Devon Energy Monetizes Non-Core Midland Assets for $858 Million; Increasing 2016 Capital Program $200 Million; Raising 2016 P...
June 15 2016 - 04:05PM
Business Wire
Devon Energy Corp. (NYSE: DVN) announced today it has entered
definitive agreements to sell its remaining non-core assets in the
Midland Basin for $858 million. These transactions include the
Company’s upstream assets in the southern Midland Basin and its
undeveloped leasehold in Martin County, Texas. This brings total
announced non-core transactions to $2.1 billion.
“We are pleased to announce these highly accretive non-core
divestitures, concluding our E&P sales process ahead of
schedule,” said Dave Hager, president and CEO. “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.”
“At least two-thirds of our asset sales proceeds are expected to
be used to further strengthen our investment-grade balance sheet,
while one-third are targeted for reinvestment in our best-in-class
U.S. resource plays,” said Hager. “With the success of our E&P
asset sales, we are now in the planning stages to increase our
upstream activity by approximately $200 million in the second half
of this year. This additional activity will deliver production in
early 2017 and beyond. Additionally, 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.”
Increasing 2016 Capital Program; Raising Full-Year Production
Guidance
The Company now expects its full-year 2016 upstream capital
program to range between $1.1 billion and $1.3 billion, an increase
of $200 million from previous guidance. The incremental capital
investment will be deployed in the Delaware Basin and the Oklahoma
STACK play beginning in the third quarter of 2016 with the addition
of three operated rigs. Devon is evaluating further accelerating
activity in the fourth quarter of 2016.
The Company is also raising its full-year 2016 production
guidance from core assets to a range of 540,000 to 560,000 Boe per
day. This represents an increase of 7,000 Boe per day from previous
guidance. More detailed information for Devon’s 2016 production and
capital outlook will be provided within second-quarter 2016
earnings disclosures.
Midland Divestitures Transaction Details
In the northern Midland Basin, Devon agreed to monetize its
working interest across 15,000 net acres in Martin County, Texas
along with 13,000 net acres in eight surrounding counties for $435
million. Current net production associated with this largely
undeveloped leasehold position is approximately 1,000 Boe per day,
with oil accounting for roughly 70 percent. Combined with the
recent sale of the Company’s overriding interest in Martin County,
proceeds from Devon’s northern Midland Basin acreage position
totaled $574 million.
In a separate transaction, Devon entered into an agreement to
sell its assets in the southern Midland Basin for $423 million.
Current production from these assets is approximately 22,000 Boe
per day, of which 33 percent was oil. At Dec. 31, 2015, proved
reserves associated with these properties totaled 43 million Boe.
Field-level cash flow accompanying these assets, which excludes
overhead costs, amounted to $13 million in the first quarter of
2016.
The Company expects to incur minimal taxes associated with these
divestitures. These transactions are subject to customary terms and
conditions and are expected to close in the third quarter of
2016.
Jefferies LLC acted as the lead financial advisor to Devon on
the divestiture transactions. RBC Richardson Barr also acted as a
financial advisor to Devon. Vinson & Elkins LLP acted as legal
advisor to Devon.
About Devon Energy
Devon Energy is a leading independent energy company engaged in
finding and producing oil and natural gas. Based in Oklahoma City
and included in the S&P 500, Devon operates in several of the
most prolific oil and natural gas plays in the U.S. and Canada with
an emphasis on a balanced portfolio. The Company is the
second-largest oil producer among North American onshore
independents. For more information, please visit
www.devonenergy.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the federal securities laws. Such statements are
subject to a number of assumptions, risks and uncertainties, many
of which are beyond the control of the Company. These risks
include, but are not limited to: the failure to consummate the
transactions due to unsatisfied closing conditions or otherwise;
the timing, amount of proceeds and ultimate success of divesting
the Company’s other non-core assets; and the other risks identified
in the Company’s Annual Report on Form 10-K and its other filings
with the Securities and Exchange Commission. Investors are
cautioned that any such statements are not guarantees of future
performance and that actual results or developments may differ
materially from those projected in the forward-looking statements.
The forward-looking statements in this press release are made as of
the date hereof, and the Company does not undertake any obligation
to update the forward-looking statements as a result of new
information, future events or otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20160615006485/en/
Devon Energy Corp.Investor ContactsHoward Thill,
405-552-3693Scott Coody, 405-552-4735Chris Carr,
405-228-2496Media ContactJohn Porretto, 405-228-7506
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