Devon Energy announced nearly $1 billion in sales Monday. The Oklahoma City-based oil and gas giant is selling wells, land leases, and mineral royalties in Texas and Oklahoma in three separate deals for about $974 million, The Journal Record’s Sarah Terry-Cobo reports:
The east Texas gas well sale is expected to bring about $525 million. The Oklahoma wells sold for about $310 million. The Midland Basin royalties should bring about $139 million. The transactions are expected to close in the third quarter; Devon did not disclose the buyers. Within the next few weeks, company executives expect to complete the sale of the 50-percent interest in Canada’s Access Pipeline, according to an investor presentation released Monday. The driller also plans to sell a partial royalty on undrilled land near Midland.
Those transactions are part of the company’s strategy to sell up to $3 billion worth of land leases, pipelines and mineral rights this year. Devon will use the proceeds to pay down debt and to help maintain its credit rating, the company said in a statement.
Oppenheimer and Company senior energy analyst Fadel Gheit said the consolidation reflects part of a larger trend within the oil and gas industry, Terry-Cobo writes:
Drillers are selling wells and leases and are preparing to operate as if oil prices will settle between $50 and $60 per barrel for West Texas Intermediate. “No one is waiting for $80 or $100 oil,” Gheit said. “A company like Devon is trying to preserve its financial flexibility and hold on to its best assets, its best resources and its best people.” It was easy to make money when crude was $90 per barrel, but at half that price drillers are re-examining their drilling portfolios and selling marginal assets, he said. Operators are maturing and focusing on spending money in regions where rock layers produce the highest returns.
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