Devon Says Hires Jefferies To Sell Non-Core Assets To Cut Debt
Feb 10 (Reuters) - U.S. oil producer Devon Energy Corp said on Tuesday it has hired the U.S. investment bank Jefferies Group LLC to market assets across four major shale basins to raise cash and slash debt.
In December, the large driller said it was looking to raise $2 billion to $3 billion from selling non-core oil assets as well as its 50-percent interest in the Access pipeline in Canada as crude prices plumbed new lows. The target value for the divestiture program has remained unchanged even as oil futures have fallen further, the company said Tuesday.
It also said in December it would buy some assets from Felix Energy LLC for $1.9 billion, part of a $2.5 billion total acquisition package.
So far, U.S. energy companies have been selling off assets in dribs and drabs to survive a downturn in energy prices but Devon's plans could prompt a flurry of larger-sized deals.
Bankers who work with oil and gas firms say they expect more transactions and larger deals in 2016 if oil prices remain low.
While small in size and value compared with Royal Dutch Shell's $70 billion move on BG Group Plc, bankers say the block of assets is one of the biggest marketed for sale by a producer since the start of the oil market's prolonged crisis.
"We are moving ahead with the divestiture program and have already received numerous indications of interest," Howard Thill, Devon's Senior Vice President for Communications and Investor Relations told Reuters on Tuesday.
While the company hopes to complete the sale by the end of this year, this is not a "fire sale", he said.
"If we do not receive good value for an asset, we will defer the sale of that asset until a later date," he said.
The drilling and exploration acreage is located across major U.S. shale hubs: the Permian Basin of Texas, the Granite Wash formation, East Texas and the Mississippian play, Thill told Reuters.
It is offering the assets as regional packages, and will also consider multiple packages together as a block, Thill said.
"At the end of the day, what is going to separate companies is the quality of their assets, their cost structure and their financial flexibility," said Fadel Gheit, an analyst with Oppenheimer and Co. "You have to have all three."
Still, Gheit said it's hard to get deals done as buyers are willing to wait to see if crude prices fall further.
U.S. oil futures have fallen more than 60 percent since June 2014, amid pressure from oversupply, and falling price has prompted oil producers to reigned in spending on drilling campaigns.
In mid-January, Devon's shares hit their lowest since September 2002 to fall below $22.
A large independent exploration and production company or integrated major might be interested in the whole package, according to two people familiar with the offering.
Devon is scheduled to release fourth-quarter earnings on Feb. 16.
(Reporting by Mike Stone and Jessica Resnick-Ault Editing by W Simon)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Rooftop Solar Now 4th Largest Source of Electricity in Australia
- US Confirms Reimposition of Oil Sanctions against Venezuela
- EU, Industry Players Ink Charter to Meet Solar Energy Targets
- Analyst Says USA Influence on Middle East Seems to be Fading
- Russian Ships to Remain Banned from US Ports
- Brazil Court Reinstates Petrobras Chair to Divided Board
- EIB Lends $425.7 Million for Thuringia's Grid Upgrades
- Var Energi Confirms Oil Discovery in Ringhorne
- Seatrium, Shell Strengthen Floating Production Systems Collaboration
- An Already Bad Situation in the Red Sea Just Got Worse
- What's Next for Oil? Analysts Weigh In After Iran's Attack
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- EIA Raises WTI Oil Price Forecasts
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Venezuela Authorities Arrest Two Senior Energy Officials
- Namibia Expects FID on Potential Major Oil Discovery by Yearend
- Oil Markets Were Already Positioned for Iran Attack
- Is The Iran Nuclear Deal Revival Project Dead?
- Petrobras Chairman Suspended
- Oil and Gas Executives Predict WTI Oil Price
- An Already Bad Situation in the Red Sea Just Got Worse
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024
- Analysts Flag 'Remarkable Feature' of 2024 Oil Price Rally