Canadian Natural To Acquire Devon's Canadian Assets For C$3.125 Bln

(RTTNews) - Canadian Natural Resources Ltd. (CNQ, CNQ.TO) Wednesday said it has agreed to acquire majority of Devon Energy Corp.'s (DVN) Canadian conventional assets, excluding Horn River and heavy oil properties, for an aggregate cash consideration of C$3.125 billion or about $2.8 billion. The deal is effective January 1, 2014, with a targeted closing on April 1, 2014.

Commenting on the acquisition, President Steve Laut said, "The acquisition provides immediate value to shareholders through production and cash flow, is accretive in earnings, cash flow and returns, and maintains our strong financial capacity to effectively execute our well defined plan."

Calgary, Alberta-based Canadian Natural is an oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa. As on December 31, 2013, proved reserves associated with the divestiture totaled about 170 million barrels equivalent.

According to the firm, current estimated production, before royalties, from the acquired properties totals about 383 mmcf/d of natural gas, 10,800 bbl/d of light crude oil and 12,000 bbl/d of NGLs and is approximately 72 percent operated.

In addition, the acquired asset package includes a royalty revenue stream, which is targeted to earn around $75 million in cash flow during 2014.

The company said it is reviewing options to combine the acquired royalty revenue stream with its own royalty revenue portfolio, intended to create a new vehicle to provide steady cash flow to current shareholders or monetization through a sale package later this year.

The targeted cash flow from the combined royalty revenue streams is expected to be between $140 million and $150 million in 2014.

Canadian Natural stated that the acquired lands and production base are all located in Western Canada in areas adjacent or proximal to its current operations and are high quality, concentrated liquids-rich natural gas weighted assets, with additional light crude oil exposure.

About 900 Devon Canada employees will be joining the Canadian Natural team, comprised of both field and head office personnel.

The transaction is subject to normal closing conditions and government approval.

Separately, Devon announced that upon closing of the deal, it plans to immediately repatriate the proceeds to the U.S. for use in repayment of debt incurred to finance its Eagle Ford acquisition.

In last November, Devon Energy had agreed to buy privately-held Texas shale oil driller GeoSouthern Energy Corp.'s assets in the Eagle Ford oil play for $6 billion in cash.

John Richels, president and chief executive officer of Devon said, "This agreement represents a significant step forward in the execution of our non-core divestiture process. This tax-efficient transaction provides for a clean exit from our Canadian conventional business at a value of nearly 7 times 2013 EBITDA, a substantial premium compared to Devon's current trading multiple."

In Toronto, Canadian Natural shares closed Tuesday's trading at C$39.18, up 1.77 percent. DVN ended at $62.91 on the NYSE.