Devon on the market?
Devon on the market?
By Adam Wilmoth
Business Writer
Devon Energy Corp.'s stock price jumped 1.6 percent Thursday as a familiar rumor again circulated throughout Wall Street.
The Wall Street Journal reported Thursday that the stock rally was fueled by speculation that ExxonMobil is targeting the Oklahoma City oil and natural gas producer for takeover.
"It is Devon's practice not to comment on rumors or speculation,” Devon spokesman Brian Engle said Friday.
Devon often is mentioned as a takeover target. Speculation in recent years has said energy giants BP, Chevron and Royal Dutch Shell were eyeing the company.
"That somebody is thinking of buying Devon is just an endorsement that Devon is a great company,” said Fadel Gheit, an industry analyst with Oppenheimer & Co. in New York.
Devon's property base in the Gulf of Mexico, the Barnett Shale of north Texas and the Canadian oil sands makes it a good fit for nearly all of the major fully-integrated oil companies, Gheit said.
"They have a presence in the three most attractive areas not only to Exxon, but for any company,” he said.
With a market capitalization of about $35 billion, Devon is large enough that few companies could digest it. But even Devon may be too small for ExxonMobil, which has a market capitalization of about $520 billion, Gheit said.
"Any action Exxon takes must be large enough to really move the needle,” he said. "Obviously Devon is one of the largest independent oil and gas producers in North America, but to Exxon, it may not be large enough.”
Larry Nichols, Devon's chairman and chief executive officer, has said repeatedly that he and the rest of the company's management team want the company to remain in Oklahoma City.
"The real protection (from a takeover) is to never get in a position to where you're vulnerable to a raider,” Nichols said in May. "We try to keep our balance sheet clean. We try to make sure we continue to grow the business. We bristle when someone says, ‘Do you want to be bought out?' As long as the growth is there and the enthusiasm is there both in our company and on our board, we think we're more protected by that than by anything else.”
Devon stock gained $1.30 on Thursday and closed at $83.52 on the New York Stock Exchange. The shares slipped Friday, dropping 42 cents to close at $83.20.
For the year, Devon stock is up 26 percent, from $66.03 on Jan 3.
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