Tags: Energy | Devon | GeoSouthern | Billion

Energy Deal: Devon May Buy GeoSouthern for $6 Billion

Tuesday, 19 Nov 2013 06:30 PM

Devon Energy Corp. is near an agreement to buy closely held GeoSouthern Energy Corp. for about $6 billion, according to a person familiar with the transaction.

A deal may be announced as soon as this week, said the person, who asked not to be identified because the talks aren’t public. The Woodlands, Texas-based GeoSouthern said it owned 120,500 net acres of drilling leases in the Eagle Ford Shale, among other holdings in Texas, in a February 2012 statement.

Chip Minty, a spokesman for Oklahoma City-based Devon, declined to comment. A message left at GeoSouthern’s headquarters wasn’t immediately returned. The possible deal was first reported by The Wall Street Journal.

Devon has narrowed its focus to onshore North America and is seeking to boost its oil-production growth after selling assets in the Gulf of Mexico and Brazil in recent years. Output averaged the equivalent of about 691,000 barrels of oil a day in the third quarter, up 1.9 percent from the year-earlier period, the company said Nov. 6.

In February 2012, Blackstone Group LP and GeoSouthern closed on a $1 billion credit facility to help fund GeoSouthern’s spending in the Eagle Ford. Peter Rose, a spokesman for New York-based Blackstone Group, declined to comment.

Production from the Eagle Ford may rise to as much as 1.645 million barrels of oil a day in 2022, nearly triple the output from 2012, according to a report from Dallas-based energy consultant Turner, Mason & Co.

Second Transaction

A GeoSouthern transaction would be the second major deal in a month for Devon. The company said Oct. 21 it and Crosstex Energy Inc. agreed to form a business that will acquire all of Crosstex’s shares and combine the two companies’ fuel pipeline and processing facilities.

The entity will consist of a master-limited partnership and a general partner controlling it, both of which will be publicly traded. Devon, which will control both of the partnerships and be the new company’s largest customer, is contributing assets valued at about $4.8 billion.

Devon held cash balances that totaled $4.3 billion as of Sept. 30. About $3.6 billion of its cash resides in units outside North America, Chief Financial Officer Jeff Agosta said on a Nov. 6 conference call with analysts and investors.

Devon shares rose 5 percent to $62.77 at the close in New York, the most since February 2012.

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Devon Energy Corp. is near an agreement to buy closely held GeoSouthern Energy Corp. for about $6 billion, according to a person familiar with the transaction.
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2013-30-19
Tuesday, 19 Nov 2013 06:30 PM
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