Devon Energy Corp and WPX Energy Inc Strategic Merger of Equals - M&A Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Leo Paul Mariani - KeyBanc Capital Markets Inc., Research Division - Analyst : Yes. Question here for Rick at WPX. Just was hoping you could provide a little bit more information in terms of how the deal came about with Devon. Did WPX look at other combination transactions? Is this has been something that's been brewing for quite some time? Or is this something that really came about during the downturn, in the pandemic here?

Question: Leo Paul Mariani - KeyBanc Capital Markets Inc., Research Division - Analyst : Okay. And just jumping over to the synergies. In terms of the incremental synergies in the merger, you guys talked about $100 million in G&A. That seems relatively easy, just given that it's smaller than the existing WPX G&A. But I was hoping for a little bit more color around the $100 million in D&C efficiencies and the $75 million in the netback improvements that you guys talked about. Is the D&C efficiencies more just a function of service cost reductions over time? And what can you tell us about the net back improvement? Is that more just better oil price? Any details would be great.

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Dave, I think the first question -- I actually have two questions. First, you highlight in the presentation that this combination will allow you to have the variable dividend restriction to 5% grow net debt reduction. But does any of those talk in our objective that you cannot accomplish when you are standalone? Because I thought that those are what -- anyway that you're targeting for? So with the combined company, at what extent they have changed? Is it just the acceleration? Or that because of the economy of scale allow you that you think you will be able to achieve it easier? The second question is that, when you guys are targeting a net debt-to-EBITDA of 1x, I think in this downturn, it seems to suggest that perhaps the industry should be even more conservative. Why not trying to target a net debt to be zero at the top end of the cycle? And also, do you have any breakup fee in this transaction that you can share?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : That's correct, yes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 28, 2020 / 12:30PM, DVN.N - Devon Energy Corp and WPX Energy Inc Strategic Merger of Equals - M&A Call

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : And how about breakup fee?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Yes. For Jeff, how about the breakup fees, if either side want to back out from the deal, if there's a better offer?