Devon Energy Corp. to Acquire Alta Energy Corp. for $1.6 Million

Strategic Insights -

Devon Energy Corp. has announced plans to acquire Alta Energy Corp. in its third major acquisition in the past 18 months, marking a strategic fit for the company. The deal, valued at approximately $1.6 million, is expected to be mostly tax-free. Devon Energy will acquire Alta's interests in 680 oil and gas wells and 24,000 net undeveloped acres primarily located in Texas, New Mexico, Wyoming, and Oklahoma.

Key Takeaways:

  • Devon Energy Corp. plans to acquire Alta Energy Corp. for $1.6 million in cash and 1.27 million common shares, representing approximately 47.5% of Alta's outstanding shares.
  • The combined value of the shares totals approximately $1.6 million, with 1.77 million Alta common shares purchased at a price of $408,521 and 566,419 shares of common stock.
  • Devon Energy also plans to exchange 250,000 preferred shares for outstanding Alta preferred shares.
  • The deal is expected to be mostly tax-free, with Devon Energy being the surviving entity in the transaction.
  • Devon Energy has already filed a Schedule 13-D with the Securities and Exchange Commission disclosing agreements with shareholders to buy approximately 1.77 million Alta common shares.
  • Alta Energy is an independent oil and gas exploration and production company founded in 1981 in Houston, with interests in 680 (258 net) oil and gas wells and 24,000 net undeveloped acres located primarily in New Mexico, Wyoming, Texas, and Oklahoma.
  • Devon Energy is primarily interested in Alta's Grayburg-Jackson property in Eddy County, New Mexico, with options on surrounding properties.
  • The acquisition is seen as a strategic fit for Devon Energy, which ranks in the top 20% of domestic publicly held independents as measured by oil and gas reserves.

Statistics:

  • $1.6 million (cash and common shares) - combined value of the deal
  • 1.77 million (approx.) - number of Alta common shares purchased
  • 566,419 (approx.) - shares of common stock included in the deal
  • 1992 - year Devon Energy doubled its size with a $126 million acquisition of most of Hondo Oil and Gas Co.'s domestic properties
  • $54 million - amount paid by Devon Energy for American Petrofina Inc. properties in June 1993
  • $160 million (approx.) - total credit line with $77 million of unused credit capacity (as of the third quarter)

Sources:

  • [Company press release]
  • [Securities and Exchange Commission Schedule 13-D filing]
  • [Houston Chronicle]
  • [Devon Energy Corp. investor relations]