CNRL continues buying spree and snaps up Devon's Canadian assets
Canadian Natural Resources (CNRL) struck a deal to buy Devon Energy's Canadian assets for $3.775 billion.
The assets include the Jackfish thermal in-situ property, a 50% stake in the undeveloped Pike lease, owned jointly with BP, and a 95% stake in Manatokan, a conventional primary heavy oil facility in Bonnyville.
The assets are conveniently located near CNRL's existing properties, and have a total production capacity of 128,300 bbl/day. Volumes are currently being curtailed by about 5,500 bbl/day due to Devon's output quota, as set by the Alberta government.
CNRL's total thermal in-situ capacity will rise to about 320,000 bbl/day of heavy diluted bitumen, further diversifying its oil and gas production portfolio. Those volumes will be in addition to its 450,000 bbl/day of light upgraded crude from its oil sands mining operations, 150,000 bbl/day of light conventional oil, 120,000 bbl/day of heavy conventional oil and 220,000 boe/day of natural gas. This year's production guidance was bumped up to 1.2 million boe/day.
The deal also gives CNRL access to the Access Pipeline, which has a capacity of 145,000 bbl/day, and is currently underutilized. CNRL will absorb another 735 employees, split between the Calgary head office and operational staff.
The company says it expects to save $135 million through cost synergies, but also adds they are in no hurry to sanction any major expansions until new export pipelines are built. Executive Vice Chair Steve Laud called the assets “a textbook definition of an excellent fit." The deal will be fully financed by a $3.25 billion loan.
Devon Energy says the divestiture allows it to reduce debt and focus on its core oil holdings, exclusively in the US. Devon is also looking to sell its Barnett Shale gas assets in North Texas, and says it expects to announce a buyer before the end of the year.
The transaction is expected to close by the end of June.