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Devon Energy to Sell Off $1B in Prime Oil and Gas Assets

Devon Midland Rig

In an attempt to boost its balance sheet amid depressed oil prices, U.S. oil and gas company Devon Energy will sell off over US$1 billion in prime assets.

The bulk of the divestment will be Texas and Oklahoma oil and gas assets, for which Devon is eyeing around US$1 billion in sales, and on top of this is also considering the sale of its 50-percent interest in Canada’s Access Pipeline. According to Nasdaq, negotiations for this latter are already ‘advanced’.

Producing assets in east Texas will go on the block, worth US$525 million, while Devon’s royalty interests in the state’s Northern Midland Basin should fetch around US$139 million. Also up for sale will be the company’s assets in the Anadarko Basin, Granite Wash area, which are estimated at US$310 million, Reuters reported.

Related: Oil Up As Global Outages Seriously Impact Crude Supplies

The US$525-million assets in east Texas boast net production at around 22,000 barrels of oil equivalent per day (Boe/d) as of the first quarter of this year.

In the Midland Basin, production for Devon averages about 25,000 boe/d as of the first quarter of this year, while the assets up for sale here also include 15,000 net undeveloped acres in Martin County.

The sales are expected to close in the third quarter of this year.

Related: U.S. Crude Exports Hit 96 Year High

Last month, Devon CEO Dave Hager said the market—despite the slight rebound of oil prices—was not favoring production growth yet.

Devon has had to cut jobs, dividends and exploration spending in the global downturn.

"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,” Hager said on Monday.

By Charles Kennedy of Oilprice.com

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