Devon Energy Turnaround Spared by Activists

Updated from March 24th to include new information from Credit Suisse analyst in the eight paragraph.

NEW YORK (TheStreet) -- It took Devon Energy (DVN) about a decade to grow from a bit player into the biggest independent energy producer in the United States. Now, it may take nearly as long for the driller to prove it can dismantle that sprawling empire.

Devon's woes are similar to those of Chesapeake Energy (CHK), Occidental Petroleum (OXY), and Hess (HES) who over-expanded during the 2000's and found themselves short on cash in the years after the financial crisis. Unlike its competitors, Devon hasn't faced the pressure of an activist investor as it restructures. That speaks to the change underway at Devon and, possibly, the scale of the company's issues.

Devon sold its Gulf of Mexico assets to BP (BP) and Apache (APA) for a total of $8.3 billion in 2010, exceeding the company's initial guidance to shareholders. Devon also impressed in February when it sold some of its businesses in Canada for about $2.8 billion, consolidating the company's international footprint to the Alberta oil sands and the Horn River.

Midstream Spinoff Over IPO

This March, Devon completed a merger of its midstream business with Crosstex Energy. The combined company was then spun into general partner and master limited partnership securities, respectively - EnLink Midstream LLC (ENLC) and EnLink Midstream LP (ENLK) -- that will be controlled by Devon. Generally, Devon has exceeded expectations on its sale and spinoff of non-core business lines.

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