Devon Business Practices

[Pete]

I'm starting to hear rumblings on several fronts that Devon is in an acquisition mode.

Specifically, I understand they are taking a hard look at a sizable energy company in Colorado.


If that or something similar was in process, it might explain a little about the recent urgency around the Preftakes block.

The assumption being that they would move lots of jobs to OKC if they bought another company, and would need somewhere to put them.

[BillyOcean]

Is it a Bakken operator?

[catch22]

I work with a guy who's main job is at Devon but has a second job with my company. He has told me the tower is filling up fast, but they are also looking at buying a company out. Confirming Pete's info. (assuming they aren't the same person )

[adaniel]

Niobrara in Colorado is the "hot play" right now. Would be cool if they could nab an operator from up there.

[Praedura]

Devon just keeps growing and growing. Continental is booming. The new Enable midstream partnership. Not to mention many other smaller players in the O&G field that are sprouting up/expanding.

This doesn't feel like the end of an era, or even the middle of one. It feels like the beginning of a new one.

[ou48A]

Devon just keeps growing and growing. Continental is booming. The new Enable midstream partnership. Not to mention many other smaller players in the O&G field that are sprouting up/expanding.

This doesn't feel like the end of an era, or even the middle of one. It feels like the beginning of a new one.

In the boom and bust cylces of the oil and NG busness it always seem like it will never end.....
.... just before it does.
The smart players never get too over extended and live to fight another day.

[s00nr1]

If I were to place a wager on which CO corporation Devon has its eyes on it would be KOG:

KOG: Summary for Kodiak Oil & Gas Corp Common St- Yahoo! Finance

Significant assets in the Bakken and there has been talk for awhile about them being a serious takeover target.

[PhiAlpha]

If I were to place a wager on which CO corporation Devon has its eyes on it would be KOG:

KOG: Summary for Kodiak Oil & Gas Corp Common St- Yahoo! Finance

Significant assets in the Bakken and there has been talk for awhile about them being a serious takeover target.

That was my guess as well.

[ou48A]

XOM and CLR have been other rumored buyers of KOG.
IMHO somebody will eventually buy KOG for its production and great acreage.

Are there any other KOG stock holders here besides my self?
If so you may already know that KOG had been trying to sell its self but apparently they didn't like any of the offers. KOG has debt load that is considered high and has a higher than some, well drilling cost.

In their second quarter update KOG said they had about 130 employes company wide. But they do a lot of contracting of work .

[Kokopelli]

Two other companies that also operate in the same areas that Devon does are, Forest Oil and SM Energy.

SM Energy (SM) is the larger of the two with a market cap of 4.56b has 725 employees and would offer lots of synergy with operations in Mid-Continent, Permian, Rocky Mtn, South Texas and Gulf Coast areas.

Forest Oil (FST) has a market cap of 620m has 605 employees and operates in the East Texas - N Louisiana, South Texas and the Tx panhandle. They are currently have their Tx panhandle assets for sale.

[Bellaboo]

I have a friend who owns several farms west of Blanchard. He has 13 SM Energy wells on his land. So they are probably pretty big in the Mid-Continent.

I thought I read where some of their Mid-Con assests were for sale also.

[PhiAlpha]

XOM and CLR have been other rumored buyers of KOG.
IMHO somebody will eventually buy KOG for its production and great acreage.

Are there any other KOG stock holders here besides my self?
If so you may already know that KOG had been trying to sell its self but apparently they didn't like any of the offers. KOG has debt load that is considered high and has a higher than some, well drilling cost.

In their second quarter update KOG said they had about 130 employes company wide. But they do a lot of contracting of work .

I am, haven't been paying much attention to it though other than the improving stock price.

[PhiAlpha]

Two other companies that also operate in the same areas that Devon does are, Forest Oil and SM Energy.

SM Energy (SM) is the larger of the two with a market cap of 4.56b has 725 employees and would offer lots of synergy with operations in Mid-Continent, Permian, Rocky Mtn, South Texas and Gulf Coast areas.

Forest Oil (FST) has a market cap of 620m has 605 employees and operates in the East Texas - N Louisiana, South Texas and the Tx panhandle. They are currently have their Tx panhandle assets for sale.

Forest has been struggling since 2009, wouldn't surprise me if someone bought them out. SM is a strong company, big in the areas you mentioned, also are picking up a lot of acreage for several emerging plays in Illinois.

[blangtang]

Pete says sizable, so

QEP

SM

Whiting (WLL)

those would be pretty big deals.

[PhiAlpha]

Pete says sizable, so

QEP

SM

Whiting (WLL)

those would be pretty big deals.

Forest would be considered decently sizable as well.

[blangtang]

Forest would be considered decently sizable as well.

yeah, something stinks at that place, saw this today:

-Forest Oil CFO Kennedy resigns, effective Aug. 23
-Forest Oil CFO resignation doesn't look good, says Wells Fargo

What does Devon want, to get more oily? They probably need to do something to fend off a value based activist ...

Quarter update is Wed AM, they need a good story to tell.

[mugofbeer]

That was my guess as well.

Damn! I guess I'm not the only smart one!

KOG went over $10/sh today so there may be some others who think this might be a possibility.

[PhiAlpha]

yeah, something stinks at that place, saw this today:

-Forest Oil CFO Kennedy resigns, effective Aug. 23
-Forest Oil CFO resignation doesn't look good, says Wells Fargo

What does Devon want, to get more oily? They probably need to do something to fend off a value based activist ...

Quarter update is Wed AM, they need a good story to tell.

Devon is pretty oily as it is and I'm not sure they have any real activist investors, but in the market today it never hurts to get more oily. I'm not sure what Forest's oil to gas ratio is, I always thought they were more gassy hence the financial struggle but they have a decent sized position out in the Texas Panhandle in the Granite Wash/Hogshooter play. As a refresher, this is the area in which CHK drilled a 7000 BOE well last year (6000 BBL, 1000 MCF)

[DoctorTaco]

If Devon buys a Denver-based company it will be good for Okc but lousy for Devon's already stretched workforce. Some background: Devon, despite an ongoing hiring frenzy, is really short on experienced technical staff. When the Houston office closed all of their projects moved to OKC but almost none of their staff did. Mix that in with an industry-wide shortage of skilled workers, Devon not being located in Houston, etc., and the result is a workforce stretched pretty thin.

Energy industry folks, as a rule, will not relocate from Denver. People scheme their whole careers for jobs in Denver. During a downturn sure, you do what you gotta do and you move to feed your family. While times are booming? Not so much. Devon will buy this company, get none of their workers to relocate, and stretch an already stretched workforce to near breaking point.

[mugofbeer]

So, what is to stop them from keeping an office in Denver? Anadarko is based in Houston but has a huge office in Denver that descended from Kerr Magee

[BG918]

If Devon buys a Denver-based company it will be good for Okc but lousy for Devon's already stretched workforce. Some background: Devon, despite an ongoing hiring frenzy, is really short on experienced technical staff. When the Houston office closed all of their projects moved to OKC but almost none of their staff did. Mix that in with an industry-wide shortage of skilled workers, Devon not being located in Houston, etc., and the result is a workforce stretched pretty thin.

Energy industry folks, as a rule, will not relocate from Denver. People scheme their whole careers for jobs in Denver. During a downturn sure, you do what you gotta do and you move to feed your family. While times are booming? Not so much. Devon will buy this company, get none of their workers to relocate, and stretch an already stretched workforce to near breaking point.

Devon has a Calgary office, maybe they would consider one in Denver as well? That way they could relocate the execs to OKC but keep most of their workforce in Colorado.

[PhiAlpha]

If Devon buys a Denver-based company it will be good for Okc but lousy for Devon's already stretched workforce. Some background: Devon, despite an ongoing hiring frenzy, is really short on experienced technical staff. When the Houston office closed all of their projects moved to OKC but almost none of their staff did. Mix that in with an industry-wide shortage of skilled workers, Devon not being located in Houston, etc., and the result is a workforce stretched pretty thin.

Energy industry folks, as a rule, will not relocate from Denver. People scheme their whole careers for jobs in Denver. During a downturn sure, you do what you gotta do and you move to feed your family. While times are booming? Not so much. Devon will buy this company, get none of their workers to relocate, and stretch an already stretched workforce to near breaking point.

Agree with this to a point, several of my friends and I are trying to eventually end up in Denver. Unfortunately, as much as i love OKC and Tulsa, they will never be at the foot of a major mountain range (though the white water facility would close the gap a bit) which is where I spent 90% of my free time when I interned in Denver. However, just like anywhere else, Denver is not for everyone and people i know have been more than willing to relocate from there.

[PhiAlpha]

Devon has a Calgary office, maybe they would consider one in Denver as well? That way they could relocate the execs to OKC but keep most of their workforce in Colorado.

The Calgary office only manages their Canadian properties so it isn't really a factor. Currently Devon's Rockies properties are all managed in OKC. If they picked up a large chunk of acreage in NM, CO, WY, or MT, I don't think it would be unreasonable to think they would open a decent sized office in Denver. It would have to be a major aquisition though for it to be anything other than a small field office. Even if people don't really want to move from Denver, money talks. Also, their aren't just a ton of opportunities up their with energy companies and like you said many people want to go there which allows companies to be more selective.

[adaniel]

Not to get off topic, but just my personal story.

I was pretty unsatisfied with my job around late 2010 and growing a bit weary of my time in OKC (I am much better now on both fronts). I got an interview up there for a job that was essentially the same up there, plus, as you mentioned, a nice boost in scenery. Right off the bat, I was told the job was going to be about a 10% pay cut from what I was making. But the recruiter arrogantly joked that I would be paid in "great Colorado air" and some other nonsense. Um sorry, but I can't pay my student loans in Colorado air, now matter how great it was.

Needless to say I passed. But businesses in Denver, along with Florida and San Diego, know that there are scores of warm bodies willing to take considerably lower salaries due to the sunshine tax effect. Further than that, I know quite a few people in TX and OK that have moved up there, shacked up in some apartment with 3 other roommates/bros so they can ski, hike, and kayak to their heart's content. Not mad at them...money isn't everything.

Personally for me though, its better for me to make a nicer salary and have some extra cash for Southwest Fun Fares to go wherever I want. This is not an indictment on Denver, its a great town that offers an unparalleled lifestyle. Just not for me and not great enough to justify such a big dip in my earnings. Truthfully, I must admit that living in OKC has been great for my career.

[DoctorTaco]

Not to get off topic, but just my personal story.

I got an interview up there for a job that was essentially the same up there, plus, as you mentioned, a nice boost in scenery. Right off the bat, I was told the job was going to be about a 10% pay cut from what I was making. But the recruiter arrogantly joked that I would be paid in "great Colorado air" and some other nonsense. Um sorry, but I can't pay my student loans in Colorado air, now matter how great it was...

...Needless to say I passed. But businesses in Denver, along with Florida and San Diego, know that there are scores of warm bodies willing to take considerably lower salaries due to the sunshine tax effect. Further than that, I know quite a few people in TX and OK that have moved up there, shacked up in some apartment with 3 other roommates/bros so they can ski, hike, and kayak to their heart's content. Not mad at them...money isn't everything.

Denver = 10% pay cut, 30-50% increase in housing costs. So yes, I see you point about money talking, and about Devon making it worth the relocated people's while to move.