Devon Energy Corporation (DVN) plans to sell all of its oil and gas assets in the Gulf of Mexico (GoM) shelf assets to Apache Corporation (APC) for $1.05 billion (approximately $840 million after tax).
The agreement includes Devon’s 158 blocks (including 51 producing blocks) located offshore Texas, Louisiana and Alabama. Production from these assets was roughly 62 million cubic feet of natural gas and 9 thousand barrels of liquids per day in 2009. Devon’s proved reserves for the year consisted of
144 billion cubic feet of natural gas and 15 million barrels of liquids related to assets on sale.
Devon estimates the sale of the remaining Gulf of Mexico assets together with its previous $8.3 billion sale to exceed the upper end of its guidance range. The company had originally expected the sale proceeds from the repositioning to be roughly $4.5-$7.5 billion.
Completion of the transaction is subject to preferential rights to purchase held by the other working interest owners in the properties as well as customary closing conditions and regulatory approvals. Devon plans to provide updates to guidance for 2010 production, expenses and capital expenditures as the transactions are closed.
In November 2009, Devon announced plans to divest all of its Gulf of Mexico and international assets to reposition itself as a high-growth North American onshore company. The company expects to use the proceeds to accelerate the development of its North American assets, debt reduction and share repurchases. Upon completion of the repositioning, Devon will emerge with even more liquidity and with one of the strongest balance sheets in its peer group.
The company has now announced the sale of the majority of the divestiture assets. Devon expects the closings of all divestitures to be completed prior to year-end.
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