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Devon To Sell Midland Basin Assets

Oil Rig

Devon Energy is set to sell its remaining non-core assets in the Midland basin area of Texas at a price tag of $858 million. The sales include interests in 28,000 acres in nine counties, including Martin county for $435 million.

The output in that area is approximately 1000 barrels of oil equivalent per day. The company is also selling assets in the southern basin that produce around 22,000 barrels of oil equivalent per day at $433 million. Dave Harger, president and CEO of Devon stated: “We anticipate our total non-core asset sales to be at or above the top end of our $2 billion to $3 billion guidance, with the sale of our 50 percent interest in the Access pipeline.”

Hager also stated that Devon is now in the planning stages of increasing its upstream activity by $200 million in the second half of 2016, which according to Harger, will deliver production in early 2017 and beyond.

Hager added, “We are seeing even better than expected results from our core business and we are raising the mid-point of our full-year 2016 production guidance by 7,000 Boe per day.”

Pioneer Natural Resources reports that it is buying 28,000 acres from Devon for $435 million. The company said that its new acquisitions sit below its existing acreage in the Wolfcamp A area. With the purchase, Pioneer plans to drill longer lateral wells, a move that should save money and increase output.

Related: Kurds To End Oil Standoff With Baghdad For $1B

Devon and Pioneer are deploying more rigs and picking their capital expenditures. Pioneer expects to increase its horizontal rig count to a total of 17 rigs. Devon added three rigs in the third quarter. Devon said that it anticipates that it will incur minimal taxes for the divestitures. The transactions should close in the third quarter of this year.

By Lincoln Brown for Oilprice.com

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