Devon and Enerplus deal very likely in the works, $3.5B-$3.7B transaction makes sense - Stifel

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Devon and Enerplus deal very likely in the works, $3.5B-$3.7B transaction makes sense - Stifel
Credit: © Reuters.

Earlier today, Reuters reported that Devon Energy (NYSE: DVN ) has approached Enerplus with an acquisition offer.

The report offered no details on potential terms of the deal, but the rumor alone was enough to send Canadian-traded shares of Enerplus nearly 8% higher.

Commenting on the development, analysts at Stifel believe "it is highly likely that a deal is in the works based on the accuracy of pre-deal reports, industry-wide, over the past year."

"While the transaction value could exceed $5.0B CAD based on our PDP and Bakken inventory assessment, we believe Devon's stock performance and the current environment necessitate pursuing a low-to-no premium transaction to keep it accretive," the analysts added.

"Net-net, we believe a transaction of $3.5B-3.7B USD ($4.8B-5.0B CAD) makes considerable financial and strategic sense for Devon based on potential synergies (could exceed $0.2B USD), the quality of Enerplus' acreage position and Devon's strategic need for greater inventory depth in the Bakken."

Enerplus's market cap stood at just shy of CAD $4B at the time of this writing.

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