Devon Energy Corp., Oklahoma City, will focus on positions in four basins this year—the Delaware, STACK, Powder River, and Eagle Ford—following completion of a divestiture program that included shedding Canadian operations and natural gas production to transform the company to a US onshore oil business (OGJ Online, Feb. 20, 2019).
In its most recent agreement of the program, in December 2019, Devon agreed to sell its Barnett shale assets to Banpu Kalnin Ventures (BKV) for $770 million (OGJ Online, Dec. 18, 2019). The transaction includes over 320,000 gross acres and 4,200 producing wells, making BKV a significant producer of natural gas in the US with over 780 MMcfd of production from assets in Pennsylvania’s Northeast Marcellus and now in the Barnett shale. Net production from the properties averaged 597 million cu ft equivalent/day in third-quarter 2019. At year-end 2018, proved reserves associated with the properties amounted to 4 trillion cu ft equivalent.
The transaction, subject to conditions and expected to close in this year’s second quarter, is BKV’s seventh since 2016, with over $1.3 billion of capital deployed into gas-weighted assets. BKV is backed by its sole investor, Banpu Pcl, a Thailand-based coal mining and power-generation company.
Prior to the Barnett deal, Devon signed with Dow to jointly develop a portion of its STACK acreage in central Oklahoma (OGJ Online, Dec. 10, 2019). Devon’s operations in the STACK are currently focused in the oil-prone Meramec and the liquids-rich Cana-Woodford shale.
In May 2019, Canadian Natural Resources Ltd. and Devon reported a deal that saw CNRL increase its crude oil production capacity by 128,300 b/d before royalties with the purchase of Devon Canada for $3.775 billion (Can.) cash (OGJ Online, May 29, 2019).
2020
A January investor presentation highlighted the basins, noting a revision to its 2019 oil growth outlook. The company now anticipates 2019 growth of 20-21% as it expects the Delaware, Eagle Ford, and Powder River basins to drive strong fourth-quarter growth. For this year, a planned $1.7-1.9 billion investment in exploration and production activities is expected to help generate 7-9% growth in oil production volumes.
The company’s most active program is in the Delaware basin, where, in 2020, Devon sees the Todd development area—where 30 new wells are expected to come online—as a growth driver.
Devon’s STACK drilling partnership with Dow calls for two drilling units in northern Canadian County where drilling of 18 Woodford wells with 10,000 ft laterals is expected to begin mid-year.
In the Powder River basin, where Devon has 8 operated wells online in the Niobrara, activity includes two successful spacing tests. In its January investor report the company said there is potential to double Niobrara activity this year.
Reported in connection with the Barnett asset sale, Devon announced a $1 billion share-repurchase program, bringing the total repurchase authorization to $6 billion. With an expiration of Dec. 31, $800 million of the $1 billion authorization is conditioned upon the closing of the Barnett transaction with BKV. When the deal was announced, Devon had repurchased 144 million shares, nearly 30% of outstanding shares, at a total cost of $4.8 billion.
Mikaila Adams | Managing Editor - News
Mikaila Adams has 20 years of experience as an editor, most of which has been centered on the oil and gas industry. She enjoyed 12 years focused on the business/finance side of the industry as an editor for Oil & Gas Journal's sister publication, Oil & Gas Financial Journal (OGFJ). After OGFJ ceased publication in 2017, she joined Oil & Gas Journal and was named Managing Editor - News in 2019. She holds a degree from Texas Tech University.