Devon Energy Corp. entered into a definitive purchase agreement to acquire leasehold interest and related assets of RimRock Oil and Gas LP in Williston basin for total cash consideration of $865 million.
The transaction adds a contiguous position of 38,000 net acres (88% working interest) all within the Fort Berthold Indian Reservation in Dunn County, ND, directly offsetting and overlapping Devon’s existing position.
In 2017, RimRock acquired operation of 100 producing wells and currently has 181 operated wells. The company’s first-quarter 2022 production was about 15,000 boe/d (78% oil), with volumes expected to increase to an average of 20,000 boe/d over the next year.
Devon expects to incur about $100 million of capital expenditures post-closing in 2022. The transaction also adds more than 100 highly economic undrilled inventory locations.
Due to the accretive nature of this transaction to free cash flow, Devon’s board intends to approve a 13% increase to the fixed quarterly dividend following closing. The company also expects this transaction to be accretive to the variable dividend payout in 2022 and beyond.
The transaction is subject to customary terms and conditions and is expected to close third-quarter 2022, with an effective date of Apr. 1, 2022.