Devon Energy embarks on new US shale focus

By Luke Geiver | May 30, 2019

Devon Energy is working to become a U.S. shale oil pure-play company following the sale of its Canadian assets. In a deal valued at nearly $3 billion, the Oklahoma-based exploration and production firm has agreed to sell its heavy oil assets to Canadian Natural Resources Limited. Later this year, Devon intends to finalize the sale of its shale gas assets in the Barnett shale gas play of North Texas. A data room for the shale gas assets has already been set up.

Devon’s Canadian assets consist mostly of heavy oil sites in Alberta. The assets generated roughly 113,000 oil-equivalent barrels in the first quarter this year. Last year, the assets in Canada generated roughly $236 million.

“New Devon will emerge with a highly focused U.S. asset portfolio and has the ability to substantially increase returns and profitability as we aggressively align our cost structure to expand margins with this top-tier oil business,” said Dave Hager, president and CEO. “The New Devon will be able to grow oil volumes at a mid-teens rate while generating free cash flow at pricing above $46 per barrel.”

Devon will now focus on its operations in the Rockies, Delaware Basin, SCOOP/STACK and Eagle Ford.

In the Delaware, Devon has a plan to spend $900 million this year, with another $300 million slated for the Eagle Ford, $400 million to the STACK and $300 million to the Rockies.

In Canada, Devon spent more than two decades working to develop its heavy oil assets.