Devon Energy has signed an agreement to divest 50% stake in Access Pipeline to Canada Pension Plan Investment Board-backed Wolf Midstream for $1.1bn.
The Access Pipeline system comprises pipelines that transport blended bitumen and diluent between the Christina Lake area of Northeastern Alberta and Edmonton.
As per the agreement, Devon will dedicate its thermal-oil acreage to Access Pipeline for 25-year period.
Wolf Midstream CEO GordSalahor said: "Access is an attractive foundational asset for Wolf that provides us with immediate scale in the region.
“We are pleased to work with Devon as a long-term partner supporting its high-quality oil sands projects, and look forward to expanding service with third-party shippers.”
The deal also has potential for an incremental CAD150m ($115.9m) payment subject to development of a new thermal-oil project on Devon’s Pike lease in Alberta, Canada.
Devon Energy president and CEODave Hager said: “With the highly-accretive sale of Access, Devon’s divestiture program is now complete with proceeds totaling $3.2bn, surpassing the top end of our $2bn to $3bn guidance range.”
The sale proceeds will be used by Devon Energy to further accelerate investment in the US resource plays which are led by the STACK and Delaware Basin.
The divestment is a part of the company's efforts to sell $3bn worth of non-core assets in a bid to boost its balance sheet amid plunging oil price.
Planned to be completed in the third quarter of 2016, the deal is subject to regulatory approvals along with customary terms and conditions.
MEG Energy holds the remaining 50% stake in the Access Pipeline system.
Image: Devon Energy intends to further accelerate investment in US resource plays. Photo: courtesy of puttsk/ FreeDigitalPhotos.net.