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Devon to Sell $1B Assets; Plans $2-3B Divesture in 2016
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Devon Energy Corporation (DVN - Free Report) has entered into a definitive agreement to sell nearly $1 billion worth of non-core upstream assets situated in east Texas, the Anadarko Basin and an overriding royalty interest in the northern Midland Basin. Year to date, the company has announced asset sale of nearly $1.3 billion.
Assets to be Sold
Three asset sale transactions in three different locations will sum up to nearly $1 billion. These assets have a very small mix of oil production. The largest among the three comprises upstream assets in east Texas and will be sold for $525 million. Net production from these properties averaged 22,000 oil-equivalent barrels (Boe) per day in the first quarter of 2016, out of which only 5% was oil.
The second transaction involves the sale of its non-core position in Anadarko Basin’s Granite Wash area for $310 million. Net production from these properties averaged 14,000 Boe per day in the first quarter of 2016, nearly 13% of which was oil.
In the third and final transaction, the company will sell its overriding royalty interest across 11,000 net acres for $139 million. Production from this overriding royalty interest is approximately 1,000 Boe per day.
All the above transactions are expected to close in the third quarter of 2016, subject to the fulfillment of customary terms and conditions of the sell agreement.
Assets Lined Up for Sale
Devon Energy is currently in talks with interested parties to sell its 50% interest in the Access Pipeline in Canada. The company also expects to sell its remaining non-core oil assets in the Midland Basin in 2016.
The non-core asset sale announced year to date combined with future asset sale will help Devon Energy to meet its divesture target of $2 billion to 3 billion in 2016.
Oil Price Moving Up
Oil prices have been showing signs of improvement from the earlier lows, thanks to an improving demand and supply picture. The improvement in oil prices will help those companies that have a primary focus on oil.
At Devon Energy, oil comprised 44% of the total production in the first quarter of 2016. It is expected to go up further after the closure of the above mentioned transactions.
Another oil focused company WPX Energy recently raised its oil production expectation by 5% from its earlier projection to 39,000 to 41,000 barrels of oil per day.
Zacks Rank
Devon Energy currently has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the oil and natural gas space are EXCO Resources Inc. and World Point Terminals, LP , both carrying a Zacks Rank #2 (Buy).
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Devon to Sell $1B Assets; Plans $2-3B Divesture in 2016
Devon Energy Corporation (DVN - Free Report) has entered into a definitive agreement to sell nearly $1 billion worth of non-core upstream assets situated in east Texas, the Anadarko Basin and an overriding royalty interest in the northern Midland Basin. Year to date, the company has announced asset sale of nearly $1.3 billion.
Assets to be Sold
Three asset sale transactions in three different locations will sum up to nearly $1 billion. These assets have a very small mix of oil production. The largest among the three comprises upstream assets in east Texas and will be sold for $525 million. Net production from these properties averaged 22,000 oil-equivalent barrels (Boe) per day in the first quarter of 2016, out of which only 5% was oil.
The second transaction involves the sale of its non-core position in Anadarko Basin’s Granite Wash area for $310 million. Net production from these properties averaged 14,000 Boe per day in the first quarter of 2016, nearly 13% of which was oil.
In the third and final transaction, the company will sell its overriding royalty interest across 11,000 net acres for $139 million. Production from this overriding royalty interest is approximately 1,000 Boe per day.
All the above transactions are expected to close in the third quarter of 2016, subject to the fulfillment of customary terms and conditions of the sell agreement.
Assets Lined Up for Sale
Devon Energy is currently in talks with interested parties to sell its 50% interest in the Access Pipeline in Canada. The company also expects to sell its remaining non-core oil assets in the Midland Basin in 2016.
The non-core asset sale announced year to date combined with future asset sale will help Devon Energy to meet its divesture target of $2 billion to 3 billion in 2016.
Oil Price Moving Up
Oil prices have been showing signs of improvement from the earlier lows, thanks to an improving demand and supply picture. The improvement in oil prices will help those companies that have a primary focus on oil.
At Devon Energy, oil comprised 44% of the total production in the first quarter of 2016. It is expected to go up further after the closure of the above mentioned transactions.
Another oil focused company WPX Energy recently raised its oil production expectation by 5% from its earlier projection to 39,000 to 41,000 barrels of oil per day.
Zacks Rank
Devon Energy currently has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the oil and natural gas space are EXCO Resources Inc. and World Point Terminals, LP , both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>