Devon Energy Corp. has put its acreage in two of its newest resource plays up for sale.
The Oklahoma City-based oil and natural gas company confirmed Wednesday that it has retained an adviser to manage the sale of its acreage in Ohio's Utica Shale and Louisiana's Tuscaloosa Marine Shale.
Both plays are part of the $2.5 billion joint venture Devon struck a year ago with China's Sinopec International Petroleum Exploration & Production Corp., but the pending sales aren't expected to affect the Sinopec deal.
Devon spokesman Chip Minty said Devon is selling its holdings in Utica and Tuscaloosa plays to focus on areas expected to bring greater returns.
“Energy companies like Devon can't operate in every play,” he said.
Devon is selling its 244,000 gross acres of leasehold in Ohio, not counting its existing production, and close to 300,000 net undeveloped acres in central Louisiana, according to adviser Scotia Waterous Inc.
Oppenheimer analyst Fadel Gheit said the sales could bring in as much as $3 billion for Devon, which is facing a cash flow deficit due to low natural gas prices.
“This portfolio action was necessary to reduce spending and generate cash to close this funding gap,” Gheit said.
Minty said resource plays at Devon must compete for capital.
At this point, the company has decided to focus on its acreage in the Mississippian in northern Oklahoma and southern Kansas, the Permian Basin in west Texas and the Niobrara in the Rocky Mountains, he said.
The remaining $1.6 billion Sinopec pledged to fund Devon's drilling operations as part of the joint venture likely will be applied in the Mississippian and Niobrara.
Japan's Sumitomo Corp. is financing Devon's operations in west Texas as part of a $1.4 billion joint venture announced in September.