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Devon Energy and Santa Fe Snyder to Merge

OKLAHOMA CITY and HOUSTON, May 26 /PRNewswire/ -- Devon Energy Corporation (Amex: DVN; TSE: NSX) and Santa Fe Snyder Corporation (NYSE: SFS) announced today that they have agreed to merge. The merger would form a top-five U.S.-based independent oil and gas company. The company will continue to be named Devon Energy Corporation and will remain headquartered in Oklahoma City.

  • The transaction would create an international oil and gas company with a pro forma enterprise value of approximately $9 billion.
  • The company would rank in the top 5 of all U.S.-based independent oil and gas producers in terms of market capitalization, total proved reserves and annual production.
  • On a combined basis, the company would have total proved reserves of approximately 1.1 billion barrels of oil equivalent.
  • The companies have substantial property overlap in core operating regions including the Permian Basin, the Rocky Mountains and the Gulf of Mexico.
  • Some 76 percent of the company's reserves would be located in North America. These reserves are weighted 58 percent to natural gas.
  • The company also would have substantial international reserves, including Azerbaijan, Southeast Asia and South America.
  • The companies expect to realize annual cost savings of $30 to $35 million.

J. Larry Nichols, President and CEO of Devon, commented, "Our two companies are stronger and better positioned to compete together than either would be independently. Both our companies have been active with the drill bit, and both have been active acquirers/consolidators. Our larger platform should enhance both strategies."

James L. Payne, Chief Executive Officer of Santa Fe Snyder, said, "Devon and Santa Fe are uniquely positioned to create additional shareholder value. The combination will be predominately North American but will also offer significant international upside potential."

Major Terms and Conditions

Under the terms of the agreement, Santa Fe Snyder shareholders will receive 0.22 of a share of Devon common stock for each Santa Fe Snyder common share. As a result, Santa Fe Snyder shareholders will own approximately 32 percent of the combined company. Devon shareholders will own approximately 68 percent.

The merger is expected to be non-taxable to the shareholders of both companies. The board of directors of each company has unanimously approved the merger. However, the merger is subject to shareholder approval and other conditions outlined below.

The accounting method for the merger is expected to be a "pooling of interests." However, such method is not a condition of the transaction. Devon expects to remain on the "full cost" method of accounting.

J. Larry Nichols, Devon's current Chief Executive Officer, will be President and Chief Executive Officer. James L. Payne, Santa Fe Snyder's current Chief Executive Officer, will serve as Vice-Chairman. James L. Pate, Devon's current Chairman, will serve as Chairman of the Board.

Devon's executive staff will continue in their current capacities. Santa Fe Snyder also will contribute executive staff to augment the strength of the management team.

The size of the combined board of directors has not yet been determined. However, the restructured board will be composed of approximately two-thirds Devon members and one-third Santa Fe Snyder members.

The Combined Company

The combined company's proved reserves would be 53 percent oil and 47 percent natural gas. North American reserves, which represent 76 percent of total, are 58 percent natural gas.

On a pro forma basis, the companies produced approximately 30 million barrels of oil equivalent in the first quarter of 2000. For the full year, on a pro forma basis, the company expects to produce between 115 and 125 million barrels of oil equivalent.

Based upon preliminary estimates, the combined company will have a capital structure consisting of approximately 126 million common shares outstanding, $150 million in preferred securities, about $1.7 billion of net long-term debt and other long-term liabilities of $400 million. The $1.7 billion debt figure excludes certain Devon debentures that are exchangeable into Chevron common stock. (Devon owns 7.1 million shares of Chevron.) Devon believes that the proposed merger would be accretive to many of its operating statistics, including oil and gas production per share, net earnings per share and cash margin per share.

    DEVON ENERGY CORPORATION
                      PRELIMINARY PRO FORMA INFORMATION
                                 (UNAUDITED)

                                      ACTUAL       PRO FORMA      % CHANGE
    Proved reserves at 12/31/99 (MMBOE)
     U. S.                               422             679           61%
     Canada                              121             121           --
     International                       127             256          102%
     Total                               670           1,056           58%

    Gas/Liquids Ratio (%)
     North America                     58/42           58/42
     Total                             47/53           47/53

    First Quarter 2000
     Net daily production (MBOE)         208             331           59%
     Cash margin (revenues less cash
      Expenses)                         $200 MM         $322 MM        61%

    Shares outstanding                    86 MM          126 MM        47%

    The above data are preliminary estimates and are unaudited.  Actual
audited results, when available, could be materially different than those
presented.

                          Other Terms and Conditions

    The transaction is subject to approval by the shareholders of both
companies as well as expiration of the Hart-Scott-Rodino waiting period and
other customary closing conditions.  Both Devon and Santa Fe Snyder intend to
hold special shareholders' meetings as soon as practicable following
completion of SEC review of the companies' proxy materials.  Completion of the
merger is expected in the third quarter of 2000.
    In connection with the proposed merger, Devon and Santa Fe Snyder have
granted each other the right to purchase newly-issued shares representing
19.9 percent of each other's outstanding common shares.  The companies also
granted each other the right to receive a three percent termination fee,
subject to certain conditions.
    Morgan Stanley Dean Witter acted as financial advisor to Devon and
provided a fairness opinion.  Chase Securities acted as financial advisor to
Santa Fe Snyder and provided a fairness opinion.
    Santa Fe Snyder Corporation is an independent oil and gas company with
operations in the United States, Southeast Asia, South America and West
Africa.  Santa Fe Snyder common stock trades on the New York Stock Exchange
under the symbol SFS.
    Devon Energy Corporation is an independent energy company engaged in oil
and gas property acquisition, exploration and production. It is one of the top
10 public independent oil and gas companies based in the United States, as
measured by oil and gas reserves.  Devon's Canadian operations are conducted
by its subsidiary, Northstar Energy Corporation.  Shares of Devon Energy
Corporation trade on the American Stock Exchange under the symbol DVN.

                               Investor Notices

    This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations.  All statements, other than statements of historical facts,
included in this press release that address activities, events or developments
that the companies expect, believe or anticipate will or may occur in the
future are forward-looking statements.  This includes completion of the
proposed merger, reserve estimates, future financial performance, future
equity issuance and other matters.  These statements are based on certain
assumptions made by the companies based on their experience and perception of
historical trends, current conditions, expected future developments and other
factors they believe are appropriate in the circumstances.  Such statements
are subject to a number of assumptions, risks and uncertainties, many of which
are beyond the control of the companies.  Statements regarding future
production are subject to all of the risks and uncertainties normally incident
to the exploration for and development and production of oil and gas.  These
risks include, but are not limited to, inflation or lack of availability of
goods and services, environmental risks, drilling risks and regulatory
changes.  Investors are cautioned that any such statements are not guarantees
of future performance and that actual results or developments may differ
materially from those projected in the forward-looking statements.
    Investors and security holders are advised to read the joint proxy
statement/ prospectus that will be included in the Registration Statement on
Form S-4 to be filed with the SEC in connection with the proposed merger
because it will contain important information.  The joint proxy
statement/prospectus will be filed with the SEC by Devon and Santa Fe Snyder.
Investors and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by Devon and
Santa Fe Snyder with the SEC at the SEC's web site at http://www.sec.gov .  The joint
proxy statement/prospectus and such other documents (relating to Devon) may
also be obtained for free from Devon by directing such request to:  Devon
Energy Corporation, 20 North Broadway, Suite 1500, Oklahoma City, Oklahoma
73102-8260, Attention: Investor Relations, telephone: (405) 552-4570, e-mail:
nakita.rizzo@dvn.com.  The joint proxy statement/prospectus and such other
documents (relating to Santa Fe Snyder) may also be obtained for free from
Santa Fe Snyder by directing such request to: Santa Fe Snyder Corporation, 840
Gessner, Suite 1400, Houston, Texas 10023, Attention:  Investor Relations,
telephone: (713) 507-5307, e-mail: nperry@santafe-snyder.com.
    Devon, its directors, executive officers and certain members of management
and employees may be considered "participants in the solicitation" of proxies
from Devon's shareholders in connection with the merger.  Information
regarding such persons and a description of their interests in the merger is
contained in Devon's filing with the SEC under Rule 425 on May 26, 2000.
    Santa Fe Snyder, its directors, executive officers and certain members of
manage ment and employees may be considered "participants in the solicitation"
of proxies from Santa Fe Snyder's shareholders in connection with the merger.
Information regarding such persons and a description of their interests in the
merger is contained in Santa Fe Snyder's filing with the SEC under Rule 14a-12
on May 26, 2000.

SOURCE  Devon Energy Corporation; Santa Fe Snyder Corporation