Shares of shale producer Devon Energy (DVN) - Get Devon Energy Corporation Report and rival WPX Energy (WPX) - Get WPX Energy, Inc. Report were rising Monday after the companies confirmed they would merge in an all-stock deal with an enterprise value of about $12 billion.
Devon Energy shares rose 4.2% to $9.19 on Monday, while WPX Energy rose 5.07% to $4.67.
The Wall Street Journal reported earlier the companies were discussing an all-stock transaction.
The merger is expected to close in the first quarter of 2021.
Upon completion of the transaction, Devon shareholders will own about 57% of the combined company and WPX shareholders will own the rest.
“This merger is a transformational event for Devon and WPX as we unite our complementary assets, operating capabilities and proven management teams to maximize our business in today’s environment, while positioning our combined company to create value for years to come,” said Dave Hager, Devon’s president and CEO, in a statement Monday.
Shares of Devon Energy have fallen about 64% over the past year, while WPX Energy has seen its stock decline about 57% as oil prices have slumped amid weaker demand during the coronavirus pandemic.
The Journal noted that Devon Energy’s market cap has fallen to about $3.4 billion from more than $50 billion during its peak in 2008. WPX Energy has a market cap of about $2.5 billion.
A merger of Devon Energy and WPX Energy would give Devon a larger foothold in the Permian Basin of Texas and New Mexico, the nation's top oil-drilling region, and an entry into North Dakota, where WPX, based in Tulsa, Oklahoma, also has holdings in the Williston Basin, the Journal noted.
The Devon Energy and WPX Energy combination follows Chevron's (CVX) - Get Chevron Corporation Report acquisition in July of Noble Energy (NBL) - Get Noble Energy, Inc. Report. The deal for $5 billion in stock marked the biggest oil-patch tie-up since the coronavirus pandemic began in mid-March.