Oklahoma City-based Devon Energy announced it’s made a $1 billion sale of some of its in Oklahoma and Texas and a royalty interest in the northern Midland Basin. It did not identify the buyers but said the largest transaction was for reserves in East Texas that sold for $525 million. It also sold its holdings in the Anadarko Basin’s Granite Wash for $310 million. The closings of the sales are expected to be completed in the third quarter.
The $1 billion sale came after Devon had revealed earlier plans to target $3 billion of asset sales to fund drilling and lower its debt. Dave Hager, Devon’s Chief Executive Officer said despite the recent rebound of oil prices, it hasn’t been enough to grow production again for the company.
“We expect the market to react positively to this news as there was some concern that the sale program would not be executed successfully,” said Paul Westervelt in an interview with Bloomberg News. He is a trader at Iberia Capital Partners in New Orleans.
Even as Devon unloaded the holdings for $1 billion, it continues attempts and is said to be in “advanced negotiations” to sell its half stake in the Access Pipeline which carries Canadian heavy oil. As part of the negotiations, Devon wants a 25-year transportation agreement.
“With oil prices having moved in our favor throughout the sales process, we are encouraged by the interest and progress in marketing our remaining non-core oil assets in the Midland Basin and Access Pipeline in Canada,” said Hager in making the Monday announcement. “Proceeds for the entire divestiture program are well on their way to achieving our previously announced range of $2 billion to $3 billion in 2016.”
The largest transaction, the $525 million of upstream assets in east Texas had net production averaging 22,000 oil-equivalent barrels a day in the first quarter of 2016. Five percent was oil and the field-level cash flower accompanying the assets totaled $10 million in the first quarter.
The holdings in the Granite Wash had net production averaging 14,000 Boe per day in the first quarter of 2016 and 13 percent was oil. The field-level cash flow totaled $ million in the first quarter.
The northern Midland Basin assets totaled 11,000 net acres and were sold for $139 million The current production was 1,000 Boe per day. The company said the sale included 15,000 undeveloped acres n Martin County.