Devon Energy to buy Anderson Exploration

Sep 05, 2001 02:00 AM

Announcing its second multibillion dollar takeover in three weeks, Oklahoma City-based Devon Energy said it has agreed to buy Canada's Anderson Exploration for $ 4.6 bn, including $ 1.2 bn in assumed debt. Last month, Devon said it would acquire Mitchell Energy & Development Corp. of Woodlands, Texas, for $ 3.2 bn, including $ 400 mm in assumed debt.
Devon, an independent exploration and production company, expects to complete both deals by the end of the year. Assuming the purchase of Mitchell is successfully completed, the Anderson acquisition would increase Devon's proved energy reserves by 35 % to 2 bn barrels of oil equivalent, making Devon the "pre-eminent" independent oil and gas producer in North America, Devon said.
Calgary, Alberta-based Anderson has 2 mm acres of undeveloped land in western and northern Canada, with assets in the Northwest Territories, the Yukon, the Mackenzie Delta and the Beaufort Sea. The undeveloped properties may contain "some of the largest remaining undeveloped oil and gas deposits in North America," Devon said.

Once both acquisitions are completed, "Devon will be in position to deliver strong production and reserve growth for years to come," said J. Larry Nichols, president and CEO of Devon. Devon's natural gas production in North America would rise about 37 % to 2.2 bn cfpd. Natural gas would comprise 64 % of the company's total reserves.
Terms of the agreement require Devon to pay $ 25.79 for each share of Anderson common stock, 51 % above Anderson's closing price. The stocks of several oil and gas companies have plummeted due to declining natural gas prices. Gas prices have dropped more than 70 % since the beginning of the year to about $ 2 per thousand cf.

The proposed buyouts of Mitchell and Anderson follow last year's $ 3 bn purchase of rival Santa Fe Snyder. The year before, Devon bought PennzEnergy, another Houston-based rival, for $ 2.6 bn.
Devon won't be seeking any more acquisitions once the proposed buyouts of Mitchell and Anderson are completed, Nichols said during a conference call. "While we have the ability to do two deals at once, we do not have the ability to do three deals at once," he said. "We will most definitely not be looking at anything else for the foreseeable future." Devon plans to finance the acquisitions of Mitchell and Anderson with a five-year, $ 6 mm loan arranged by UBS Warburg and Banc of America, Nichols said.

Source: Tulsa World
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