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Petroleum

Northstar Energy and Devon Energy Announce Merger Agreement

Strategic Insights

— 1 min read

Northstar Energy Corporation and Devon Energy Corporation have reached a definitive agreement to merge the two companies, creating a top-tier oil and gas producer in North America. The combined company will have a strong presence in both the US and Canada, with a balanced portfolio of reserves and a significant inventory of exploration opportunities.

Key Takeaways:

  • The merger will create a company with approximately 1.2 trillion cubic feet of gas reserves and 117 million barrels of oil reserves, making it one of the largest North American independent oil and gas producers.
  • The combined company will have a strong balance sheet, with low debt levels and a significant working capital position.
  • Northstar shareholders will receive 0.227 Devon common equivalent shares for each existing Northstar share, and will also receive a downside protection collar that will increase the exchange ratio if the Canadian dollar value of the offer is less than $11.00 per Northstar share.
  • The merger is subject to approval by the shareholders of both companies, as well as certain regulatory and court approvals.
  • Devon Energy Corporation will issue 15.4 million common equivalent shares and assume Northstar's existing long-term debt, which is approximately Cdn.$455 million.
  • The combined company will have two separate operating teams for the US and Canadian operations, and will have a large inventory of exploration opportunities, holding an aggregate of 2.5 million net acres of undeveloped lands.
  • John A. Hagg, President and CEO of Northstar, will lead the combined company's Canadian operations, while J. Larry Nichols, President and CEO of Devon, will serve as President and CEO of the US company.

Statistics:

  • Total proved reserves: approximately 1.2 trillion cubic feet of gas and 117 million barrels of oil.
  • Net acres of undeveloped lands: 2.5 million.
  • Public float: 36.8 million shares.
  • Working capital: approximately Cdn.$90 million.
  • Total debt: approximately Cdn.$455 million.
  • Available financial borrowing capacity: estimated Cdn.$735 million.

Sources:

  • Business Wire, June 29, 1998
  • Devon Energy Corporation, press release, June 29, 1998
  • Northstar Energy Corporation, press release, June 29, 1998

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