Devon Energy To Sell Non-Core Upstream Assets Worth $1 Billion

Devon Energy Corp. DVN revealed that it struck definitive agreements with undisclosed parties to monetize nearly $1 billion of non-core upstream assets in east Texas, the Anadarko Basin and an overriding royalty interest in the northern Midland Basin. According to the company, these transactions were subject to customary terms and conditions and were expected to close in the third quarter of the current year. The Company sees incurring minimal taxes in connection with these transactions. Devon Energy president and CEO, Dave Hager, commented about the transaction, "Combined with other recent asset sales, we have now announced $1.3 billion of gas-focused upstream divestitures. As we've said previously, proceeds from these tax-efficient transactions will be utilized to further strengthen our investment-grade financial position." He continued to add, "With oil prices having moved in our favor throughout the sales process, we are encouraged by the interest and progress in marketing our remaining non-core oil assets in the Midland Basin and Access Pipeline in Canada. Proceeds for the entire divestiture program are well on their way to achieving our previously announced range of $2 billion to $3 billion in 2016." The company disclosed that the largest transaction was an agreement to sell upstream assets in east Texas for $525 million. The energy firm added that net production from these properties averaged 22,000 oil-equivalent barrels (Boe) per day in the first quarter of 2016, of which about 5 percent was oil. Field-level cash flow accompanying these assets, which excluded overhead costs, totaled $10 million in the first quarter. The proved reserves associated with these properties accounted for about 87 million Boe at the end of the last year. Devon Energy said that in a separate transaction, it agreed to divest its non-core position in the Anadarko Basin's Granite Wash area for $310 million. Net production associated with these properties averaged 14,000 Boe per day in the first quarter of 2016, of which 13 percent was oil. Field-level cash flow accompanying these assets, which excludes overhead costs, totaled $6 million in the first quarter. The proved reserves in connection with these properties accounted for 31 million Boe at the end of the last year. Similarly, In the northern Midland Basin, the company reached a deal to sell its overriding royalty interest across 11,000 net acres for $139 million. Its current production from this overriding royalty interest was about 1,000 Boe per day. The transaction does not include the Company's working interest across 15,000 net acres in Martin County. On Friday, the stock traded 2.39 percent lower.