Devon Energy Corp. agreed Tuesday to sell its interests in three deepwater Gulf of Mexico (GOM) projects to Denmark-based Maersk Oil for $1.3 billion. Maersk Oil also negotiated to make up to $4 billion in additional investments in the GOM projects over time.
The three projects, all located in the prospective Lower Tertiary Trend, include Devon’s half-interest in the Petrobras-operated Cascade project, which is expected to begin ramping up next year. The sale also includes Devon’s quarter-interest in Chevron Corp.’s Jack and St. Malo projects, which are both scheduled to begin production in 2014. All of the developments are in the Walker Ridge federal lease area offshore Louisiana. Maersk Oil’s estimated share of recoverable resources from the three fields combined is more than 200 million boe.
“This is an important first step in executing our plan to divest all of our Gulf of Mexico and international assets and to reposition Devon as a purely North American onshore company,” said Devon President John Richels. He said the sales proceeds would be used for debt reduction and to “accelerate investment” in the company’s North American onshore assets.
Devon officials in early November said they would try to secure a joint venture partner for the GOM projects (see Daily GPI, Nov. 6). In mid-November CEO Larry Nichols said an “overabundance of opportunities” would lead Devon to sell all of its deepwater and international properties to reposition itself as a North American onshore producer (see Daily GPI, Nov. 17).
Because the deepwater GOM projects were in early development, Devon has no current production or proved reserves associated with the Lower Tertiary projects to be sold. The sale would reduce Devon’s previously announced 2010 capital budget for the GOM by about $400 million.
Devon estimates its after-tax proceeds from this transaction at approximately $1.1 billion. The effective date of the sale is Jan. 1, 2010. Closing is expected to occur on or before Feb. 1, 2010. Completion of the transaction is subject to preferential rights to purchase held by the other working interest owners in the properties as well as additional closing conditions and regulatory approvals.
Data rooms for all of the remaining assets to be sold are to open in early 2010. Aggregate after-tax proceeds from the planned divestitures, including the Lower Tertiary transaction, are estimated at $4.5-7.5 billion.
Maersk Oil, considered a mid-size international oil and gas company, is a part of the A.P. Moller-Maersk Group. It currently has production in Denmark, Qatar, the United Kingdom , Algeria and Kazakhstan, and exploration activities in a number of locations globally. It produces more than 800,000 boe/d.
©Copyright 2009Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |