Devon Energy to buy Mitchell Energy & Development for 1.85 times revenue

Weekly Corporate Growth Report, Aug 20, 2001

Featured Transaction

The Deal: Devon Energy Corp. has agreed to purchase Mitchell Energy & Development Corp. for $3.1 billion in cash and stock. The transaction is a continuation of Devon's recent acquisition spree. The company has doubled its size in just a few years. After news of the deal was announced, shares of Mitchell gained 68 cents to $45.65, and Devon shares rose 47 cents to close at $50.26.

Discussion: Mitchell Energy & Development explores for and processes oil and gas and gathers, processes and markets natural gas and natural gas liquids. The company has proved reserves of 2.1 trillion cubic feet of natural gas equivalent, mainly in Texas. Mitchell Energy also owns or has interests in 9,100 miles of gas gathering pipelines and six gas processing plants, and it's one of the largest United States producers of natural gas liquids at 55,000 barrels per day. Devon Energy has become an oil and gas powerhouse with the acquisitions of PennzEnergy, Northstar Energy and Santa Fe Snyder. The firm has proved reserves of approximately 1.1 billion barrels of oil equivalent, mostly in Colorado, New Mexico, Texas and Wyoming. It also has exploration and production operations in the Gulf of Mexico and western Canada and is a major producer of coalbed methane gas.