No. of Recommendations: 4
Immediately accretive to financial metrics – The transaction is immediately accretive to Devon’s key per-share financial measures, including earnings, cash flow, free cash flow and net asset value. The assets were acquired at less than 4-times EBITDAX, with an estimated free cash flow yield of 15 percent at an $80 WTI oil price.
Improves outlook for return of capital to shareholders – Due to the accretive nature of this transaction to free cash flow, Devon’s board of directors has expanded its share-repurchase authorization by 67 percent to $5 billion through mid-year 2026. The company also expects this acquisition to be accretive to the company’s dividend payout in 2025 and beyond.
Maintains strong financial position – The transaction structure supports Devon retaining its strong investment-grade credit ratings with a projected net debt-to-EBITDAX ratio of approximately 1.0 times upon closing. The company plans to improve its financial strength by allocating up to 30 percent of its annual free cash flow towards reducing $2.5 billion of debt over the next two years.
https://www.morningstar.com/news/globe-newswire/91...
