NEW: Inside $DVN's Massive $5 Billion Dollar Oil Grab...

Well in the midst of me sweating bullets about whether to buy the $7 chicken versus the $9 chicken at the grocery store today, oil giant Devon Energy (NYSE:DVN) has decided to pull out its black gold pocket book to make a rather large purchase of its own. 

(Source: Giphy) 

You see, while EV enthusiasts are busy tracking Elon’s every move and our appointed politicians are hugging trees in hopes of a zero-emission utopia, Oil conglomerates like Devon Energy are still making it rain with cash - specifically $5 billion in cash for Grayson Mill Energy’s Williston Basin business. 

(Source: Yahoo Finance) 

In short, Devon has decided that they are shelling out $3.25 billion in cold, hard benjamins and another $1.75 billion in stock to get their hands on all of Grayson Mill's assets. Meaning in essence, Devon decided to buy up every car on the lot, then decided to buy the whole dealership just for kicks and giggles. Classic big d$&% oil man move. 

(Source: Ifunny) 

Now to be clear, this deal isn’t just about flexing Devon’s financial muscles; it’s a strategic play that significantly bolsters Devon’s position in the Williston Basin. We’re talking 307,000 net acres of prime oil-producing land that should make every Devon executive’s mustache curl with excitement. 

(Source: Giphy) 

In fact, Devon’s CEO, Rick Muncrief, isn’t shy about the benefits of this deal either as he basically said, “We’re about to make it rain dividends.” They’re projecting production from the newly acquired properties to stay at a solid 100,000 barrels of oil equivalent per day next year. 

Which is more than enough oil to keep those gas guzzling trucks in Oklahoma filled and satisfied. 

(Source: Giphy) 

But with this big swinging $5 billion deal, it’s not just about pumping more oil. Devon’s also looking at some hefty savings from operational efficiencies and marketing synergies. They’re expecting up to $50 million in annual cash flow savings. Talk about summer savings…

Yet, even though this seemed like this move would also pump up Devon’s stock prices as it would its oil production, Devon Energy actually dipped a bit on the news - (-1.08%) on Monday. 

(Source: Google Finance) 

Of course, that’s the short term reaction, but the real excitement lies in the long term outlook for Devon. With this newly sealed deal they’ll be expanding their share-repurchase authorization by 67% to $5 billion through mid-2026. Which is some serious shareholder love right der. 

(Source: Globe Newswire) 

But let’s zoom out for a second, because while everyone’s talking about electric vehicles and green energy, oil companies like Devon are out here still cashing checks and breaking necks with big moves like these. And this deal is just another example of the ongoing consolidation in the oil and gas sector. In fact, last year alone, there were $250 billion worth of deals just like this one… meaning black gold is still as precious as ever. 

(Source: Fortune) 

However, in terms of the company and its stock price, what’s next for Devon? 

Well as of right now, they are probably sitting atop the Devon Tower today popping champagne and bragging about the thoroughbred race horses they are going to buy next weekend. 

(Source: Giphy) 

But once the excitement dials down, they’ll be planning to use the increased cash flow from this deal to boost their dividend payouts starting next year. 

Plus, they’re eyeing further debt reduction, aiming to allocate up to 30% of their annual free cash flow towards reducing $2.5 billion of debt over the next two years. Think getting ripped by only eating pizza. It’s a win-win for Devon. 

(Source: Giphy) 

So what’s the takeaway friends?

Well in conclusion, while the world continues to debate the future of energy, Devon is making sure it’s well-positioned no matter what. And with this new deal, they’ve just acquired literal gold themselves with a lot more land and a lot of oil under it. 

(Source: Giphy) 

So whether you’re team EV or team Oil, if you’re an investor looking to make good bets, it may be in your best interest to keep an eye on this oil giant. Because the oil game is far from over, and Devon’s just getting started. Let it rain babayyy! 

Stocks.News holds positions in Devon Energy as mentioned in the article.