Devon Energy Collects $2 Billion from Asset Divestiture

Devon Energy reports the results of the Canadian portion of its previously announced program to divest non-core oil and gas properties. Devon reported the results of planned divestitures of properties located in the United States last month.

Devon has now entered into purchase and sale agreements for all of the properties it has offered for sale. Aggregate after-tax proceeds from the divestitures are estimated at more than $2 billion. In Canada, Devon's utilization of existing tax pools reduces the amount of current taxes attributable to the divestitures.

These agreements cover multiple packages of properties. Some of the transactions have already closed. The company expects the remaining transactions to be closed by mid-June, 2005. In accordance with the terms of the agreements, Devon is not disclosing the details of individual transactions nor identifying the purchasers.

Devon expects these divestitures to provide aggregate gross proceeds of approximately $2.3 billion, as detailed in the table below. This represents an average price of approximately $14 per equivalent barrel of proved reserves, based upon year-end 2004 reserve estimates. The combined divestiture properties produced approximately 6.9 million equivalent barrels of oil (MMBoe) in the first quarter of 2005.

                                       Expected        Estimated     12/31/04
                                        Gross          After-tax      Proved
                                       Proceeds         Proceeds     Reserves
                                    (US$ millions)   (US$ millions)   (MMBoe)
     United States onshore                605              420           46
     United States offshore               595              495           42
     Canada                             1,137            1,135           78
     Total                              2,337            2,050          166

"The market response to our Canadian divestiture packages was very enthusiastic," said Brian J. Jennings, senior vice president and chief financial officer. "Consequently, the combined after-tax proceeds of more than $2 billion are well above the $1.5 billion upper end of our original target range."

The Canadian divestitures are expected to result in early settlement of oil hedges covering 3,000 barrels per day. The amount of the loss to be recognized from the early settlement of the Canadian oil hedges will not be known until the closing date of certain of the divestitures. However, based on current oil prices, Devon expects the loss will be approximately $16 million. The loss will be reported in Devon's second quarter 2005 financial results.

Devon previously announced that its property divestitures in the United States would result in early settlement of oil hedges covering 5,000 barrels per day. Early settlement of the U.S. oil hedges will result in a loss of approximately $39 million. The loss was reported in Devon's first quarter 2005 financial results.