WSJ: Devon Energy in talks to acquire Woodlands company for $6B

HOUSTON — The Wall Street Journal is reporting that Oklahoma City-based Devon Energy is nearing a deal to acquire privately held GeoSouthern Energy Corp., an exploration company that helped pioneer development of the booming Eagle Ford Shale in South Texas.

The Journal, quoting people familiar with the matter,  said the two companies could announce a deal with a value of about $6 billion on Wednesday.

Chip Minty, a Devon spokesman, told FuelFix the company does not comment on “rumors and speculation.” Representatives of GeoSouthern Energy and one of its major investors, Blackstone, did not respond to requests for comment.

GeoSouthern Energy  recently leased space at Wildwood Corporate Centre, a three-story building under construction at 460 Wildwood Forest at Interstate 45 North in The Woodlands, with plans to relocate its headquarters there in January, the Houston Chronicle reported in April. The company employs about 140 workers at its headquarters, according to that report.

GeoSouthern is a privately owned company founded in 1981 that last year held drilling rights over 120,500 net acres “in an attractive portion of the Eagle Ford trend,” according to a 2012 press release from Blackstone.

Devon is in the midst of a transformation after a dramatic collapse last year. The company’s earnings of more than $2 billion in 2010 and 2011, were decimated in 2012 by the natural gas boom, which pushed down prices and left Devon with a loss of $185 million in 2012. Natural gas made up about 62 percent of Devon’s production in 2012, according to filings with the U.S. Securities and Exchange Commission.

Devon has focused its recent efforts on boosting oil production, which has helped the company increase revenues so far this year. But the company’s earnings so far this year are lower than in 2012, according to the company’s latest earnings report. Devon had a net loss of $227 million through the first 9 months of 2013, compared with a profit of $151 million during that same period last year.

Devon opted to close its Houston office in 2012 as part of a consolidation and cost-cuttng plan, moving its staff into its gleaming, 50-story skyscraper in Oklahoma City.

Devon said early this year that it was “the first and only U.S.-based independent energy company to develop and operate a bitumen oil sands project in Canada,” according to regulatory filings. The company’s production of oil from Canada averaged 38,000 barrels per day in the third quarter of 2013.

Devon’s total oil production was 690,000 barrels of oil equivalent per day during the three months that ended Sept. 30, with natural gas accounting for 57 percent of production, according to regulatory filings. Its third-quarter oil production of 119,000 barrels per day was up 21 percent from the same period a year ago, according to regulatory filings.

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