Devon Energy (DVN.US) announced on Monday that it has agreed to acquire GraysonMill Energy's Williston Basin business in cash and stocks for about $5 billion, including $3.25 billion in cash and $1.75 billion in stocks.

Devon Energy said that the deal would significantly expand its position in the Williston Basin, adding net acreage of 0.307 million acres (70% of operating interest), and by 2025, the expected production from the acquired assets would remain at around 0.1 million barrels per day (55% oil).

Devon Energy said that as the scale of the basin expands, it expects to save up to $50 million in cash flow annually through operating efficiency improvements and marketing synergies.

In response to the acquisition of Williston, Devon expects its oil production to reach an average of 0.375 million barrels per day, and its asset portfolio total production to reach an average of 0.765 million barrels per day.

The company said that as the acquisition will increase free cash flow, it plans to raise its share buyback authorization to $5 billion, up 67%.

"The acquisition of GraysonMill is a great strategic opportunity for Devon Energy, enabling us to effectively expand our oil production and operations while gaining a meaningful and highly economic drilling inventory," said Rick Muncrief, President and CEO of Devon Energy.