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U.S. Devon Energy announced on Wednesday an agreement to sell its Canadian business to Canadian Natural Resources for C$3.8 billion, or US$2.8 billion, as part of its plan to focus on growing its oil production in the United States.
As part of the exit from Canada, Devon Energy will sell its heavy oil assets, most of which are located in Alberta, with net production averaging 113,000 oil-equivalent barrels in Q1 2019. Proved reserves at Devon’s assets were around 409 million barrels of oil as of end-2018.
In February this year, Devon Energy said that it would be looking to sell its Canadian assets to become a high-return U.S. oil growth business in what analysts described as a ‘long-overdue’ announcement from the U.S. oil company.
Back then, various analysts expected a wide range for what a potential price tag for Devon’s Canadian assets would be—those ranged from as low as US$2.6 billion (C$3.5 billion) to as high as US$6.66 billion (C$9 billion).
The deal with Canadian Natural Resources announced today is expected to close by the end of this quarter and is contingent upon customary terms and conditions, Devon Energy said in a statement.
Devon Energy will use the proceeds from the Canadian asset sale to cut its debt.
“This transaction creates value for our shareholders by achieving a clean and timely exit from Canada, while accelerating efforts to focus exclusively on our high-return U.S. oil portfolio,” Devon Energy’s president and CEO Dave Hager said.
For Canadian Natural Resources, the acquisition of Devon’s Canadian assets is a good fit to its current asset portfolio.
“These high quality assets complement our existing asset base and provide further balance to our production profile, while not increasing the need for incremental market access out of western Canada, as it is already existing production,” Canadian Natural’s President Tim McKay said in a statement.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.