Devon Energy agrees to sell noncore assets for $340 million

Devon Energy Corp. said Monday it has agreed to sell noncore assets in the south Texas Eagle Ford play, boosting its sales total so far this year to $340 million.

Devon agreed to sell 19,600 acres in Lavaca County, Texas, to Houston-based Penn Virginia Corp. for $205 million in cash. The deal includes net production of about 4,000 barrels of oil equivalent per day and is scheduled to close by the end of September.

Devon has not disclosed details of its other assets sales, but the company said since May it has agreed to sell a total of $340 million in assets.

“These highly-accretive asset sales are an important step in executing on our $1 billion divestiture program over the next year,” CEO Dave Hager said in a statement Monday. “The divestiture proceeds will further strengthen our investment-grade financial position and provide us additional flexibility to build operational momentum across our top-tier U.S. resource plays.”

Devon executives on May 1 announced a plan to sell $1 billion in noncore properties within 18 months and to focus the company’s drilling efforts on Oklahoma’s STACK play and southeast New Mexico’s Delaware Basin.

“The successful resource expansion in our world-class STACK and Delaware Basin assets has generated an abundance of opportunities within our portfolio,” Hager said in May. “Given the multidecade growth platform these franchise assets provide, we are taking this initial step to bring value forward

from noncore assets and sharpen our focus on the highest-returning growth inventory in our portfolio.”

While the Lavaca County assets are considered noncore for Devon, the deal boosts Penn Virginia’s leasehold by 35 percent in an area it considers core to its operations.

“This strategic acquisition is an excellent fit and an important step in our long-term growth strategy for Penn Virginia,” John A. Brooks, Penn Virginia’s interim principal executive officer and chief operating officer said in a statement. “It is particularly attractive as it materially increases our Eagle Ford production, acreage and drilling.”