Devon Energy has entered into an agreement to non-core Delaware Basin acreage to a Houston-based energy company Carrizo Oil and Gas for $215m.
Image: Devon Energy sells non-core Delaware Basin assets for $215m. Photo: Photo by rawpixel on Unsplash.
The sale includes about 10,600 gross (9,600 net) acres located in the Delaware Basin in Reeves and Ward counties.
The assets have a net production capacity of nearly 2,500 oil-equivalent barrels per day (60% oil).
The acquisition increases Carrizo Oil and Gas’ acreage position in the Delaware Basin to approximately 46,000 net acres on a pro forma basis. It is expected to bring high degree of operational control with more than 90% of net acreage operated.
Besides, it is expected to provide significant opportunities for Carrizo Oil and Gas to generate efficiencies from increased scale, extension of lateral lengths, and integration of infrastructure.
Carrizo’s president and CEO S.P. “Chip” Johnson, IV said: “This acquisition is an excellent fit with our existing Phantom-area acreage and meaningfully increases our scale in the area. Upon completion of the transaction, we will hold approximately 26,300 net acres in our Phantom area and 46,000 net acres in the Delaware Basin.
“The acquisition materially increases our inventory of de-risked drilling locations in the area as well as offers significant upside potential from delineating the entire position and testing additional zones.”
Subject to customary terms and conditions, the transaction is expected to close in the fourth quarter of 2018.
The sale of properties is part of Devon’s divestiture program to monetize non-core assets across the US.
With the transaction, Devon takes its total proceeds from divestiture program $4.4bn.
The company expects to sell additional minor, non-core assets by the end of 2018. The assets include enhanced oil recovery projects in the Midland Basin and Rockies along with Wise County acreage in the Barnett Shale.