Activist Toms Capital urges Devon Energy in letter to explore alternatives, including a sale

Um, guys, I'm going to, uh, go into the world of activism for a moment here as well. Um, report a story. Uh, Devon Energy, Devon Energy is the subject of an activist campaign from the hedge fund Toms Capital Management. It's urging the Houston-based oil and gas company to review strategic alternatives, including a sale. That's according to a letter

that Toms sent to Devon earlier this month. Toms, uh, over $4 billion in assets, says in the letter it is one of Devon's top five shareholders. Now, last May, Devon closed its merger with Concho Energy. It significantly increased the size of the company's portfolio in the Delaware Basin. That is a key oil and

gas producing sub-basin of the Permian in West Texas and Southeastern Mexico. The deal also brought together a portfolio that now includes the Marcellus Shale, the Eagle Ford Powder River Basin, as amongst other properties that Toms claims brings an undue level of complexity to the company and contributes to what is in its view a

discount to its peers of at least one multiple point. And that's significant given the stock trades at about four and a half times next year's expected EBITDA. Devon has caused frustration amongst other investors as well. Of its, uh, the energy-focused investment firm Kimmeridge, for example, has publicly urged the company to streamline its

property portfolio and articulate a post-Concho merger strategy. Now, in meetings prior to sending its letter, Toms had encouraged a similar strategy, but it's now urging the company to sell itself, asserting in its letter that a potential strategic strategic buyer of the entire company could subsequently divest assets, shifting the execution risk of such sales away from Devon holders. Toms