Devon sells east Texas and Granite Wash assets plus Midland Basin royalty interests for US$974 million

Devon Energy announced three independent divestitures aimed at sharpening the company's focus in higher quality assets resource plays. Devon has divested assets in East Texas, mainly in the Haynesville and Cotton Valley plays, for US$525 million with 22,000 boed net flowing production, along with Granite Wash assets in the Anadarko Basin for US$310 million with 14,000 boed net flowing production. In addition, the company sold an overriding royalty interest across 11,000 net acres in the Permian's northern Midland Basin for US$139 million. Selling these assets helps Devon simplify its portfolio, and reduce its leverage after spending US$2.5 billion (46% cash) on tight-oil acquisitions in December 2015. After selling its remaining marketed assets (i.e., Midland Basin properties and its 50% interest in the Access Pipeline in Canada), we believe Devon will raise an amount closer to the higher end of its targeted range of US$2-3 billion (including US$300 million raised already this year).