Devon Energy announces strategic exit of Canadian business

Devon Energy announced that it has entered into a definitive agreement to sell its Canadian business to Canadian Natural Resources for $2.8 billion. This transaction is subject to customary terms and conditions and is expected to close by the end of Q2 2019. Proceeds from the sale of Canada will be used for debt reduction.

“The sale of Canada is an important step in executing Devon’s transformation to a US oil growth business,” Dave Hager, President and CEO, said. “This transaction creates value for our shareholders by achieving a clean and timely exit from Canada, while accelerating efforts to focus exclusively on our high-return US oil portfolio.

“I would like to express my sincere appreciation to all of our Canadian employees for their hard work and dedication over the past two decades in building an industry-leading heavy oil business,” Mr Hager said. “With this change in ownership, it is great to see our talented and innovative employee base transition to a top-tier company like Canadian Natural Resources.”

The company’s Canadian asset portfolio consists of heavy oil assets principally located in the province of Alberta, with net production averaging 113,000 BOE in Q1 2019. At year-end 2018, proved reserves associated with these properties amounted to approximately 409 million bbl. Field-level cash flow accompanying these assets, which excludes overhead costs, totaled $236 million in 2018.

To complete the company’s transformation to a high-return US oil growth business, Devon Energy continues to advance the divestiture process for its Barnett Shale gas assets in north Texas. Data rooms for the Barnett will open in Q2 2019 and the company expects to exit the assets by the end of 2019.

J.P. Morgan Securities acted as lead financial advisor to Devon on the Canada transaction. Goldman Sachs also acted as a financial advisor.