Devon Energy Corp. agreed Sunday to merge with Houston-based Ocean Energy Inc. in a deal that will create the nation's largest independent oil and natural gas producer and the state's largest publicly traded company.
The new company will retain Devon's name and Oklahoma City headquarters and is expected to be worth more than $20 billion.
The directors of both Devon and Ocean approved the merger Sunday, but the deal is subject to approval by the U.S. Securities and Exchange Commission and the shareholders of both companies.
Devon's Larry Nichols will remain chairman and chief executive, and Ocean's James T. Hackett will relocate to Oklahoma City and become the new company's president and chief operating officer.
Devon employs about 700 people in Oklahoma City and 3,000 worldwide. Ocean employs about 1,000 worldwide.
"The combined company has a significantly improved financial statement, has a much more exciting growth potential and has better balance between exploration and exploitation," Nichols said Sunday. "Our relative strengths and weaknesses complement each other. Both are much stronger together than when they are apart."
The deal is expected to save the companies at least $50 million annually in general and administrative costs, the companies said.
The $5.3 billion merger is Devon's third major transaction in less than two years. The Oklahoma City company acquired Canada-based Anderson Exploration Ltd. in October 2002 for $4.6 billion and bought Houston-based Mitchell Energy & Development Corp. for $3.5 billion in January 2002.
"All companies that have had successful growth in our industry have used a dual strategy of drilling and strategic mergers," Nichols said. "The large companies have combined together to make better companies."
While Devon continues to grow, Nichols said Oklahoma City is still able to serve his company's needs.