Devon Energy Corp. has entered into a definitive agreement to sell its 50 percent ownership interest in Access Pipeline to Wolf Midstream Inc., a portfolio company of Canada Pension Plan Investment Board, for CAD1.4 billion (US$1.1 billion), using current exchange rates.
The agreement also includes the potential for an incremental CAD150 million (US$113.8 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.
The agreement also includes the potential for the Access Pipeline toll to be reduced by as much as 30 percent with the development of new thermal-oil projects in the future.
Bennett Jones LLP acted as legal advisor to Devon. The transaction is subject to regulatory approvals along with customary terms and conditions. Closing is expected in the third quarter of 2016.
Dave Hager, Devon president and CEO said:
“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. 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.”