Oklahoma City’s Devon Energy announced Thursday it has reached an agreement to sell the southern portion of its Barnett shale position in north Texas for $553 million. At the same time, the company has made an offer to purchase $1 billion in debentures held by investors.
The sale of the Barnett shale holdings is expected to close in the second quarter of 2018 but the company did not announce the buyer or buyers.
“Combined with other recent asset sales, divestiture proceeds associated with our 2020 Vision have now reached $1 billion,” said Dave Hager, president and CEO. “In conjunction with this asset sale, and consistent with our strategic plan, we announced today in a separate release that our board has authorized a $1-billion share-repurchase program and a 33% increase in Devon’s quarterly cash dividend.”
Hager said he and the board are confident about the company’s future and “will continue to pursue opportunities to further increase cash returns to our shareholders.”
Net production from the southern Barnett divestiture assets, which reside primarily in Johnson County, are currently averaging 200 MMcf of gas-equivalent per day. Field-level cash flow accompanying these assets, which excludes overhead costs, is expected to be approximately $100 million in 2018.
The company’s remaining position in the Barnett shale primarily resides in Denton, Wise and Tarrant counties, with current production of 680 MMcf of gas-equivalent per day. This position contains an inventory of approximately 1,500 potential locations, consisting of undrilled inventory and horizontal refrac opportunities.
As for the debentures, the company commenced tender offers to purchase for cash for 7.875% debentures due 2031, the 7.950% debentures due 2032, the 5.850% notes due 2025, the 5.600% notes due 2041 and the 3.250% notes due 2022.
The notes were issued by the company or the Devon Financing Company, LLC. The company is also soliciting consents to the adoption of some proposed amendments to the indentures including the elimination of all of the restrictive covenants.