This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Devon Energy Completes Transformation With Linn Energy Deal

Updated from from 12:19 p.m. ET to include advisors and additional analyst comments.

NEW YORK (TheStreet) - Devon Energy's (DVN) transformation into a pure-play onshore oil and gas driller is complete with the company's $2.3 billion sale of non-core assets to upstream master limited partnership (MLP) Linn Energy (LINE). Devon Energy, unlike peers such as Occidental Petroleum (OXY), Marathon Oil & Gas (MRO) and Hess (HES), was able to affect its turnaround under CEO John Richels without the hand of a vocal activist investor.

On Monday, Devon Energy said its non-core asset sale consisted of properties in the Rockies, the onshore Gulf Coast and the Mid-Continent regions of the U.S. would raise $1.8 billion after taxes. In total, Devon has raised $5 billion in recent months from asset sales in the U.S. and Canada, and the spinoff of its EnLink Midstream (ENLK) business.

The asset sales do two things, both for the company and its investors. It rationalizes Devon Energy's operations, which had been discounted by investors amid production shortfalls and balance sheet troubles. They also are helping Devon Energy identify ways to grow its oil and liquids production volumes in coming years.

Confidence Rises in Devon Energy Turnaround

Devon Energy Turnaround Spared by Activists

Energy Transfer Equity The Best Way to Play LNG Exports This Year

In late 2013, Devon Energy agreed to buy GeoSouthern Energy, a driller focused on the Eagle Ford shale, for $6.3 billion in cash. Devon took on significant debt in that deal; however, with a heavy slate of asset sales and spinoffs in 2014, the company now expects to pare its net debt by $4 billion by year-end.

As initial production numbers come in on the GeoSouthern deal, analysts at both Bank of America and Wells Fargo now expect the acquisition to drive Devon Energy's stock.

Transformation Complete

Devon Energy's non-core asset sale to Linn Energy on Monday may perhaps be the company's most straightforward deal in recent memory. It also may prove a pivotal moment in Devon Energy's transformation, with the company stating on Monday it is now no longer in turnaround mode.

"With the sale of our remaining non-core assets, the portfolio transformation that we announced late last year is now complete," CEO Richels said in a Monday statement. ""In a short period of time we transformed our portfolio through three significant steps: the accretive Eagle Ford entry, the innovative creation of EnLink Midstream, and the sale of our non-core properties," he added.

Devon Energy once was among the largest independent drillers by revenue in the United States, with a portfolio tilted towards natural gas production and operations spanning onshore drilling fields, the offshore Gulf of Mexico and international operations in Canada and overseas. Now, the company is concentrated in onshore basins in North America, and has diversified away from natural gas.

Devon Energy forecast nearly 60% of its production would come from liquids by year-end, and gave a forecast of oil production growth rates in excess of 20% in coming years.

Investment bank Jefferies was lead financial advisor to Devon Energy in its asset sale to Linn Energy, while Credit Suisse also provided advisory work

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,912.11 -70.48 -0.42%
S&P 500 1,969.95 -8.96 -0.45%
NASDAQ 4,442.6980 -2.2110 -0.05%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs