The properties to be divested are located principally in the offshore Gulf of Mexico and onshore in the United States and Canada. Oil and gas production from these properties is expected to average 90,000 to 100,000 Boe per day in 2004. The company's second quarter 2004 oil and gas production was 684,000 Boe per day. Excluding the contribution of the divested properties for the full year, Devon expects its 2005 production of oil, gas and natural gas liquids to be 210 to 220 million Boe.
"Our growth strategy is to create shareholder value by investing in significant long-term projects," said John Richels, Devon's president. "The non-core and mature properties we plan to sell no longer fit that strategy. Given the premium prices recent divestitures have commanded, we believe this is an ideal time to refocus our producing portfolio. Proceeds from these divestitures will be applied to fund a planned share purchase program that we are also announcing today."
Due to the steeper production decline characteristics of many of the properties to be divested, Devon expects its companywide reserve life to lengthen as a result of the sales. Additionally, divestiture of these properties is expected to result in a lower overall cost structure and improved operating efficiency.
Devon carried out a similar divestiture program in 2002, and refocused its portfolio by selling approximately $1.5 billion in non-core properties. The company expects to begin the current divestiture process in the fourth quarter of 2004 and substantially complete it in the first quarter of 2005. After-tax sale proceeds are expected to range between $1.0 billion and $1.5 billion.
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