Devon Energy Corp. Monday announced a series of financial moves, including divestiture of some of its North American oil and gas reserves, a two-for-one stock split, a buyback of up to 10% of its stock and a move from the American to the New York Stock Exchange.

The Okahoma City-based company said it plans to divest oil and gas properties in North America representing proved reserves of 145 to 165 million barrels of oil equivalent (Boe). Company-wide proved reserves stood at approximately 2.1 billion Boe at the end of last year.

“Our growth strategy is to create shareholder value by investing in significant long-term projects,” said John Richels, Devon’s president. “The non-core and mature properties we plan to sell no longer fit that strategy. Given the premium prices recent divestitures have commanded, we believe this is an ideal time to refocus our producing portfolio. Proceeds from these divestitures will be applied to fund a planned share purchase program that we are also announcing today.”

The properties to be divested are located principally in the offshore Gulf of Mexico and onshore in the United States and Canada. Oil and gas production from these properties is expected to average 90,000 to 100,000 Boe per day in 2004. The company’s second quarter 2004 oil and gas production was 684,000 Boe per day. Excluding the contribution of the divested properties for the full year, Devon expects its 2005 production of oil, gas and natural gas liquids to be 210 to 220 million Boe.

Due to the steeper production decline characteristics of many of the properties to be divested, Devon expects its companywide reserve life to lengthen as a result of the sales. Additionally, divestiture of these properties is expected to result in a lower overall cost structure and improved operating efficiency.

Devon carried out a similar divestiture program in 2002, and refocused its portfolio by selling approximately $1.5 billion in non-core properties. The company expects to begin the current divestiture process in the fourth quarter of 2004 and substantially complete it in the first quarter of 2005. After-tax sale proceeds are expected to range between $1.0 billion and $1.5 billion.

Devon’s two- for-one split of outstanding common stock will be applicable to shareholders of record at the close of business on Oct. 29, 2004. It will be accomplished through a stock dividend to be issued on Nov. 15, 2004.

The share repurchase will take place from time to time depending on market conditions over an 18-month period beginning in the fourth quarter of 2004, Devon said. The 10% target represents approximately 25 million shares, or approximately 50 million shares following a planned two-for-one stock split. The company plans to repurchase shares in the open market and in privately negotiated transactions. The stock repurchase program may be discontinued at any time.

“We have already repaid nearly $1 billion in long-term debt in 2004 and have reached our goal of accumulating sufficient cash to retire debt payable in 2005 and 2006,” said Brian J. Jennings, senior vice president and CFO. “Given the strength of oil and natural gas prices, we expect to continue generating significant amounts of excess cash. We plan to aggressively purchase Devon’s shares with cash flow from operations and the proceeds of the divestiture program we are also announcing today. We are very confident about Devon’s future and are firmly committed to enhancing per share value.”

The company intends to repay approximately $1.6 billion of long-term debt in 2005 and 2006. Cash balances on hand currently exceed this amount.

Devon’s plans will be discussed further at its annual executive briefing on Sept. 28, 2004. A webcast of this half-day event will commence at 8:30 a.m. Eastern Time, accessible at https://www.devonenergy.com.

Devon has been approved to file an application with the New York Stock Exchange (NYSE) and expects trading to commence on Oct. 12, 2004. Until then, Devon will continue trading on the American Stock Exchange (AMEX). The company expects to retain DVN as its ticker symbol.

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