“2015 provided an extremely challenging business environment for our industry.” Dave Hager, CEO and President.
Despite laying off 1,000 workers amidst the energy downturn, Devon Energy CEO and President David Hager on Wednesday sounded optimistic the company will remain economically healthy.
“Looking at our financial flexibility longer term, if commodity prices remain low, Devon has significant balance sheet strength to withstand an extended downturn,” stated Hager during a Wednesday morning conference call with analysts.
He confirmed Devon is putting up assets for sale and those assets include the sale of up to 80,000 barrels of oil a day non-core upstream assets n the U.S.
“The properties up for sale include 15,000 net undeveloped acres in Martin County, Texas and producing assets in the Southern Midland Wolfcamp, Carthage, Granite Wash and the Mississippian Lime Plays,” continued Hager in answering question.
The Granite Wash and the Mississippian Lime plays are both in Oklahoma.
“We are committed to living within cash flows in 2016. To do so, we have taken aggressive measures to preserve more than $1 billion of cash flow through operating cost and dividend reductions,” he said. “We have the financial strength to withstand an extended downturn and we’re looking to further bolster our investment-grade balance sheet with ongoing asset divestiture programs.”
In his opening statements, Hager said Devon has the divestitures underway with an intent to monetize $2 billion to $3 billion of assets during 2016.
“These are high-quality assets. And the feed back that we have received from the market thus far is very positive regarding the quality of these assets and the ability to transact these assets at the prices that we have assumed here,” continued the CEO. “We are opening data rooms starting next week. And then soon after that, we anticipate that we’d be receiving bids here during the first half of the year and closing on these throughout the year.”
Plus, there is a lot of belt-tightening and Hager made it clear that Devon for now is not focusing on any long-term projects.
“We are just short-term project oriented,” he explained. “We do not have to continue investment into longer-term projects that no longer make economic sense such as in the deepwater, LNG projects, anything like that.”
Hager said the company has the ability to respond very quickly should prices rebound.
“We have maintained—despite the employee reduction we’re going through right now, it’s very important to us to maintain the organizational capacity to flex our program back up should we see encouragement in prices.”
