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Devon agrees to sell southern Barnett for $533mn

08 Mar 2018 11:30 GMT
Devon agrees to sell southern Barnett for $533mn

Houston, 8 March (Argus) — Oil and natural gas producer Devon Energy has agreed to sell the southern portion of its assets in north Texas' Barnett shale for $533mn to an unnamed buyer, cementing its shift away from gas fields.

The assets are mostly in Johnson county and produce about 200mn cf/d (6mn m³/d) of natural gas equivalent (cfe/d). The sale is scheduled to close in the second quarter.

The company still holds Barnett acreage in Denton, Wise and Tarrant counties.

Devon's Barnett production on the remaining acreage averages about 680mn cfe/d. It has 1,500 potential drilling locations on those lands, but the Barnett is a low-priority asset for Devon.

The company has earmarked about $50mn, or 2pc of its planned 2018 exploration and production spending ,for the Barnett, the smallest amount for any of its assets.

Devon was an early pioneer in the production of gas from shale formations. It first acquired Barnett assets through the 2002 purchase of Mitchell Energy & Development. By 2008, Devon's Barnett production there topped more than 1 Bcf/d, making it the first US shale producer to achieve that milestone. Company output moved well past that mark in the ensuing years.

Devon's Barnett work allowed it to develop the drilling and well completion expertise that is now used to unlock oil from the Permian basin of west Texas and southeastern New Mexico, and from Oklahoma's Stack formation. Those have become the company's two key operating areas and the fields it is targeting for future growth.

Devon's output from the Barnett has dwindled as it shied away from a glutted US gas market and transformed itself to an onshore oil producer. The company has primarily focused on minimizing well decline rates in the Barnett.

Earlier this month, natural gas producer Southwestern Energy said it would market its Fayetteville shale assets in Arkansas to fund further development of the Marcellus, a gas-bearing formation in Pennsylvania and the surrounding states that remains lucrative at low gas prices.

Southwestern discovered the Fayetteville and it provided a foothold for its early growth.