Devon Energy announced it acquired 16,300 net undeveloped acres in the core of the Delaware Basin in Lea and Eddy Counties, New Mexico, for approximately $2.6 billion through a Bureau of Land Management oil and gas lease sale. The acquisition is expected to strengthen the company’s premier Delaware Basin position, extend inventory life, and increase net asset value per share.
The acreage purchase adds approximately 400 net drilling locations normalized to 2-mile laterals, with Devon highlighting strong expected well economics and low breakeven costs. The company said the federal leases include an 87.5% net revenue interest with 10-year lease terms across all depths, terms that are more favorable than many state and fee leases in the region.
Devon noted the acreage position is contiguous with its existing Delaware Basin operations, enabling the company to drill longer laterals and reduce costs through co-development and multi-well pad development. The company also emphasized that the acreage benefits from existing infrastructure and facilities adjacent to its current operations.
The transaction values the acreage at approximately $161,500 per net acre, or roughly $6.5 million per drilling location. Devon said it expects to fund the acquisition with cash on hand while maintaining its credit profile and continuing its shareholder return strategy, including the recently announced $8 billion share repurchase program.
Clay Gaspar, President and Chief Executive Officer of Devon Energy, said the lease sale represented a rare opportunity to acquire large-scale, high-quality federal acreage in the Delaware Basin.
Gaspar also said the company evaluated each tract based on rock quality, midstream connectivity, strategic fit, and expected per-share value accretion. He added that the acquisition aligns with Devon’s long-term strategy and strengthens its inventory depth following the recently completed merger with Coterra Energy.
KEY QUOTES:
“This BLM lease sale presented a rare and compelling opportunity to add high-quality, contiguous federal acreage at scale in the core of the Delaware Basin. Each tract was evaluated on rock quality, midstream connectivity, strategic fit and per-share value accretion for our owners. The favorable federal lease terms, including the lower royalty burden, multi-pay potential and the ability to develop with longer laterals on multi-well pads, are immediately accretive to our top-tier inventory. This acquisition is consistent with our successful ground game track record and strengthens our leading Delaware Basin position.”
Clay Gaspar, President and Chief Executive Officer, Devon Energy
“The success we achieved in this auction is a testament to the alignment of our Board and the effectiveness of our team, even as we continue to accelerate through the integration of a major merger completed just two weeks ago. Our combined understanding of the basin following the Coterra merger only reinforced our conviction in the quality and depth of this inventory and our confidence in moving decisively to capture these accretive high-quality opportunities.”
Clay Gaspar, President and Chief Executive Officer, Devon Energy
