By Dow Jones Business News, October 21, 2013, 09:50:00 AM EDT
By Tess Stynes
Devon Energy Corp. ( DVN ) and Crosstex Energy L.P. ( XTEX ) unveiled plans to combine Devon's midstream operations with
Crosstex to form a publicly listed master limited partnership that includes gathering, pipeline and processing
Earlier this year, oil-and-gas producer Devon had unveiled plans to form a master limited partnership to operate
midstream assets in North America.
"The combined company's midstream assets and expertise greatly accelerate the value proposition of Devon's previously
announced standalone master limited partnership in a manner that is highly accretive to our shareholders," said John
Richels, Devon President and Chief Executive.
The deal, which the companies expect will immediately add to earnings after closing, also will form a publicly listed
general partner, in which Devon will have a 70% stake and Crosstex holders will have a 30% stake.
The combination aims to provide increased diversification and scale, as well as an enhanced liquids-oriented growth
profile. Devon Energy will be the new company's biggest customer.
The new master limited partnership's name will be announced before the deal's closing, which is expected during the
first quarter of next year. Devon would have a 53% stake in the MLP, while Crosstex holders would have a 40% stake and
the general partner entity would have a 7% stake.
Under the deal, Devon will contribute its equity interest in a newly formed Devon subsidiary and $100 million in cash.
The MLP and general partner will each own 50% of the Devon subsidiary. Crosstex holders will receive one unit in the
general-partner entity for each Crosstex share as well as a one-time cash payment of about $2 a share, or $100 million
Devon contributed assets are valued at an estimated $4.8 billion.
Stockholders representing approximately 22% of Crosstex Energy's outstanding units have entered agreements to approve
Crosstex President and CEO Barry E. Davis will be president and CEO of the new company. Devon President and CEO John
Richels be chairman. The board of both entities will have nine-member boards, which will each include five members
designated by Devon
Devon shares were up 3.2% at $65.25. Crosstex shares closed Friday at $20.35 and were halted premarket.
Write to Tess Stynes at email@example.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
Copyright (c) 2013 Dow Jones & Company, Inc.