According to a report from the Wall Street Journal,Devon Energy is nearing a $6 billion takeover of Texas shale oil driller GeoSouthern Energy Corp., according to people familiar with the matter.
The acquisition, which could be announced as soon as Wednesday, would be the largest U.S. oil and gas transaction of the year.
The acquisition, which could be announced as soon as Wednesday, would be the largest U.S. oil and gas transaction of the year.
A takeover would be a bet by Devon, a pioneer in drilling for natural gas, into pumping more U.S. crude. GeoSouthern's operations are almost entirely in the Eagle Ford Shale, a prolific oilfield in South Texas.
Devon, which has a $25 billion stock market value, was the first company to combine horizontal drilling and hydraulic fracturing, a technological pairing that unleashed the current energy boom. When it bought into the Barnett Shale in Texas a decade ago, it helped create a nationwide glut of natural gas.
But the company was soon passed by rivals that moved more aggressively, discovering and leasing even better oil-and-gas fields in Pennsylvania, North Dakota and Texas.
A GeoSouthern deal could be "a move by Devon, which largely had a tier two asset base in North America, to buy tier one assets," says Arun Jayaram, an energy analyst with Credit Suisse.
Blackstone Group is one of the big winners,the private-equity firm helped GeoSouthern secure $1 billion in bank debt in February 2012 to help pay for its drilling activities. Blackstone and GeoSouthern haven't disclosed the private-equity firm's direct investment in the company.
