Devon Energy Agrees To Sell 50% Ownership In Access Pipeline For $1.1 Billion

Devon Energy Corp. DVN reached a definitive agreement to divest its 50 percent ownership stake in Access Pipeline to Wolf Midstream Inc. for CAD $1.4 billion, or USD $1.1 billion. It's a portfolio company of Canada Pension Plan Investment Board. The companies expect the transaction to close in the third quarter.

According to Devon Energy, the deal included the possibility for an additional CAD $150 million or US$120 million payment with the sanctioning, as well as development of a new thermal-oil project on its Pike lease in Alberta, Canada.

Devon Energy said that as per the sale agreement terms, its thermal-oil acreage is dedicated to Access Pipeline for an initial term of 25 years. The company added that a market-based toll would be applied to production from its three Jackfish projects, which were fully operational. As a result, the company sees its lease operating expense at the Jackfish complex to increase by about $100 million on a full year basis.

The company's president and CEO, Dave Hager, said, "With the highly-accretive sale of Access, Devon's divestiture program is now complete with proceeds totaling $3.2 billion, surpassing the top end of our $2 billion to $3 billion guidance range. Furthermore, the divestiture proceeds significantly strengthen our investment-grade balance sheet and position us to further accelerate investment in our best-in-class U.S. resource plays, led by the STACK and Delaware Basin."

Devon Energy said the deal included the possibility for the Access Pipeline toll to be slashed by 30 percent with the development of fresh thermal-oil projects in the future. Its next potential project is the first phase of Pike. Devon is the operator of this joint venture leasehold with a 50 percent working stake.

Shares traded up 2.3 percent in Thursday's pre-market trading.