Devon CEO on divestiture plan: ‘There is no shortage of incoming phone calls’
Devon Energy Corp., Houston, is receiving a high level of interest from potential buyers interested in assets the company might look to shed following the May acquisition of Coterra Energy Inc., chief executive officer Clay Gaspar said Aug. 5.
Speaking after Devon reported second-quarter profits of $1.9 billion on revenues of $7.4 billion, Gaspar said he and his team are analyzing their options amid “a hot market for quality assets” and added that he expects to be able to share at least some news this fall.
Gaspar has said the new Devon will be managed with its large Permian basin position at its core. Analysts and investors have been particularly focused on the future of the combined Devon-Coterra’s assets in the Marcellus basin, with activist firm Kimmeridge calling for the sale of the later as it did when Coterra was still independent. In addition, Bloomberg reported late last month that Gaspar and his team are considering selling the company’s Eagle Ford and Powder River operations for more than $4 billion.
“We’re exceptionally aware of the market,” Gaspar said on a conference call in which he declined to address specifics but also more openly than in past acknowledged that at least some sales are coming. “One advantage of announcing an across-the-board effort like this is there is no shortage of incoming phone calls. Every intentional buyer, every JV partner, every bank, everything that you can conceptually think of is certainly coming our way.”
Asked to outline the parameters that Devon’s leaders are using to frame those discussions and their analysis of the company’s six-basin portfolio, Gaspar highlighted, as he has before, the value of assets’ inventory, the price they could command from eager buyers and how individual operations “fit in and enhance what really is a Permian-centric core business.”
Gaspar emphasized the thoroughness of the Devon team’s process but investors were disappointed that some deal news didn’t accompany the second-quarter results. Shares of Devon (Ticker: DVN) fell more than 4% to $42.09 on Aug. 5, although they recovered about half that loss the following day.
On his team’s conference call, Gaspar said he’s first and foremost focused on making the right decision rather than moving as quickly as possible.
“We’re not letting any grass grow under our feet. We are moving aggressively but also thoroughly,” he said, later adding that “I feel like I have the full backing of the board on however we want to move forward. And I can tell you, it’s moving forward quite well. We just want to avoid the trap of commenting on the rumor du jour.”
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of business journalism experience and writes about markets and economic trends for Endeavor Business Media publications Healthcare Innovation, IndustryWeek, FleetOwner, Oil & Gas Journal and T&D World. With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati and later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector as well as many of its publicly traded companies.