Devon adds Delaware basin acreage in $2.6-billion BLM lease deal

Devon Energy Corp. added to its Delaware basin position in a $2.6-billion deal.

The operator acquired 16,300 net undeveloped acres in Lea and Eddy Counties, NM, in the Bureau of Land Management’s oil and gas lease sale.

The Permian acreage, directly adjacent to Devon’s existing Delaware basin position, extends inventory life and supports longer laterals, co-development, and multi-well pad development to reduce costs, the company said May 21. Devon said the acquisition adds about 400 net locations normalized to 2-mile laterals.

The federal leases carry an 87.5% net revenue interest and 10-year terms across all depths, terms Devon said are more favorable than net revenue interests typical of state and fee leases in the region.

“This BLM lease sale presented a rare and compelling opportunity to add high-quality, contiguous federal acreage at scale in the core of the Delaware basin,” said Clay Gaspar, Devon’s president and chief executive officer. “Each tract was evaluated on rock quality, midstream connectivity, strategic fit, and per-share value accretion.”

Before the sale, Devon held about 746,000 net acres in the Delaware basin across southeast New Mexico and west Texas, where development activities cross the Wolfcamp shale and Bone Spring and Avalon intervals, across Culberson, Reeves, Loving, Eddy and Lea Counties and others. 

New Mexico-Texas oil and gas lease sale

The Bureau of Land Management leased 74 parcels totaling 33,530 acres in New Mexico and Texas in the quarterly sale. Combined bonus bids and rental payments totaled about $4 billion.

The sale was conducted under the Working Families Tax Cuts Act, which lowered the federal royalty rate for new onshore oil and gas production to 12.5% from 16.67% set under the Inflation Reduction Act.