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Devon to acquire RimRock’s

Williston assets for $865mn

WILLISTON DEVON Energy has announced this week that it The transaction also adds more than 100
BASIN has agreed to acquire RimRock Oil and Gas’ Wil- undrilled inventory locations that Devon
liston Basin assets in North Dakota for $865mn described as “highly economic”, adding that
in cash. this positions the company’s Williston assets to
RimRock is a portfolio company of private maintain high-margin production and strong
equity firm Warburg Pincus. The company owns cash flow for several years.
over 38,000 net acres (154 square km) in the The transaction is due to close in the third
Williston Basin, which is its main area of focus. quarter of the year, with Devon anticipating
RimRock acquired the majority of its Williston $100mn of capital expenditures to be incurred
acreage via a $500mn purchase from Whiting post-closing in 2022.
Petroleum in 2017. It has a roughly 88% work- “This bolt-on acquisition is highly comple-
ing interest in its Williston assets, which include mentary to our existing position in the Williston
around 200 wells, primarily within the Fort Bert- Basin and is immediately accretive to our finan-
hold Indian Reservation in North Dakota’s Dunn cially driven strategy,” stated Devon’s president
County. and CEO, Rick Muncrief. “RimRock’s directly
The assets directly offset and overlap Devon’s adjacent acreage offers strong operational syn-
position in the basin, and thus are expected to ergies, adds to our high-quality inventory in
help it build scale as well as boosting its overall the core of the play and positions us to further
Williston asset quality. Devon said RimRock’s increase the return of cash to shareholders.”
assets produced roughly 15,000 barrels of oil Devon said its board intends to approve a 13%
equivalent per day (boepd) in the first quarter of increase to the fixed quarterly dividend following
2022, comprised of 78% oil. This is expected to the closing of the transaction. It attributed this
increase to an average of 20,000 boepd over the to the accretive nature of this transaction to free
next year. cash flow.™

Callon raises capex amid high

oil prices, rising costs

TEXAS HOUSTON-HEADQUARTERED Callon service providers and raw materials.
Petroleum has joined a number of exploration Callon also revealed that it had taken actions
and production companies in raising its capital to secure reliable access to top-tier service and
expenditure budget. The company announced consumables providers for the remainder of
an updated operational capex budget range of 2022 and was extending contracts into 2023.
$790-810mn in 2022, marking an increase from The company is currently running seven rigs but
$725mn previously. expects to drop one before the end of the month.
Inflationary service cost pressures were cited “As we have worked with our oilfield services
as being behind the revised guidance. Average partners over the last few months to amend and
price increases of about 20% have been reported extend several key agreements, visibility into our
for key drilling and completion items compared capital cost structure for the remainder of 2022
to 2021 levels. has dramatically improved,” Callon’s president
At the same time, Callon increased its projec- and CEO, Joe Gatto, stated.
tions for adjusted free cash flow to over $900mn “While service costs have increased as the
in 2022, resulting from higher commodity prices industry faces significant inflationary pressures,
according to its second-quarter report. The fig- we remain committed to a disciplined spending
ure is higher than Wall Street had projected, with programme with an expected capital reinvest-
analysts previously forecasting $853mn. ment rate that is now tracking at less than 50%,”
This comes as a sector-wide trend emerges, Gatto added.
with Morgan Stanley analysts saying around Callon merged with Carrizo Oil & Gas in
30% of the exploration and production com- 2019 and operates in around 180,000 net acres
panies they cover have raised their capex (728 square km) spread across the Permian
budgets owing to inflationary pressures from Basin and Eagle Ford shale in Texas.™

P6 www. NEWSBASE .com Week 23 09•June•2022