Devon Energy Corp. (NYSE: DVN) announced today its intent to divest approximately $1 billion of upstream assets across its portfolio. The non-core assets identified for monetization include select portions of the Barnett Shale focused primarily around Johnson County and other properties located principally within the company’s U.S. resource base.
Devon expects to commence the divestiture program in the second quarter of 2017 and complete the sale process over the next 12 to 18 months. The company plans to deploy divestiture proceeds toward its U.S. resource plays and to further strengthen its investment-grade financial position. The company’s non-core divestiture plan is also expected to accelerate Devon’s transition to higher-margin production.
“The successful resource expansion in our world-class STACK and Delaware Basin assets has generated an abundance of opportunities within our portfolio,” said Dave Hager, president and CEO. “Given the multi-decade growth platform these franchise assets provide, we are taking this initial step to bring value forward from non-core assets and sharpen our focus on the highest-returning growth inventory in our portfolio.
“This divestiture program, combined with our excellent liquidity and strong hedge position, supports our capital program and places us firmly on track to achieve our production growth targets in 2017 and 2018,” said Hager. “Importantly, these strategic actions provide certainty for our future capital programs and uniquely position Devon to maintain strong operational momentum through the end of the decade.”
Growing U.S. Resource Base Provides Opportunity for Additional Asset Sales
Given the depth of Devon’s resource base in North America’s best basins, the company possesses highly-visible and sustainable growth opportunities within its portfolio. This growth inventory is concentrated in the STACK and Delaware Basin, where Devon has exposure to more than 30,000 potential drilling locations, of which roughly one third have been successfully de-risked.
With ongoing STACK appraisal work and further testing of the Leonard and Wolfcamp zones in the Delaware Basin, Devon’s risked resource base in the U.S. has the potential to further expand. With successful delineation work, the company would evaluate strategic options for additional non-core asset sales.