OilVoice - Devon Energy Announces $1.3 Billion GoM Sale Agreement with Maersk Oil

Devon Energy Announces $1.3 Billion GoM Sale Agreement with Maersk Oil

Tuesday, December 22, 2009

Devon Energy Corporation has agreed to sell its interests in three Lower Tertiary development projects in the Gulf of Mexico to Maersk Oil for $1.3 billion. The agreement covers Devon's 50-percent working interest in the Cascade project and its 25-percent working interests in the Jack and St. Malo projects. All three projects are located in the deepwater Walker Ridge federal lease area offshore Louisiana.

"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 John Richels, Devon's President. "We intend to apply the sales proceeds to debt reduction and to accelerate investment in our world-class North American onshore assets."

Devon has no current production or proved reserves associated with these projects. The sale of these properties reduces Devon's previously announced 2010 capital budget for the Gulf of Mexico by approximately $400 million.

Devon estimates its after-tax proceeds from this transaction at approximately $1.1 billion. The effective date of the sale is January 1, 2010. Closing is expected to occur on or before February 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.

Devon announced plans to divest its Gulf of Mexico and international assets in November 2009. Data rooms for all of the remaining divestiture assets will be open in the first quarter of 2010. The company has estimated the aggregate after-tax proceeds from the planned divestitures, including this transaction, at $4.5 billion to $7.5 billion.

"Maersk Oil is an important part of our portfolio, and we have said we wanted to invest in our oil business. For that reason, we have been looking and continue to look for investment opportunities in the areas where we are already active with production or exploration. We have a high activity level in the Gulf of Mexico, where we are presently evaluating our Buckskin discovery. Taking over Devon’s activities, which are also deepwater and with early production, will give us valuable insight in deep water play. This is a significant long-term investment, which we expect will generate a good return for A.P. Møller - Mærsk A/S," says Nils S. Andersen, CEO of A.P. Møller – Mærsk A/S.
As a partner in Cascade, Jack and St. Malo, Maersk Oil will contribute with in-depth knowledge of the geological aspects of the area and technological expertise to the partnerships with Petrobras and Chevron, and already has a team based in Houston, Texas.

"We are very pleased with this acquisition, which will enable us to establish material production within a short timeframe. In addition, we believe that the Gulf of Mexico has a lot of potential, which is why we are expanding our presence in the area," says Jakob Thomasen, CEO of Maersk Oil.
Apart from the deepwater Gulf of Mexico as well as offshore Brazil, Maersk Oil is engaged as operator in deepwater activities offshore Angola, where the Chissonga discovery was made earlier this year.

"We are developing our deepwater expertise, and broadening our portfolio to include the Cascade, Jack and St. Malo fields will further add to our capabilities," says Jakob Thomasen.

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