Devon Reaches Deals to Shed Midland Basin Assets for Combined $858 Million

By Tess Stynes 

Devon Energy Corp. reached two separate deals to divest itself of noncore assets in the Midland Basin in Texas for a combined $858 million.

Pioneer Natural Resources Co. agreed to acquire assets in the northern Midland Basin from Devon for $435 million, expanding the shale-driller's presence in the region.

In a separate transaction, Devon will sell assets in the southern Midland Basin for $423 million. Devon didn't disclose the identity of the buyer.

Oklahoma City-based Devon said the two deals bring its announced planned divestitures of noncore assets to $2.1 billion, part of its efforts to improve its balance sheet.

Devon Chief Executive Dave Hager said the company expects its "total noncore asset sales to be at or above the top end of our $2 billion to $3 billion guidance, with the sale of our 50% interest in the Access pipeline."

Devon and Pioneer both boosted their capital spending plans for the year.

For its part, Devon raised its 2016 upstream capital spending guidance by $200 million to a total of between $1.1 billion and $1.3 billion.

The deal with Dallas-based Pioneer, expected to close in the third quarter, includes roughly 28,000 net acres, with net daily production of about 1,000 barrels of oil equivalent. Oil comprises roughly 70% of the production. The assets are near certain Pioneer acreage in the Wolfcamp shale, with more than half in an area where the company says it has drilled some of its most productive wells.

Pioneer also plans to add five horizontal drilling rigs in the second half of this year. The added rigs are expected to increase Pioneer's 2016 capital budget by roughly $100 million to a total of $2.1 billion.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

June 15, 2016 18:07 ET (22:07 GMT)

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