Skadden and Gibson Dunn are advising on Devon Energy’s merger with Coterra Energy in a deal that values the combined business at around $58bn.
Skadden is advising Devon Energy, while Gibson Dunn is advising Coterra. The all-stock transaction will create one of the world’s largest shale operators with core assets in the Delaware Basin. Coterra shareholders will receive a 0.70 share of Devon common stock for each share of Coterra common stock. On completion, Devon shareholders will own about 54% of the combined company and Coterra shareholders around 46%. The deal is expected to close in the second quarter of this year subject to regulatory approvals. The combined company will be known as Devon Energy.
The Skadden team advising Devon includes Houston-based M&A partners Steve Gill, Mingda Zhao and Emery Choi, with support from Dohyun Kim and Elizabeth Gonzalez-Sussman in New York. Also on the deal are executive compensation partners Erica Schohn and Joseph Penko (both New York); capital markets partner Michael Hong (New York); finance partner Steven Messina (New York); tax partner Trevor Allen (New York); and antitrust partner David Wales (Washington DC).
Meanwhile, the Gibson Dunn team advising Coterra was led by corporate partners Tull Florey, Hillary Holmes and Andrew Kaplan, alongside counsel Jonathan Sapp. Oil and gas practice co-chair Rahul Vashi is advising on the oil and gas aspects of the deal, while senior counsel Gregory Nelson is advising on tax aspects and partner Shalla Prichard on financing aspects. Benefits advice is being provided by partner Krista Hanvey and counsel John Curran, while partner Joshua Lipton is advising on competition matters.
Clay Gaspar, Devon’s president and CEO, said: “This transformative merger combines two companies with proud histories and cultures of operational excellence, creating a premier shale operator. We’ve now built a diverse asset base of high-quality, long duration inventory to drive resilient value creation and returns for shareholders through cycles.
“Underpinned by our leading position in the best part of the Delaware Basin, and a deep set of complementary assets, we expect to capture annual pre-tax synergies of $1bn. This will drive higher free cash flow and greater shareholder returns beyond what either company could achieve alone.”
Evercore is serving as financial adviser to Devon, while Goldman Sachs and JPMorgan are acting as financial advisers to Coterra.
In other recent oil and gas-related deals, back in August Latham & Watkins, Slaughter and May and HSF Kramer were called in to advise on National Grid’s £1.5bn sale of its Grain LNG terminal to British Gas owner Centrica and US infrastructure investor Energy Capital Partners.
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