Devon Energy has entered definitive agreements to sell its remaining non-core assets in the Midland basin for $858 million.The sale is part of a push by Devon to shed up to $3 billion in noncore assets as it tries to strengthen its balance sheet after the worst price crash in a generation.
These transactions include the company’s upstream assets in the southern Midland basin and its undeveloped leasehold in Martin County, Texas.
In the northern Midland basin, Pioneer Natural Resources agreed to acquire Devon’s working interest across 15,000 net acres in Martin County, Texas, along with 13,000 net acres in eight surrounding counties for $435 million. Current net production associated with this largely undeveloped leasehold position is approximately 1,000 boed, with oil accounting for roughly 70%.In a separate transaction, Devon entered into an agreement to sell its assets in the southern Midland basin for $423 million. Current production from these assets is approximately 22,000 boed, of which 33% was oil. Devon did not disclose the buyer.Both transactions are expected to close in the third quarter.
Devon also increased its 2016 capital budget by $200 million, saying it now plans to spend $1.1 billion to $1.3 billion this year, and slightly raised its 2016 production guidance for core operations to between 540,000 and 560,000 barrels of oil equivalent per day (boepd).
Pioneer, known for its aggressive hedging program, also said it would add five drilling rigs in Texas starting in September, bringing its total rig count to 17 as oil prices recover to $50 a barrel.These rig additions will add about $100 million to the company’s capital budget for 2016, lifting it to $2.1 billion.
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