Devon Energy is set to acquire the leasehold interest and related assets in the Williston Basin from RimRock Oil and Gas for $865m in cash.
Devon Energy has signed an agreement with RimRock, which is a portfolio company of private equity company Warburg Pincus, for the transaction.
Established in 2016, RimRock operates as an independent oil and gas company, with nearly 200 wells, including 64 drilled wells and over 130 acquired operating wells.
The acquisition is expected to be completed in the third quarter of 2022, subject to customary terms and conditions, and will be effective 1 April 2022.
RimRock CEO James Fraser said: “RimRock was founded with the mission to apply modern technologies to optimize asset performance as a low-cost operator.
“The current commodity environment, combined with our high-performing assets and the support of our strong team, resulted in an incredible business that I am proud to have led.
“I would also like to thank Warburg Pincus for their partnership over the past 5 years and believe Devon Energy will benefit greatly from ownership of these assets moving forward.”
Based on the accretive nature of the transaction to free cash flow, Devon’s board intends to increase the fixed quarterly dividend to 13%, after the closing of the deal.
The transaction is said to enhance the company’s asset quality and scale in Williston Basin.
It adds a contiguous 38,000 net acres, and more than 100 highly economic undrilled inventory locations to the company’s portfolio.
RimRock has produced around 15,000 barrels of oil per day in the first quarter, with volumes expected to increase to an average of 20,000 barrels of oil per day over the next year.
Devon forecasts a capital expenditure of $100m this year, after the closing of the acquisition.
Devon Energy president and CEO Rick Muncrief said: “This bolt-on acquisition is highly complementary to our existing position in the Williston Basin and is immediately accretive to our financially-driven strategy.
“RimRock’s directly adjacent acreage offers strong operational synergies, adds to our high-quality inventory in the core of the play and positions us to further increase the return of cash to shareholders.”
