Devon Energy’s RimRock Acquisition Highlights Value Outside Permian Basin

The RimRock transaction, which adds at least 100 locations, should enable Devon Energy to keep production flat in the Williston Basin for the next 4-5 years, Goldman Sachs said.

Devon Energy’s RimRock Acquisition Highlights Value Outside Permian Basin

The RimRock bolt-on acquisition adds a contiguous position of 38,000 net acres directly offsetting and overlapping Devon Energy’s existing position in the Williston Basin. (Source: Hart Energy, RimRock Oil and Gas, Shutterstock.com)

News of a new Devon Energy Corp. acquisition might have had investors expecting an expansion in the Permian Basin.

Instead, Devon’s $865 million Bakken bolt-on on of RimRock Oil and Gas LP, announced on June 8, highlights the strategic value of a diversified asset base, said David Deckelbaum, an analyst at Cowen. In addition to its Delaware Basin “franchise growth asset,” Devon holds positions in the Anadarko and Powder River basins and the Eagle Ford Shale.

RimRock’s acreage overlaps and is adjacent to Devon’s Bakken position, “makes logical sense and paints an interesting picture of FCF accretive bolt-ons that can be arbitraged by diversified E&Ps to more rapidly grow FCF distributions per share.”

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Darren Barbee

Darren Barbee is senior editor for Oil and Gas Investor magazine.