Devon has agreed to sell its interests in three Lower Tertiary development projects in the Gulf of Mexico to Maersk Oil for $1.3 billion. The agreement covers Devon's 50-percent working interest in the Cascade project in the Greater Chinook Area and its 25-percent working interests in the Jack and St. Malo projects. All three projects are located in the deepwater Walker Ridge federal lease area offshore Louisiana.
"This is an important first step in executing our plan to divest all of our Gulf of Mexico and international assets and to reposition Devon as a purely North American onshore company," said John Richels, Devon's President. "We intend to apply the sales proceeds to debt reduction and to accelerate investment in our world-class North American onshore assets."
Devon has no current production or proved reserves associated with these projects. The sale of these properties reduces Devon's previously announced 2010 capital budget for the Gulf of Mexico by approximately $400 million.
Devon estimates its after-tax proceeds from this transaction at approximately $1.1 billion. The effective date of the sale is January 1, 2010. Closing is expected to occur on or before February 1, 2010. Completion of the transaction is subject to preferential rights to purchase held by the other working interest owners in the properties as well as additional closing conditions and regulatory approvals.
Devon announced plans to divest its Gulf of Mexico and international assets in November 2009. Data rooms for all of the remaining divestiture assets will be open in the first quarter of 2010. The company has estimated the aggregate after-tax proceeds from the planned divestitures, including this transaction, at $4.5 billion to $7.5 billion.
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