Filer: Devon Energy Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: Devon Energy Corporation
Commission File No. 0-30176
On May 26, 2000, Devon Energy Corporation and Santa Fe Snyder Corporation issued
the following press release:
[Devon Logo] [Santa Fe Snyder Logo]
Devon Energy Corporation Santa Fe Snyder Corporation
20 North Broadway, Suite 1500 840 Gessner, Suite 1400
Oklahoma City, Oklahoma 73102-8260 Houston, TX 77024
FOR IMMEDIATE RELEASE
Devon Energy Corporation Santa Fe Snyder Corporation
Media contacts: Vince White Kathy E. Hager
VP Corp. Communications VP, Public Affairs
(405) 552-4505 (713) 507-5315
Investor contacts: Zack Hager John O'Keefe
Investor Relations VP, Investor Relations
(405) 552-4526 (713) 507-5775
For additional information: http:/www.devonenergy.com
http:/www.santafe-snyder.com
DEVON ENERGY AND SANTA FE SNYDER TO MERGE
OKLAHOMA CITY and HOUSTON - May 26, 2000 - Devon Energy Corporation (AMEX:DVN,
TSE:NSX) and Santa Fe Snyder Corporation (NYSE:SFS) announced today that they
have agreed to merge. The merger would form a top-five U.S.-based independent
oil and gas company. The company will continue to be named Devon Energy
Corporation and will remain headquartered in Oklahoma City.
<PAGE>
o The transaction would create an international oil and gas company with a
pro forma enterprise value of approximately $9 billion.
o The company would rank in the top 5 of all U.S.-based independent oil and
gas producers in terms of market capitalization, total proved reserves and
annual production.
o On a combined basis, the company would have total proved reserves of
approximately 1.1 billion barrels of oil equivalent.
o The companies have substantial property overlap in core operating regions
including the Permian Basin, the Rocky Mountains and the Gulf of Mexico.
o Some 76 percent of the company's reserves would be located in North
America. These reserves are weighted 58 percent to natural gas.
o The company also would have substantial international reserves, including
Azerbaijan, Southeast Asia and South America.
o The companies expect to realize annual cost savings of $30 to $35 million.
J. Larry Nichols, President and CEO of Devon, commented, "Our two companies are
stronger and better positioned to compete together than either would be
independently. Both our companies have been active with the drill bit, and both
have been active acquirers/consolidators. Our larger platform should enhance
both strategies."
James L. Payne, Chief Executive Officer of Santa Fe Snyder, said, "Devon and
Santa Fe are uniquely positioned to create additional shareholder value. The
combination will be predominately North American but will also offer significant
international upside potential."
MAJOR TERMS AND CONDITIONS
Under the terms of the agreement, Santa Fe Snyder shareholders will receive 0.22
of a share of Devon common stock for each Santa Fe Snyder common share. As a
result, Santa Fe Snyder shareholders will own approximately 32 percent of the
combined company. Devon shareholders will own approximately 68 percent.
The merger is expected to be non-taxable to the shareholders of both companies.
The board of directors of each company has unanimously approved the merger.
However, the merger is subject to shareholder approval and other conditions
outlined below.
The accounting method for the merger is expected to be a "pooling of interests."
However, such method is not a condition of the transaction. Devon expects to
remain on the "full cost" method of accounting.
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<PAGE>
MANAGEMENT
J. Larry Nichols, Devon's current Chief Executive Officer, will be President and
Chief Executive Officer. James L. Payne, Santa Fe Snyder's current Chief
Executive Officer, will serve as Vice-Chairman. James L. Pate, Devon's current
Chairman, will serve as Chairman of the Board.
Devon's executive staff will continue in their current capacities. Santa Fe
Snyder also will contribute executive staff to augment the strength of the
management team.
The size of the combined board of directors has not yet been determined.
However, the restructured board will be composed of approximately two-thirds
Devon members and one-third Santa Fe Snyder members.
THE COMBINED COMPANY
The combined company's proved reserves would be 53 percent oil and 47 percent
natural gas. North American reserves, which represent 76 percent of total, are
58 percent natural gas.
On a pro forma basis, the companies produced approximately 30 million barrels of
oil equivalent in the first quarter of 2000. For the full year, on a pro forma
basis, the company expects to produce between 115 and 125 million barrels of oil
equivalent.
Based upon preliminary estimates, the combined company will have a capital
structure consisting of approximately 126 million common shares outstanding,
$150 million in preferred securities, about $1.7 billion of net long-term debt
and other long-term liabilities of $400 million. The $1.7 billion debt figure
excludes certain Devon debentures that are exchangeable into Chevron common
stock. (Devon owns 7.1 million shares of Chevron.) Devon believes that the
proposed merger would be accretive to many of its operating statistics,
including oil and gas production per share, net earnings per share and cash
margin per share.
3
<PAGE>
<TABLE>
<CAPTION>
DEVON ENERGY CORPORATION
PRELIMINARY PRO FORMA INFORMATION
(UNAUDITED)
ACTUAL PRO FORMA % CHANGE
<S> <C> <C> <C>
Proved reserves at 12/31/99 (MMBOE)
U. S. 422 679 61%
Canada 121 121 --
International 127 256 102%
--- ---
Total 670 1,056 58%
Gas/Liquids Ratio (%)
North America 58/42 58/42
Total 47/53 47/53
First Quarter 2000
Net daily production (MBOE) 208 331 59%
Cash margin (revenues less cash
expenses) $200 MM $322 MM 61%
Shares outstanding 86 MM 126 MM 47%
</TABLE>
The above data are preliminary estimates and are unaudited. Actual audited
results, when available, could be materially different than those presented.
OTHER TERMS AND CONDITIONS
The transaction is subject to approval by the shareholders of both companies as
well as expiration of the Hart-Scott-Rodino waiting period and other customary
closing conditions. Both Devon and Santa Fe Snyder intend to hold special
shareholders' meetings as soon as practicable following completion of SEC review
of the companies' proxy materials. Completion of the merger is expected in the
third quarter of 2000.
In connection with the proposed merger, Devon and Santa Fe Snyder have granted
each other the right to purchase newly-issued shares representing 19.9 percent
of each other's outstanding common shares. The companies also granted each other
the right to receive a three percent termination fee, subject to certain
conditions.
4
<PAGE>
Morgan Stanley Dean Witter acted as financial advisor to Devon and provided a
fairness opinion. Chase Securities acted as financial advisor to Santa Fe Snyder
and provided a fairness opinion.
Santa Fe Snyder Corporation is an independent oil and gas company with
operations in the United States, Southeast Asia, South America and West Africa.
Santa Fe Snyder common stock trades on the New York Stock Exchange under the
symbol SFS.
Devon Energy Corporation is an independent energy company engaged in oil and gas
property acquisition, exploration and production. It is one of the top 10 public
independent oil and gas companies based in the United States, as measured by oil
and gas reserves. Devon's Canadian operations are conducted by its subsidiary,
Northstar Energy Corporation. Shares of Devon Energy Corporation trade on the
American Stock Exchange under the symbol DVN.
INVESTOR NOTICES
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical facts, included
in this press release that address activities, events or developments that the
companies expect, believe or anticipate will or may occur in the future are
forward-looking statements. This includes completion of the proposed merger,
reserve estimates, future financial performance, future equity issuance and
other matters. These statements are based on certain assumptions made by the
companies based on their experience and perception of historical trends, current
conditions, expected future developments and other factors they believe are
appropriate in the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the companies. Statements regarding future production are subject to all of the
risks and uncertainties normally incident to the exploration for and development
and production of oil and gas. These risks include, but are not limited to,
inflation or lack of availability of goods and services, environmental risks,
drilling risks and regulatory changes. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements.
5
<PAGE>
Investors and security holders are advised to read the joint proxy
statement/prospectus that will be included in the Registration Statement on Form
S-4 to be filed with the SEC in connection with the proposed merger because it
will contain important information. The joint proxy statement/prospectus will be
filed with the SEC by Devon and Santa Fe Snyder. Investors and security holders
may obtain a free copy of the joint proxy statement/prospectus (when available)
and other documents filed by Devon and Santa Fe Snyder with the SEC at the SEC's
web site at www.sec.gov. The joint proxy statement/prospectus and such other
documents (relating to Devon) may also be obtained for free from Devon by
directing such request to: Devon Energy Corporation, 20 North Broadway, Suite
1500, Oklahoma City, Oklahoma 73102-8260, Attention: Investor Relations,
telephone: (405) 552-4570, e-mail: [email protected]. The joint proxy
statement/prospectus and such other documents (relating to Santa Fe Snyder) may
also be obtained for free from Santa Fe Snyder by directing such request to:
Santa Fe Snyder Corporation, 840 Gessner, Suite 1400, Houston, Texas 10023,
Attention: Investor Relations, telephone: (713) 507-5307, e-mail:
[email protected].
Devon, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" of proxies from
Devon's shareholders in connection with the merger. Information regarding such
persons and a description of their interests in the merger is contained in
Devon's filing with the SEC under Rule 425 on May 26, 2000.
Santa Fe Snyder, its directors, executive officers and certain members of
management and employees may be considered "participants in the solicitation" of
proxies from Santa Fe Snyder's shareholders in connection with the merger.
Information regarding such persons and a description of their interests in the
merger is contained in Santa Fe Snyder's filing with the SEC under Rule 14a-12
on May 26, 2000.
* * * * * * * * * * * *
[end of press release]
The following is preliminary pro forma information made available on May 26,
2000.
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<PAGE>
<TABLE>
<CAPTION>
Devon Energy Corporation
Unaudited Pro Forma Capitalization
As of March 31, 2000
(In Thousands)
------------------------------------------------------------------------
Devon Santa Fe Adjustments Pro Forma
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net working capital surplus (deficit) $ 68,422 $ (10,200) $ 58,222
Borrowings under credit facilities with banks 355,560 495,300 $ 57,000 907,860
Debentures exchangeable into Chevron common stock
4.90%, due 8/15/2008 443,807 443,807
4.95%, due 8/15/2008 316,506 316,506
Market value of Chevron common stock (2) (661,631)
Other debentures
10.25%, due 11/1/2005 250,000 250,000
10.125%, due 11/15/2009 200,000 200,000
Unamortized premium on debentures 36,444 36,444
Other unsecured notes
Senior notes, 8.05%, due 6/15/2004 125,000 125,000
Unaccreted discount on note (1,300)
Senior subordinated notes, 8.75%, due
6/15/2007 175,000 175,000
Other long-term obligations
Deferred revenue associated with forward
sale (3) 152,000 152,000
Other 173,680 89,900 263,580
------------------------------------------------------------------------
Total indebtedness net of working capital (Net Debt) 1,045,944 1,046,100 57,000 2,149,044
------------------------------------------------------------------------
Preferred stock (perpetual preferred, 6.5% coupon) 150,000 150,000
----------- ----------
Total Net Debt plus preferred $ 1,195,944 $ 1,046,100 $ 57,000 $2,299,044
========================================================================
</TABLE>
(1) This adjustment represents the total estimated transaction costs (e.g.,
severance, relocation, professional fees, etc.).
(2) Devon owns 7.1 million shares of Chevron common stock, which underlie the
exchangeable debentures. The market value is based on the share price of
Chevron common stock on May 25, 2000, of $93 3/16.
(3) Santa Fe entered into two crude oil forward sales contracts in August 1999
and January 2000. This amount of deferred revenue represents the remaining
obligation of Santa Fe to deliver a total of 9.0 million barrels of oil
during the period April 2000 through August 2002, deliverable straight-line
at 311,000 barrels per month.
7
<PAGE>
<TABLE>
<CAPTION>
Devon Energy Corporation
Pro Forma Combined Reserve Data
Estimated reserves as of 12/31/99 (1)
Devon Santa Fe Snyder Combined
Amount Portion Amount Portion Amount Portion
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Reserve Breakdown:
Oil (MMBo) 303.9 45.4% 192.8 49.9% 496.7 47.0%
NGLs (MMBo) 49.8 7.4% 18.0 4.7% 67.8 6.4%
Gas (Bcf) 1,896.5 47.2% 1,053.1 45.4% 2,949.6 46.5%
Total (MMBoe) 669.8 386.3 1,056.1
Contribution 63.4% 36.6% 100.0%
PD (MMBoe) 510.5 76.2% 259.4 67.2% 769.9 72.9%
PUD (MMBoe) 159.3 23.8% 126.9 32.8% 286.2 27.1%
Principal Areas (in MMBoes):
Permian Basin 120.3 18.0% 95.0 24.6% 215.3 20.4%
GOM/Gulf Coast and Other Offshore 85.0 12.7% 57.0 14.8% 142.0 13.4%
Rocky Mountain 113.8 17.0% 105.3 27.3% 219.1 20.7%
Mid-Continent & Other 103.0 15.4% 103.0 9.8%
Canada 120.5 18.0% 120.5 11.4%
Subtotal North America 542.6 81.0% 257.3 66.6% 799.9 75.7%
Azerbaijan 107.7 16.1% 107.7 10.2%
Argentina/Brazil 47.0 12.2% 47.0 4.5%
Southeast Asia 71.6 18.5% 71.6 6.8%
West Africa 10.4 2.7% 10.4 1.0%
Egypt 2.3 0.3% 2.3 0.2%
Venezuela 17.2 2.6% 17.2 1.6%
Subtotal International 127.2 19.0% 129.0 33.4% 256.2 24.3%
Grand Total 669.8 100.0% 386.3 100.0% 1,056.1 100.0%
Pre-tax SEC PV 10% (in millions) (1) $3,634 $2,178 $5,812
- --------------------------------------
Contribution 62.5% 37.5% 100.0%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reserve data taken from the Annual Reports and Form 10-K filings of the
companies.
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<PAGE>
INVESTOR NOTICES
The foregoing information includes "forward-looking statements" as defined by
the Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical facts, included
in this press release that address activities, events or developments that the
companies expect, believe or anticipate will or may occur in the future are
forward-looking statements. This includes completion of the proposed merger,
reserve estimates, future financial performance, future equity issuance and
other matters. These statements are based on certain assumptions made by the
companies based on their experience and perception of historical trends, current
conditions, expected future developments and other factors they believe are
appropriate in the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the companies. Statements regarding future production are subject to all of the
risks and uncertainties normally incident to the exploration for and development
and production of oil and gas. These risks include, but are not limited to,
inflation or lack of availability of goods and services, environmental risks,
drilling risks and regulatory changes. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements.
Investors and security holders are advised to read the joint proxy
statement/prospectus that will be included in the Registration Statement on Form
S-4 to be filed with the SEC in connection with the proposed merger because it
will contain important information. The joint proxy statement/prospectus will be
filed with the SEC by Devon and Santa Fe Snyder. Investors and security holders
may obtain a free copy of the joint proxy statement/prospectus (when available)
and other documents filed by Devon and Santa Fe Snyder with the SEC at the SEC's
web site at www.sec.gov. The joint proxy statement/prospectus and such other
documents (relating to Devon) may also be obtained for free from Devon by
directing such request to: Devon Energy Corporation, 20 North Broadway, Suite
1500, Oklahoma City, Oklahoma 73102-8260, Attention: Investor Relations,
telephone: (405) 552-4505, e-mail: [email protected]. The joint proxy
statement/prospectus and such other documents (relating to Santa Fe Snyder) may
also be obtained for free from Santa Fe Snyder by directing such request to:
Santa Fe Snyder Corporation, 840 Gessner, Suite 1400, Houston, Texas 10023,
Attention: Investor Relations, telephone: (713) 507-5775, e-mail:
[email protected].
9
<PAGE>
Devon, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" of proxies from
Devon's shareholders in connection with the merger. Information regarding such
persons and a description of their interests in the merger is contained in
Devon's filing with the SEC under Rule 425 on May 26, 2000.
Santa Fe Snyder, its directors, executive officers and certain members of
management and employees may be considered "participants in the solicitation" of
proxies from Santa Fe Snyder's shareholders in connection with the merger.
Information regarding such persons and a description of their interests in the
merger is contained in Santa Fe Snyder's filing with the SEC under Rule 14a-12
on May 26, 2000.
* * * * * * * * * * * *
[end of pro forma information]
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Devon, its directors, executive officers and certain members of
management and employees may be soliciting proxies from Devon's shareholders in
favor of adoption of the merger agreement. The participants in such solicitation
may include the directors of Devon: James L. Pate (Chairman of the Board), John
W. Nichols (Chairman Emeritus), J. Larry Nichols (President and Chief Executive
Officer), Thomas F. Furguson, David M. Garvin, Michael E. Gellert, Moulton
Goodrum, Jr., John A. Hagg, Henry R. Hamman, William J. Johnson, Michael M.
Kanovsky, Robert A. Mosbacher, Jr., H.R. Sanders, Brent Scowcroft and Robert B.
Weaver and the following other members of management and employees of Devon:
Donald A. Garner (President and Chief Operating Officer of Northstar Energy
Corporation), J. Michael Lacey (Senior Vice President of Exploration and
Production), Duke R. Ligon (Senior Vice President-General Counsel), Marian J.
Moon (Senior Vice President-Administration), John Richels (Chief Executive
Officer of Northstar Energy Corporation), Darryl G. Smette (Senior Vice
President-Marketing), H. Allen Turner (Senior Vice President-Corporate
Development), William T. Vaughn (Senior Vice President-Finance), Rick D. Clark
(Vice President and General Manager, Northern Division), Danny J. Heatly (Vice
President-Accounting) R. Alan Marcum (Controller) Gary L. McGee (Vice
President-Government Relations), William A. Van Wie (Vice President and General
Manager, Southern Division), Vince W. White (Vice President Communications and
Investor Relations), Dale T. Wilson (Treasurer), Brian J. Jennings (Vice
President-Corporate Finance), Paul R. Poley (Vice President-Human Resources) and
Zack Hager (Senior Investor Relations Analyst). As of the date of this
communication, none of the foregoing participants individually owns in excess of
1% of Devon's common stock or in the aggregate in excess of 3% of Devon's common
stock. Except as disclosed above, to the knowledge of Devon, none of the
directors, executive officers or employees of Devon named above has any
interest, direct or indirect, by security holdings or otherwise in the merger.
10
