Oklahoma City-based Devon Energy continued with its strategy of divesting non-core assets Monday, announcing the sale of almost $1 billion of mostly natural gas-weighted upstream assets in eastern Texas and the Anadarko Basin plus a royalty interest in the northern Midland Basin.
The asset sales are expected to help improve the producer's balance sheet and help fund acquisitions in the Anadarko Basin STACK play and in Wyoming's Power River Basin that Devon bought in December for a combined $4.05 billion.
"Combined with other recent asset sales, we have now announced $1.3 billion of gas-focused upstream divestitures," Devon CEO Dave Hager said in a statement Monday.
In the largest announced transaction, Devon agreed to divest upstream assets in eastern Texas for $525 million. Net production from these properties averaged 22,000 barrels of oil equivalent per day (123 Mcfe/d) comprising about 70% gas, 25% natural gas liquids and 5% crude in the first quarter of 2016, it said.
Field-level cash flow from the assets, which excludes overhead costs, totaled $10 million in Q1, it added.
As of year-end 2015, proved reserves associated with these properties amounted to about 87 million boe (488 MMcfe), the company said.
Devon also agreed to sell its non-core position in the Anadarko Basin's Granite Wash area for $310 million. Net production from the properties averaged 14,000 boe/d (79 Mcfe/d) -- consisting of 50% gas, 37% NGLs and 13% crude oil -- in Q1, it said.
The field-level cash flow from the Granite Wash assets totaled $6 million in Q1. At year-end 2015, proved reserves associated with these properties amounted to 31 million boe (174 MMcfe).
In a third transaction, Devon agreed to sell its overriding royalty interest across 11,000 net acres of the northern Midland Basin in west Texas for $139 million. Current production from this overriding royalty interest is about 1,000 boe/d (5.61 Mcf/d).
The transaction does not include Devon's working interest across 15,000 net acres in Martin County, Texas, that the company is marketing separately.
Hager said with the current asset sales Devon is well on its way to achieving its previously announced goal of selling $2 billion to $3 billion worth of assets this year.
Devon continues to progress toward monetizing other non-core upstream assets in the Midland Basin, which had an average production of about 25,000 boe/d (140 Mcfe/d) in Q1, which include the 15,000 net undeveloped acres in Martin County, the company said.
Additionally, Devon said it is in advanced negotiations to sell its 50% interest in the heavy oil Access Pipeline in northeastern Alberta, Canada, and expects to announce a deal within the next several weeks.
"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," Hager said.
Devon did not disclose the buyer in any of the transactions, which the company expects to close in the third quarter.
The asset sales announced Monday come on the heels of a deal Devon announced in April to sell non-core Mississippian play assets in northern Oklahoma to White Star Petroleum for $200 million.
At around the same time as the announcement of the Devon deal, White Star announced it had changed its name from American Energy-Woodford as it spun off from the American Energy Partners group of companies founded by the late Aubrey McClendon in 2013.
Devon's current round of asset sales also coincide with the strategy the company announced in February reduce capital expenditures to $1.3 billion/year, down 75% from 2015, to protect its balance sheet amid low commodity prices.
