Devon Energy (DVN) – Oil & Gas Merger Play
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The Deal: ExxonMobil buys XTO
ExxonMobil agreed to buy XTO for $41 billion, a 25% premium over its recent stock price. XTO has rights to some 45 trillion cubic feet of gas including shale gas, tight gas, coal bed methane and shale oil.
The Trade: Devon Energy (DVN)
Devon sold off their international assets and is a very good pure North American play. ExxonMobil is strong globally, but doesn’t have as much presence in the U.S. as Devon Energy. With Devon’s recent dispositions of its international assets it fits in well with ExxonMobil.
Another potential acquirer could be CNOOC (China). CNOOC already works with Devon and could also make a play on this energy company.
I would buy the July 2010 Calls at $65 strike price for $8.40/option.