Devon Energy Secures Provisional Short-Term Credit Facility
Devon Energy Corporation (NYSE: DVN) intends to establish a new $1 billion short-term credit facility. The facility will provide the company with provisional interim liquidity until it receives the proceeds from divestitures of assets in Africa. The company previously announced its intention to divest its African operations.
Devon also announced that its board of directors has approved an ongoing, annual stock repurchase program. The purpose of the annual stock repurchase program is to offset dilution resulting from restricted stock issued to and options exercised by employees. The new repurchase program is in addition to the company's 50 million share repurchase program that was authorized in August 2005.
Short-term Credit Facility
The $1 billion, 364-day unsecured revolving senior credit facility will be arranged through a syndicate of banks led by Banc of America Securities LLC and J. P. Morgan Securities Inc. Devon expects to complete the transaction during the third quarter of 2007.
Devon has no current intentions to draw additional funds under its existing $2.5 billion credit facility or under the new credit facility. However, the new credit facility would enable Devon to increase borrowings under its existing commercial paper program from a current maximum of $2 billion to a new maximum of $3 billion, if the need arises. Borrowings under the commercial paper program reduce available capacity under the credit facilities on a dollar for dollar basis.
The company had approximately $1.6 billion borrowed under the commercial paper program at June 30, 2007. Whether commercial paper borrowings will exceed the current $2 billion maximum is dependent upon potential borrowing requirements and the timing of Devon's African divestiture program. Commercial paper borrowings exceeding the current $2 billion maximum could result from debt retirements and share repurchases.
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