Devon Energy Corp. said Tuesday it plans to develop a portion of its Oklahoma properties with joint venture partner Dow Inc. within the STACK, aka the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties.

“Under this agreement, Devon will monetize half of its working interest in 133 undrilled locations in exchange for approximately a $100 million drilling carryover the next four years,” the Oklahoma City-based independent said.

Devon’s current working interest in the acreage “is estimated at 60% across a mix of standard and extended-reach lateral drilling locations.”

Activity is set to begin in 2020 with the development of two drilling units in northern Canadian County, with drilling slated to start mid-year.

In an investor presentation this month, Devon said that its assets in the STACK have generated $319 million of free cash flow over the last 12 months. Devon’s hydrocarbon production from the STACK stood at 121,000 boe/d (26% oil), equal to about 37% of the company’s total output of 325,000 boe/d.

Devon management plans to prioritize free cash flow over volume growth in the STACK, citing the area’s “long-term inventory optionality.”

The capital carry “helps bring forward value in a play that wasn’t expected to garner much capital expenditure (capex) allocation for Devon,” analysts at Tudor Pickering Holt & Co. (TPH) said of the deal in a Wednesday note to clients.

Activity is set to initially focus on the oil-prone Cana-Woodford (aka Anadarko-Woodford) Shale, analysts said, “with some potential” thereafter for wet gas from the natural gas liquids (NGL)-rich Meramec formation.

“Shifting the amount of STACK capex in this timeframe from oil to wet gas results in similar oil expectations in our model, though gas/NGL growth are increased, bumping corporate boe volumes by under 5% by the end of the planned program,” the TPH note said.

The agreement with Dow “is consistent with our strategy to optimize the capital efficiency and returns associated with our development programs,” said Devon CEO Dave Hager.

Devon’s David Harris, executive vice president for exploration and production, said the agreement “will benefit from the improvements in capital efficiency achieved in the play this year, driven by optimized infill development spacing and substantially lower drilling and completion costs.”

Devon anticipates no change to its 2020 production targets or capex as a result of the agreement.

Midland, MI-based Dow Inc. was spun off this year from chemical giant DowDupont Inc.