Devon Energy Corporation (DVN) said it is close to completing its strategic repositioning, which was long pending for approval of the Brazilian government. Yesterday, Devon said that it has received approval from the Brazilian government for the sale of its assets in Brazil to BP Plc (BP) for $3.2 billion.
Devon Energy expects to complete the transaction later this week. Following the completion of the strategic repositioning, the company said it will focus on its highly competitive North American onshore exploration and production business.
Devon Energy had announced plans to divest its Gulf of Mexico and international assets to focus on its North American onshore assets in November 2009. Since then, the company has successfully sold off all its properties in the Gulf of Mexico, Azerbaijan, China and other International regions. The only pending sale transaction under the plan is the sale of its remaining offshore assets in Brazil, which has now cleared all hurdles.
Devon said it will realize total proceeds of roughly $8 billion (after-tax) from the divestiture program, which is way above the company’s initial expectation of $4.5 – $7.5 billion. With the completion of this divestiture program, we expect Devon to emerge with sustainable organic growth opportunities, superior financial strength and enhanced per share growth.
Based in Oklahoma, Devon Energy is engaged primarily in exploration, development and production of oil and natural gas. The company’s oil and gas operations are mainly concentrated in the onshore areas of North America, including the United States and Canada.
We maintain our Neutral recommendation on Devon. The company also retains a short term Zacks #3 Rank (Hold).