Devon Energy Announces Final Step to Complete Transformation to U.S. Oil Growth Company

Devon Energy Corp. (NYSE: DVN) today announced that the board of directors has authorized the company to pursue the separation of its Canadian and Barnett Shale assets to complete its transformation to a high-return U.S. oil growth business. Devon will evaluate multiple methods of separating the assets, including a potential sale or spin-off. The separation will allow the company to focus on its top-tier, high-return U.S. oil assets and is aligned with Devon’s previously announced long-term strategic plan.

“With our world-class U.S. oil resource plays rapidly building momentum and achieving operating scale, the final step in our multi-year transformation is an aggressive, transformational move that will accelerate value creation for our shareholders by further simplifying our resource-rich asset portfolio,” said Dave Hager, president and CEO. “New Devon will emerge with a highly focused U.S. asset portfolio and has the ability to substantially increase returns and profitability as we aggressively align our cost structure to expand margins with this top-tier oil business. The New Devon will be able to grow oil volumes at a mid-teens rate while generating free cash flow at pricing above $46 per barrel.”

The company expects to complete the separation of its Canadian and Barnett Shale assets by the end of 2019. Devon has hired advisors for each asset, and data rooms for Canada and the Barnett are expected to be open by the second quarter of 2019. The company anticipates using potential proceeds from the separation of these assets to maintain target debt levels of 1.0-to-1.5 times EBITDA and to continue Devon’s industry-leading share repurchase activity.

Share-Repurchase Program Increased to $5 Billion and Dividend Raised 13 Percent

Devon also announced today that its board of directors authorized a $1 billion increase to the company’s previously announced $4 billion share-repurchase program, bringing the total repurchase program to $5 billion. The authorization for the repurchase program expires on Dec. 31, 2019. As of Feb. 18, 2019, Devon had completed $3.4 billion of repurchases under the program, totaling approximately 90 million shares.

All purchases will be made in accordance with applicable laws from time to time in open-market or private transactions, depending on market conditions, and may be discontinued at any time. At the current share price, this program covers nearly 30 percent of the company’s outstanding common stock.