Devon Energy Corp., Oklahoma City, has amended its agreement to sell its Barnett shale assets to Banpu Kalnin Ventures (BKV) (OGJ Online, Dec. 18, 2019).
Under the amended terms, Devon has agreed to sell its Barnett shale assets to BKV for up to $830 million of total proceeds, consisting of $570 million in cash at closing and contingent payments of up to $260 million. The previous sale price was $770 million without contingent payments.
With the amended terms, Devon will receive an increased deposit of $170 million from BKV, and the scheduled closing date for the transaction is extended to Dec. 31 from Apr. 15. The closing payment is subject to customary purchase price adjustments that, among other things, allocate revenues and expenses based on a Sept. 1, 2019, effective date.
In December, with initial report of the Barnett sale, Devon announced a $1 billion share-repurchase program set to expire Dec. 31, 2020. Of the $1 billion, $800 million is conditioned upon the closing of the Barnett transaction.
The agreement provides for contingent cash payments of up to $260 million based upon future commodity prices, with upside participation beginning at either a $2.75 Henry Hub natural gas price or a $50 West Texas Intermediate oil price. The contingent payment period begins Jan. 1, 2021 and has a term of 4 years. The contingent payments are earned and paid on an annual basis.