US shale maker Devon Energy Corp is in talks to acquire rival WPX Energy Inc in an all-equity transaction that would create a company worth about $ 6 billion, people familiar with the matter said Saturday.
Talks of the deal show how consolidation in the oil and gas industry is increasing as low energy prices push some independent producers to seek scale through mergers. In July, Noble Energy Inc agreed to be acquired by Chevron Corp for $ 5 billion in stock.
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According to one of the sources, the deal, which would value Tulsa, Oklahoma̵
The sources, who requested anonymity to discuss private talks, warned that a deal was not guaranteed.
Devon and WPX did not immediately respond to requests for comment.
|WPX||WPX ENERGY INC||4.44||+0.03||+ 0.68%|
|DVN||DEVON ENERGY CORPORATION||8.82||-0.14||-1.56%|
Buffered by reduced hydrocarbon demand due to coronavirus lockdown measures, which helped briefly push US crude oil prices into negative territory for the first time earlier this year, US oil and gas producers are looking for combinations.
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Such mergers allow companies to eliminate duplication and create economies of scale by structuring them at little or no premium over existing valuations to retain as much liquidity as possible.
Devon, based in Oklahoma City, was valued at $ 3.4 billion at the end of Friday. Shares of WPX closed Friday at $ 4.44, giving the company a market capitalization of $ 2.5 billion.
Both companies have substantial operations in the Delaware part of the Permian Basin, the heart of the US shale revolution in parts of Texas and New Mexico.
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Devon also holds acreage in the Eagle Ford game of South Texas, Oklahoma, and Wyoming. Outside of the Permian, WPX has land in North Dakota.
(Reporting by David French in New York; Editing by Sandra Maler and Richard Chang)