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Wednesday, February 14, 2024

Devon -- Dividend Watch -- February 14, 2024

Locator: 46819DIV.

Updates

February 14 2024: David Messler's take over oilprice.com.

The merger and acquisition deals are coming in the shale patch, at a rate almost too fast to document. Last week news broke about Devon Energy, (NYSE:DVN), and Canadian-based producer, Enerplus,opening merger talks. Enerplus has some choice acreage in the Bakken play that would be very attractive to Devon as it fills in a lot of gaps in its own prime Bakken acreage. 

They also hold some non-operated acreage in the Marcellus, that would likely be sold off as Devon has no other operation in that basin. The Bakken is home to some of the longest shale laterals, and the ERF “jigsaw puzzle” pieces would assist DVN greatly in maximizing the production from the play. Details are sketchy at this point, and I wouldn't be surprised if ERF isn't holding out for a cash premium given the liquids-rich “dirt”- 68%, they own. That would be the smart play for their shareholders. DVN has reached for its checkbook in its last couple of deals, for RimRock, and Validus. The stocks of both companies are off from peaks set in Q-3 of last year, DVN about 30% and ERF about 15%.

This is the time to be merging with companies that can contribute immediately to the bottom line, and synergistically make Newco potentially a better entity than the two were separately. That’s what’s supposed to happen anyway. The question arises, should Devon be the one buying? Here’s the problem with the moves Devon has made employing this fill-in-the-gaps, “bolt-on” strategy, from a shareholder perspective. They aren’t getting paid for it by the investing community! Perhaps ERF should be buying Devon’s Bakken acreage. The industrial logic works that way as well. We will table that thought for now, but return to it as we close out the article.

Original Post 

Devon acquiring Enerplus?

Haven't seen update since several days ago

Devon appears not to have announced 1Q24 dividend yet.

Motley Fool's take.

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