Devon Energy has announced it has entered into a definitive agreement to sell its assets in the Barnett Shale to Banpu Kalnin Ventures (BKV) for $770 million. This transaction is subject to customary terms and conditions and is expected to close in Q2 2020. Devon expects no incremental cash taxes associated with the divestiture of these assets.
“Devon’s transformation to a US oil growth business is now complete,” Dave Hager, Devon Energy President and CEO, said. “The timely and tax-efficient exit from Canada and the Barnett this year has generated $3.6 billion of proceeds at accretive multiples to the company’s current valuation. Furthermore, these transactions accelerate efforts to focus exclusively on our resource-rich US oil portfolio, where we have the ability to substantially increase returns, margins and profitability.”
“The Barnett Shale has been a cornerstone asset for Devon over the past two decades,” Mr Hager added. “With this change in ownership, it is great to see our talented and innovative employees supporting this high-quality gas asset transition to a world-class company like Banpu.”
Net production from the Barnett Shale properties averaged 597 million cu ft equivalent per day in Q3 2019. At year-end 2018, proved reserves associated with these properties amounted to approximately 4 trillion cu ft equivalent. The transaction includes various purchase price adjustments that, among other things, allocate revenues and expenses based on a 1 September 2019 effective date.
“This deal represents our continued belief in the long-term potential of US shale gas and is fully in line with Banpu’s vision of developing a greener and smarter energy portfolio,” Christopher Kalnin, CEO of BKV, said.
The Barnett transaction represents BKV’s seventh transaction since 2016, with over $1.3 billion of capital deployed into gas-weighted assets. This acquisition will make BKV a significant producer of natural gas in the US with over 780 million cu ft per day of production from assets in Pennsylvania’s Northeast Marcellus and now in the Barnett Shale.