Devon Energy to Acquire Mitchell Energy for $3.5 Billion
OKLAHOMA CITY and THE WOODLANDS, Texas, Aug 14, 2001 /PRNewswire/ --
Devon Energy Corporation (Amex: DVN; Toronto: NSX) and Mitchell Energy &
Development Corp. (NYSE: MND) announced today that Devon will acquire Mitchell
for cash and stock. With the acquisition, Devon will become the second largest
independent natural gas producer in the United States.
"The Mitchell properties fit perfectly with our long-term objectives," said J.
Larry Nichols, Chairman, President and CEO of Devon. "The reserves are
concentrated -- nearly all in Texas, 71 percent natural gas with an impressive
growth curve. In addition to the oil and gas properties, we will also acquire
one of the largest suites of U. S. midstream assets of any independent. We
believe this transaction can deliver significant growth in per share value, as
Devon's shareholders have come to expect."
George P. Mitchell, Chairman and CEO of Mitchell, said, "This transaction
provides important benefits to our shareholders and employees. It provides
significant value while retaining a unique opportunity to participate in the
exciting upside potential of Devon. Our shareholders and employees will benefit
from becoming part of a larger, stronger and more diversified company."
Benefits of the Transaction
-- Accretive to Devon's reserves per share, production per
margin per share and earnings per share.
-- Expands Devon's year end reserve base by approximately
38%, adding a
new high-growth core area.
-- Complements and expands Devon's established midstream
critical mass in the strategically located Dallas/Forth
-- Enhances Devon's marketing clout in North American gas
-- Enhances Devon's technological leadership in tight gas
Major Terms and Conditions
Under the terms of the agreement, Mitchell's shareholders would receive, for
each Mitchell common share, $31 cash and 0.585 of a share of Devon common stock.
This requires Devon to pay $1.6 billion and issue 30.2 million shares to
Mitchell's shareholders. Based upon Devon's closing stock price of $50.26 on
August 13, 2001, the total value of the cash to be paid and stock to be issued
to Mitchell shareholders would be approximately $3.1 billion. Devon would also
assume approximately $400 million of debt and other obligations of Mitchell.
Devon expects the acquisition to be accounted for using the purchase method of
The board of directors of each company has unanimously approved the merger.
George P. Mitchell, Chairman and CEO of Mitchell, and his wife own approximately
46 percent of Mitchell's outstanding common stock. Mr. and Mrs. Mitchell have
agreed to vote their shares in favor of the acquisition by Devon. After
completion of the transaction, Mr. and Mrs. Mitchell will own approximately nine
percent of Devon's common shares. Todd Mitchell, son of George P. Mitchell, will
join Devon's board of directors.
Pro Forma Transaction Impact
-- Based upon estimates as of June 30, 2001, Devon would
approximately 2.5 trillion cubic feet of gas equivalent
acquisition, increasing Devon's proved reserves to more
1.5 billion barrels of oil equivalent.
-- Proved reserves would be 58 percent natural gas,
32 percent oil and
10 percent natural gas liquids.
-- Approximately 82 percent of proved reserves would be in
-- Devon would also acquire natural gas processing plants,
other midstream assets valued between $800 million and
-- Devon and Mitchell combined produced approximately 1.4
feet of natural gas per day in the U.S. in the second
quarter of 2001,
making Devon the second largest independent gas producer
in the U.S.
-- Devon expects to achieve annual operating and overhead
synergies of at
least $20 million.
Completion of the transaction will cause Devon's outstanding
shares to increase
from 126 million to 156 million. Devon's capital structure after the transaction
will include $150 million in preferred securities, about $3.4
billion of net
long-term debt and other long-term liabilities of $340 million.
The $3.4 billion
debt figure excludes certain Devon debentures that are exchangeable into Chevron
common stock. (Devon owns 7.1 million shares of Chevron.)
Other Terms and Conditions
The transaction is subject to approval by the shareholders of both companies as
well as expiration of the Hart-Scott-Rodino waiting period and other customary
closing conditions. Both Devon and Mitchell intend to hold special shareholders'
meetings as soon as practicable following completion of regulatory review.
Completion of the transaction is expected in the fourth quarter of 2001.
Conference Call and Investor Presentation
Devon and Mitchell will discuss this transaction in a conference call webcast
today. The conference call webcast will begin at 8:30 am Central Time (9:30 am
Eastern Time). The webcast may be accessed from Devon's homepage at www.dvn.com
. Devon and Mitchell will also host a meeting of investors and analysts at 11:00
am Central Time (12:00 pm Eastern Time). That webcast may also be accessed on
Devon's homepage at www.dvn.com .
Mitchell Energy & Development Corp. is one of the nation's largest independent
producers of natural gas and natural gas liquids. For additional information on
the company and its operations, visit our Internet website at
Devon Energy Corporation is an independent energy company engaged in oil and gas
exploration, production and property acquisitions. Devon ranks among the top
five U.S.-based independent oil and gas producers and is included in the S&P 500
Index. Shares of Devon Energy Corporation trade on the American Stock Exchange
under the symbol DVN. Devon's exchangeable shares (resulting from Northstar,
Devon's wholly-owned Canadian operating unit) trade on the Toronto Stock
Exchange under the symbol NSX.
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
contemplated transaction and strategic plans, expectations and objectives for
future operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or developments
that the companies expect, believe or anticipate will or may occur in the future
are forward-looking statements. This includes completion of the proposed
transaction, realization of expected synergies from the transaction, reserve
estimates, future financial performance, future equity issuance and other
matters. These statements are based on certain assumptions made by the companies
based on their experience and perception of historical trends, current
conditions, expected future developments and other factors they believe are
appropriate in the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the companies. Statements regarding future production are subject to all of the
risks and uncertainties normally incident to the exploration for and development
and production of oil and gas. These risks include, but are not limited to,
inflation or lack of availability of goods and services, environmental risks,
drilling risks and regulatory changes. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
Investors and security holders are advised to read the joint proxy statement/
prospectus that will be included in the Registration Statement on Form S-4 to be
filed with the Securities and Exchange Commission in connection with the
proposed transaction because it will contain important information. The joint
proxy statement/prospectus will be filed with the SEC by Devon and Mitchell.
Investors and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by Devon and
Mitchell with the SEC at the SEC's web site at www.sec.gov . The joint proxy
statement/prospectus and such other documents (relating to Devon) may also be
obtained for free from Devon by directing such request to: Devon Energy
Corporation, 20 North Broadway, Suite 1500, Oklahoma City, Oklahoma 73102-8260,
Attention: Investor Relations, telephone: (405) 552-4570, e-mail:
firstname.lastname@example.org. The joint proxy statement/prospectus and such other
documents (relating to Mitchell) may also be obtained for free from Mitchell by
directing such request to: Mitchell Energy & Development Corp., 2001 Timberloch
Place, The Woodlands, Texas 77380, Attention: Investor Relations, telephone:
(713) 377-6625, e-mail: email@example.com.
Devon, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" of proxies from
Devon's shareholders in connection with the transaction. Information regarding
such persons and a description of their interests in the transaction is
contained in Devon's Proxy Statements and Annual Reports on Form 10-K filed with
the SEC. Additional information regarding the interests of those persons may be
obtained by reading the proxy statement/prospectus when it becomes available.
Mitchell, its directors, executive officers and certain members of management
and employees may be considered "participants in the solicitation" of proxies
from Mitchell's shareholders in connection with the transaction. Information
regarding such persons and a description of their interests in the transaction
is contained in Mitchell's Proxy Statements and Annual Reports on Form 10-K
filed with the SEC. Additional information regarding the interests of those
persons may be obtained by reading the proxy statement/prospectus when it
SOURCE Devon Energy Corporation
media, Vince White, VP Communications and Investor Relations,
+1-405-552-4505, or investors, Zack Hager, Manager, Investor Relations, +1-405-552-4526, both of Devon Energy Corporation