Oklahoma City’s Devon Energy announced Thursday it is going ahead with a nearly $1.1 billion sale of its 50 percent ownership in a western Canada Access Pipeline.
As OK Energy Today reported earlier, Wolf Midstream Inc. is the buyer.
“With the highly-accretive sale of Access, Devon’s divestiture program is now complete with proceeds totaling $3.2 billion, surpassing the top end of our $2 billion to $3 billion guidance range,” said Dave Hager, president and CEO. “Furthermore, the divestiture proceeds significantly strengthen our investment-grade balance sheet and position us to further accelerate investment in our best-in-class U.S. resource plays, led by the STACK and Delaware Basin.”
Wolf Midstream is a portfolio company of Canada Pension Plan Investment Board. The agreement includes the potential for an incremental $150 million payment with the sanctioning and development of a new thermal-oil project on Devon’s Pike lease in Alberta, Canada.
Under the agreement, Devon’s thermal-oil acreage is dedicated to Access Pipeline for an initial term of 25 years. A market-based toll will also be applied to production from the Company’s three Jackfish projects which are fully operational. As a result, Devon expects its lease operating expense at the Jackfish complex to increase by nearly $100 million on an annualized basis.
The Company’s next potential project is the first phase of Pike, which is located immediately adjacent to the Jackfish complex. Devon is the operator of this joint venture leasehold with a 50 percent working interest. Front-end engineering and design work at the first phase of Pike is complete, but the project has not been sanctioned.
Closing on the agreement is expected in the third quarter of 2016.