Oil and gas company Devon Energy Corporation (DVN), Tuesday, said it has agreed to sell its interests in three lower tertiary development projects in Gulf of Mexico to Maersk Oil, a unit of Danish shipping and oil group AP Moller Maersk A/S, for $1.3 billion in cash. The sale is effective January 1, 2010 and is expected to close on or before February 1, 2010, subject to preferential purchase rights in the properties and other regulatory approvals.
Oklahoma City-based Devon said it intends to use the sales proceeds to reduce debt and to accelerate investment in its North American onshore assets. Devon estimates after-tax proceeds from the transaction to be nearly $1.1 billion.
According to the transaction, Copenhagen-based Maersk will obtain a 50% working interest in Cascade field and a 25% working interest in both Jack and St. Malo fields. All the three lower tertiary development projects are located in deepwater Walker Ridge federal lease area offshore Louisiana.
Today's announcement follows Devon's intentions announced last month to divest all its Gulf of Mexico and international assets to strategically reposition the company as a high-growth North American onshore company. Devon sees the repositioning to be highly accretive to earnings, cash flow, production and reserves beginning in 2011.
Devon said it has no current production or proved reserves in connection with the projects, and expects the sale to reduce its previously announced 2010 capital budget for Gulf of Mexico by about $400 million.
Devon stated that data rooms for all of the remaining divestiture assets will be open in the first quarter of 2010. The company anticipates the aggregate after-tax proceeds from the planned divestitures, including the current transaction, between $4.5 billion and $7.5 billion. Devon sees to complete the divestitures throughout next year and anticipates to complete the process by year-end.
Based on estimated proved reserves at the end of 2009, Devon's Gulf of Mexico and international properties comprise about 7% of its company-wide proved reserves of 2.8 billion barrels of oil equivalent, or Boe. If the sale of Gulf of Mexico and international assets had occurred in 2009, Devon's estimated year-end 2009 proved reserves would have been 2.6 billion Boe or nearly 200 million Boe greater than year-end 2008 levels.
Commenting on the sale, Devon's president John Richels said, "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."
In third quarter of 2009, Devon reported a sharp decline in profit, hurt by significantly lower product prices as well as a 64% drop in quarterly revenues, although it recorded strong production growth and lower overall costs. The company reported a net income of $499 million or $1.12 per share for the quarter compared to $2.62 billion or $5.88 per share in the third quarter of fiscal 2008. Total revenues for the quarter plunged to $2.10 billion from $5.98 billion in the prior year.
DVN is currently trading on the New York Stock Exchange at $71.30 per share, up $0.65 or 0.92% on a volume of 899,743 shares. In the past 52-week period, the shares have been trading in a range of $38.55 to $73.12.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.