Devon Energy Announces Plan to Strategically Reposition Company as High-Growth, Onshore North American Exploration and Production Company
OKLAHOMA CITY, Nov. 16 /PRNewswire-FirstCall/ -- Devon Energy Corporation (NYSE: DVN) today unveiled its plan to strategically reposition Devon as a high-growth North American onshore company. Devon intends to divest all of its Gulf of Mexico and international assets. The company plans to direct proceeds to its high-return U.S. and Canadian onshore portfolio and to retire debt.
"Devon's success has led to an overabundance of opportunities, and this repositioning will allow us to optimize value for our shareholders," said J. Larry Nichols, chairman and chief executive officer. "We do not believe that the value of our high-quality Gulf and international assets is being adequately reflected in our stock price. By monetizing these assets, we will realize their full value, allowing us to unleash the growth potential that resides within our world-class onshore assets."
"Following the divestitures, Devon will be uniquely positioned to deliver high organic growth on a sustainable basis, funded entirely with internally generated funds. Furthermore, we expect Devon to emerge with an even stronger balance sheet and one of the lowest overall cost structures in our peer group," added Nichols.
Expected Timing, Proceeds and Pro-Forma Impacts
Devon expects to have data rooms open for all of the divestiture assets and commence the divestiture process in the first quarter of 2010. The company expects to complete the divestitures throughout 2010 and to have finished the process by year-end.
Devon believes the divestitures will generate after-tax proceeds of $4.5 billion to $7.5 billion. The company expects the repositioning to be highly accretive to earnings, cash flow, production and reserves beginning in 2011.
Relative Size and Product Mix of Gulf of Mexico and International Assets
Based on estimated year-end 2009 proved reserves, Devon's Gulf of Mexico and international properties comprise approximately seven percent of Devon's company-wide proved reserves of 2.8 billion barrels of oil equivalent (Boe). If the sale of the 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 some 200 million Boe greater than year-end 2008 levels.
Oil and natural gas liquids account for approximately 43 percent of company-wide estimated proved reserves at year-end 2009. Pro forma for the divestiture of the Gulf of Mexico and international assets, oil and natural gas liquids account for 41 percent of the total. Accordingly, the company's overall balance between liquids and natural gas will change only slightly as a result of this repositioning.
Conference Call Webcast Scheduled for Today
Devon will host a conference call webcast at 9 a.m. Central Time (10 a.m. Eastern Time) today to discuss 1) the planned repositioning of the company, 2) an update of the company's resource potential and 3) the company's 2010 capital budget and outlook. The webcast may be accessed from Devon's internet home page at www.devonenergy.com.
Deutsche Bank provided financial services to Devon in connection with this matter.
Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and gas exploration and production. Devon is a leading U.S.-based independent oil and gas producer and is included in the S&P 500 Index. For additional information, visit www.devonenergy.com.
This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission. Such statements are those concerning strategic plans, expectations and objectives for future operations. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by Devon on its website or otherwise. Devon does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.
The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. This release may contain certain terms, such as resource potential, reserve potential, probable reserves, possible reserves and exploration target size. The SEC guidelines strictly prohibit us from including these terms in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K, File No. 001-32318, available from us at Devon Energy Corporation, Attn. Investor Relations, 20 North Broadway, Oklahoma City, OK 73102. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
SOURCE Devon Energy Corporation
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