based on data from exchanges and regulators.