S&P alters Devon view to stable

S&P said it revies the outlook for Devon Energy Corp. to stable from negative and affirmed all its ratings on the company, including the BBB- unsecured debt rating.

“The stable outlook reflects our view that Devon (on a stand-alone basis) will reduce its capital spending and operating expenses while continuing to limit its share buybacks such that it maintains a funds from operations (FFO)-to-debt ratio of 35% to 40% over the next two years,” S&P said in a press release.

Devon reported it will acquire WPX Energy for about $2.6 billion, plus the assumption of $3.2 billion of debt, which will materially increase its scale and further improve its credit measures and cash flows.

If the transaction is completed as anticipated, S&P said the acquisition of WPX would strengthen the company’s business and financial risk profiles, though not to the levels needed for an upgrade.

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