Newspaper article THE JOURNAL RECORD

Devon Closes Sale of Stocks for $30 Million

Newspaper article THE JOURNAL RECORD

Devon Closes Sale of Stocks for $30 Million

Article excerpt

An offering of 1.2 million shares of Devon Energy Corp. preferred stock grossed $30 million before it was closed Wednesday, the Oklahoma City company announced.

"I think this is a relatively large offering compared to anything in the city this year," said Allen Turner, vice president of corporate development at Devon.

Devon Energy, founded in 1969, went public with its stock last year. In 1988, the company also consolidated with its master limited partnership, providing pro forma net income of $5.1 million, or 59 cents per share, and revenues of $31.6 million with net cash from operations of $13.5 million.

The recent public offering was at $25 per share for newly issued Convertible Preferred Stock carrying an annual dividend of $1.94. The stock had been trading since Aug. 10, with Smith Barney, Harris Upham & Co. Inc. as underwriter.

Proceeds of the offering, about $28.5 million net after expenses, have been used, to repay the company's existing bank debt of about $23.7 million, the company said. The remaining near $5 million has been temporarily invested in bank certificates of deposit, the company said.

"This offering substantially strenthens Devon Energy's already strong balance sheet and provides the company with greater financial flexibility," said William R. Vaughn, company vice president of finance.

"This offering should also improve cash flow to the common shareholders since the effective dividend rate of about 8 percent is almost three to four full percentage points below the interest rate the company paid most recently on the bank debt it has just retired."

Although bank debt has been repaid, Vaughn noted that lines of credit totaling $33 million have been left intact.

Turner said the cash netted from the offering will be reinvested into acquisitions and development of properties within the next 18 to 24 months, which means debt will be renewed.

For example, Turner said about $8 million will be needed in the next nine to 10 months for exploration and production activities in the company's San Juan Basin coal seam drilling project.

The company's most significant areas of operations are onshore, including the San Juan Basin of northwest New Mexico and the Arkoma Basin in southeast Oklahoma. …

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