Devon Energy Buys Grayson Mill Energy in Latest Oil Patch Deal

Devon Energy (DVN) on Monday announced that it has purchased privately held Grayson Mill Energy for $5.0 billion in cash and stock to expand its operations in the Williston Basin, situated in the Dakotas, Montana, and parts of Canada.

Devon said it will pay $3.25 billion in cash and $1.75 billion in shares for Grayson Mill, which is backed by private equity firm EnCap Investments, an energy sector investor.

Devon noted that the move “significantly expands the company’s position in the Williston Basin,” by adding 307,000 net acres with 70% working interest. It pointed out that production is expected to be maintained at about 100,000 barrels of oil equivalent (BOE) in 2025, with 55% of that being oil.

Chief Executive Officer (CEO) Rick Muncrief explained that the deal “allows us to efficiently expand our oil production and operating scale while capturing a meaningful runway of highly economic drilling inventory.”

Devon Says Deal 'Immediately Accretive'

The company added that the transaction will be “immediately accretive to Devon’s key per-share financial measures, including earnings, cash flow, free cash flow and net asset value.”

Devon said that because of the free cash flow benefits of the acquisition, the board has increased its stock buyback program by 67% to $5 billion through mid-year 2026. 

The deal is the latest in a string of recent multibillion-dollar energy company mergers, including APA (APA)-Callon, Chevron (CVX)-Hess (HES), and ConocoPhillips (COP)-Marathon Oil (MRO).

Shares of Devon Energy fell almost 3% to $45.73 as of 10:45 a.m. ET Monday. They’re essentially flat so far in 2024.