A major merger in the energy industry was announced Monday.
Oklahoma City’s Devon Energy and Tulsa based WPX will become one company, making it one of the largest oil producers of its kind in the United States worth an estimated $12 Billion.
“It’s a deal that is in our city’s favor and I think it’s leadership at the company that is committed to Oklahoma City that insured that that was the case today,” Oklahoma City Mayor David Holt said.
Dean of Oklahoma City University’s Minders School of Business Steve Agee said it’s great news for Devon and Oklahoma City.
“The news has been pretty negative in regard to oil and gas lately because of the COVID situation,” he said. “It’s been kind of a depressing time, but this is a merger of opportunity between two very good companies, two very well run companies.”
Under the merger of equals agreement, the new company will keep the name Devon Energy and will also remain headquartered in downtown Oklahoma City.
WPX is currently developing a 12-story building in downtown Tulsa.
“It's sad news, just to be blunt,” Tulsa Mayor G.T. Bynum said. “To have a company and a leadership team like that, knowing they're leaving town, it's tough.”
“I am sensitive to the fact that that this didn't benefit both cities in quite the same fashion,” Holt said. “But that'll be us tomorrow, and it's been us yesterday, so we know how it goes.”
Holt said he personally spoke with Devon CEO Dave Hager Monday.
“I came away from it absolutely convinced that this is good for Oklahoma City,” he said. “This builds a bigger company, it’s the fourth largest independent energy producer in the country now, and it is headquartered here in Oklahoma City.”
Agee said the merger will help consolidate costs in both the cooperate office and field activities.
“Energy companies are struggling right now,” Agee said. “It doesn’t matter if you’re in exploration or production, or if you’re in the service industry, drilling companies, they’re all suffering right now, so anytime you can cut costs and generate more revenue on that bottom line that’s the object.”
He said more energy mergers may be on the horizon.
“Several companies here in Oklahoma have filed for Chapter 11 bankruptcy, so there’s potentially opportunity there for a merger activity,” Agee said.
The companies said the merger should be finalized in early 2021.