Devon Energy to sell EnLink Midstream stakes as it streamlines assets
(Reuters) - Oil and gas producer Devon Energy Corp said on Wednesday it plans to sell its stakes in EnLink Midstream for $3.13 billion cash in a bid to streamline assets and pare debt.
"The EnLink proceeds, combined with proceeds from the non-core E&P assets already sold and those currently being marketed, will exceed our $5 billion divestiture target," Chief Executive Officer Dave Hager said in statement.
Shares of the company rose more than 6 percent to $41.85 before the bell.
Devon is trying to simplify its asset portfolio, cut costs and at the same time return cash to shareholders. The company raised its share repurchase program to $4 billion, up from a previously announced $1 billion.
"The midstream monetization may have come sooner than anticipated as some were expecting sale of Canada or the Eagle Ford," Kathy Yang, analyst at Cowen & Co, said.
"Although the EnLink sale following the Johnson County Barnett sale brings the company's divestitures over its $5 billion target, we would not rule out further portfolio optimization as focus is on Delaware & STACK core assets," Yang added.
Devon plans to sell stakes in EnLink Midstream Partners LP and EnLink Midstream LLC to an affiliate of Global Infrastructure Partners. The new buyback is conditional on closing the EnLink deal, which the company expects by July, it said in a statement.
Devon said the sale will reduce debt by 40 percent. The company's total long-term debt at the end of 2017 was $10.29 billion, according to the company's latest annual filing.
In March, Devon said it was looking at asset sales of up to $5 billion as it streamlines operations to the SCOOP/STACK, Permian and Rocky Mountain areas.
A month later, the company cut around 300 workers, roughly 9 percent of its staff to reduce costs and save $150 million to $200 million by 2020.
Devon and its shale peers have come under pressure from Wall Street to focus less on production and search for more ways to boost shareholder returns. (Reporting by Laharee Chatterjee in Bengaluru; Editing by Bernard Orr)
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