Devon Energy Provides Barnett Update, Announces Special Dividend and Outlines Next Steps in Cost-Reduction Plan
Devon Energy announced an early closing for its Barnett Shale divestiture, moving the date to October 1, 2020, from December 31, 2020. The company will receive a net cash payment exceeding $300 million and offer contingent cash payments up to $260 million based on future commodity prices. A $100 million special dividend of $0.26 per share will be distributed to shareholders on October 1, 2020. Devon aims to achieve $300 million in sustainable cash cost savings by year-end and intends to repurchase up to $1.5 billion in debt to save approximately $75 million in annual interest.
- Accelerated closing of Barnett Shale divestiture expected to provide over $300 million in net cash.
- Declared a $100 million special dividend, affirming commitment to return cash to shareholders.
- Targeting $300 million in sustainable cash cost savings, enhancing operational efficiency.
- Debt repurchase plan expected to save $75 million in annual interest, optimizing financial position.
- Contingent cash payments based on commodity prices introduce uncertainty in future cash flows.
KEY HIGHLIGHTS
- Accelerating Barnett Shale closing to Oct. 1, 2020, from previously scheduled date of Dec. 31, 2020
- Board of directors declares a
$100 million special dividend in conjunction with Barnett closing - Expect to achieve
$300 million of sustainable cash cost savings by year-end - Plan to use cash on hand to repurchase up to
$1.5 billion of additional debt
OKLAHOMA CITY, Aug. 04, 2020 (GLOBE NEWSWIRE) -- In conjunction with its second-quarter earnings announcement, Devon Energy Corp. (NYSE: DVN) provided an update on the timing of its Barnett Shale divestiture closing and outlined details on the next phase of its strategic plan. These strategic initiatives include the return of cash directly to shareholders, a plan to streamline corporate and operating costs across the organization and the resumption of its debt reduction program.
BARNETT SHALE DIVESTITURE TO CLOSE AHEAD OF PLAN
Devon and Banpu Kalnin Ventures plan to accelerate the scheduled closing date of the Barnett Shale asset sale to Oct. 1, 2020, from the previously arranged date of Dec. 31, 2020. After accounting for purchase-price adjustments, which include an upfront deposit of
The Barnett Shale sale agreement also provides Devon the opportunity for contingent cash payments of up to
BOARD AUTHORIZES
With the accelerated closing of the Barnett Shale divestiture, Devon’s board of directors has declared a special dividend in the amount of
“With the visibility we have on the early closing of the Barnett transaction, I am excited to announce that we are returning a portion of the proceeds to our shareholders in the form of a
TARGETING
Another important initiative the company announced today is a plan to deliver sustainable, cash-cost reductions of
A key contributing factor to the cost-reduction plan is Devon’s intent to repurchase up to
“As we navigate through the challenges presented by COVID-19, Devon continues to transform how it operates. The next phase of our strategic plan is to take meaningful and decisive steps to sustainably improve our cost structure and reduce debt,” said Jeff Ritenour, executive vice president and chief financial officer. “The aggressive reduction of cash costs across our organization is expected to drive down per-unit expenses by an incremental 10 percent versus our second-quarter 2020 results.”
ABOUT DEVON ENERGY
Devon Energy is a leading independent energy company engaged in finding and producing oil and natural gas. Based in Oklahoma City and included in the S&P 500, Devon operates in several of the most prolific oil and natural gas plays in the U.S. with an emphasis on achieving strong corporate-level returns and capital-efficient cash-flow growth.
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FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. These risks include, but are not limited to: the delay or failure to close the Barnett divestiture due to unsatisfied closing conditions or otherwise; the amount of proceeds received from the Barnett divestiture due to the actual amount of purchase price adjustments or other factors, and the ultimate use of those proceeds; further volatility in commodity prices, market conditions or other adverse circumstances caused by the COVID-19 pandemic or other events that could negatively impact the company’s ability to complete the debt repurchase plan and realize the anticipated interest expense savings; whether the company can execute upon and sustain it cost savings plan, as well as the ultimate amount of cost reductions realized; and the other risks identified in Devon’s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date hereof, and the company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.
FAQ
What is the amount of the special dividend declared by Devon Energy?
When will the special dividend be paid to shareholders?
What are the expected cash cost savings Devon Energy aims to achieve?
How much debt does Devon Energy plan to repurchase?
What is the financial impact of the Barnett Shale divestiture?
