DBRS puts Devon Energy on negative review

DBRS said it placed the ratings of Devon Energy Corp. and subsidiary Devon Finance Corp. under review with negative implications.

The ratings reflect a concern with regard to the aggressive use of debt to fund the $6 billion acquisition of GeoSouthern Energy's assets in the Eagle Ford shale formation, DBRS said.

This leverage will weigh down the company's credit metrics to levels that are no longer consistent with current ratings, the agency said.

The company plans to fund the acquisition with $4.5 billion in new debt and $1.5 billion cash on hand. DBRS said it expects the rating action will be limited to one notch upon the completion of the transaction in the first quarter of 2014.

Pro forma following the acquisition, the percentage of debt in the capital structure is expected to rise above 40%, which is below the mid-point range for the rating category, DBRS said.

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