Devon Energy sells Access Pipeline stake for C$1.4 billion

OKLAHOMA CITY -- Devon Energy has entered into a definitive agreement to sell its 50% ownership interest in Access Pipeline to Wolf Midstream Inc., a portfolio company of Canada Pension Plan Investment Board, for C$1.4 billion ($1.1 billion). The agreement also includes the potential for an incremental C$150 million payment with the sanctioning and development of a new thermal-oil project on Devon’s Pike lease in Alberta, Canada.

Under terms of the sale agreement, Devon’s thermal-oil acreage is dedicated to Access Pipeline for an initial term of 25 years. A market-based toll will be applied to production from the company’s three Jackfish projects, which are fully operational. As a result, Devon expects its lease operating expense at the Jackfish complex to increase by approximately $100 million on an annualized basis.

The agreement also includes the potential for the Access Pipeline toll to be reduced by as much as 30% with the development of new thermal-oil projects in the future. The company’s next potential project is the first phase of Pike, which is located immediately adjacent to the Jackfish complex. Devon is the operator of this joint venture leasehold with a 50% working interest. Front-end engineering and design work at the first phase of Pike is complete, but the project has not been sanctioned.

“With the highly-accretive sale of Access, Devon’s divestiture program is now complete with proceeds totaling $3.2 billion, surpassing the top end of our $2 billion to $3 billion guidance range,” said Dave Hager, president and CEO. “Furthermore, the divestiture proceeds significantly strengthen our investment-grade balance sheet and position us to further accelerate investment in our best-in-class U.S. resource plays, led by the STACK and Delaware basin.”

The transaction is expected to close in the third quarter.