Devon Energy Reports Status of U.S. Property Divestitures
Devon Energy issued a progress report today on its previously announced program to divest non-core oil and gas properties. Devon reported that it has entered into purchase and sale agreements for substantially all of the properties it has offered for sale in the United States. Aggregate after-tax proceeds from these divestitures are estimated at $915 million.
The company is also divesting non-core oil and gas properties located in Canada. Devon will issue a separate release concerning the Canadian properties at a later date.
These agreements cover multiple packages of properties located onshore and offshore in the United States. One of the transactions was closed on March 31, 2005. The company expects the remaining transactions to be closed by April 30, 2005. In accordance with the terms of the agreements, Devon is not disclosing the details of individual transactions nor identifying the purchasers.
Devon expects divestitures of its properties in the United States to provide aggregate gross proceeds of approximately $1.2 billion, as detailed in the table below. This represents an average price of approximately $13.64 per equivalent barrel of proved reserves, based upon year-end 2004 reserve estimates. The company previously forecast that these properties would produce approximately 5.3 million equivalent barrels of oil (MMBoe) in the first quarter of 2005.
Expected Estimated 12/31/04 Gross After-tax Proved Proceeds Proceeds Reserves ($ millions) ($ millions) (MMBoe) Location United States onshore 605 420 46 United States offshore 595 495 42 Total 1,200 915 88"The expected divestiture proceeds are at the high end of the range we anticipated," said Brian J. Jennings, senior vice president and chief financial officer. "After the divestitures, our property base will be more tightly focused and have a longer reserve life. Considering these impressive results and today's strong commodity price environment, we expect to conclude our current 50 million share stock repurchase program by late summer."
Devon also announced that its property divestitures in the United States
will result in early settlement of oil hedges covering 5,000 barrels per day.
Early settlement of these oil hedges will result in a loss of approximately
$39 million. The loss will be reported in Devon's first quarter 2005
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- Devon Energy Plans To Divest $1B Assets; Profit Beats (May 02)