Devon, WPX plan integration

As third quarter results begin to roll in, Devon Energy and WPX can't wait to put their companies together.

Devon and WPX announced the goal at the end of September, when officials said they would merge through an all-stock deal to create a larger company with a dominant position in an operational area of about 400,000 acres in the Delaware Basin covering much of west Texas and eastern New Mexico.

Plans call for several WPX front-line executives including CEO Rick Muncrief to step into similar or identical leadership roles at the new Devon.

Devon's CEO Dave Hager will become executive chairman of an expanded board of directors once the deal closes.

For now, key individuals from both firms are meeting with each other and merger integration experts as they develop plans for the combination.

Integration team members from Devon include David Harris, executive vice president of exploration and production, Jeff Rite no ur, chief financial officer and Tana Cashion, director of human resources. WPX team members include Clay Gaspar, chief operating officer, Dennis Cameron, general counsel, Kevin Vann, chief financial officer and Angela Kouplen, chief financial officer.

“The intention is to have the full integration team, including subject matter experts from both WPX and Devon, in place soon and begin all aspects of integration planning” a regulatory filing made by Devon earlier this month states.

Making progress

The future executive team already determined the new combined company's overall organizational structure and reporting relationships, Devon' s filing states.

Gaspar, it said, will oversee its geosciences, reservoir, production, drilling, completions, facilities, environmental, health & safety and field operations activities.

Harris will over see the larger company' s business

development, land, technology and innovation activities.

Ritenour will oversee the combined company' s corporate finance, treasury, planning, reserves, accounting, tax, investor relations, marketing, midstream, supply chain and internal audit activities.

Cameron will oversee its legal, public and government affairs activities, while Cash ion will over see its human resources, corporate communications, community relations, and its administration— facilities and real estate, security, corporate services and hospitality, aviation and digital security activities.

A more specific management structure has not yet been announced.

As part of that same filing, Devon officials stated they understood the urgency and importance of integrating the two organizations quickly and effectively.

“Key integration objectives will include identifying synergies and performance improvement opportunities, as well as focusing on culture and t he organizati on ,” a filing Devon made with the U.S. Securities and Exchange Commission stated. “Although we cannot project the exact timing of the close, it may be possible to close as early as mid-December.”

Devon's third quarter results

Devon was the first of the two companies to report its third quarter results.

After markets closed Thursday, it announced it experienced a net loss of $92 million, or 25 cents per share, on total revenues of just more than $1 billion.

The company highlighted these third-quarter results:

• Oil production that totaled 146,000 barrels per day, exceeding midpoint guidance by 6,000 barrels.

•8% lower production expenses, year-over-year.

• Free cash flow generation of $223 million.

• A reduction of quarterly general and administrative expenses of 30%, year-overyear. The lower overhead costs were primarily driven by reduced personnel expenses, company officials stated.

“Devon is executing at a very high level on all aspects of our disciplined cash-return business model,” stated Dave Hager, Devon's CEO, as part of the earnings release. “Our third- quarter performance was highlighted by recordsetting well productivity and capital efficiency gains in the Delaware Basin that drove oil production well above guidance with a total capital investment that was below forecast. Furthermore, this strong operational performance, coupled with significant improvements in our corporate cost structure, positioned us to generate $223 million of free cash flow in the quarter.”

WPX is expected to report i ts third quarter results on Nov. 4.