Devon Energy To Sell Stake In EnLink Midstream; Lifts Share Buyback To $4 Bln

(RTTNews) - Devon Energy Corp. (DVN) announced Wednesday that it has entered into an agreement to sell its aggregate ownership interests in EnLink Midstream Partners, LP (ENLK) and EnLink Midstream, LLC (ENLC) to an affiliate of Global Infrastructure Partners (GIP) for $3.125 billion.

Devon's ownership interests in EnLink Midstream includes 115 million units in the general partner and 95 million units in the master limited partnership. The company's interests in EnLink generated $265 million of cash distributions over the past year, valuing the transaction at approximately 12 times cash flow.

The company said it will extend its fixed-fee gathering and processing contracts with respect to the Bridgeport and Cana plants with EnLink through 2029. The company's minimum volume commitments for these agreements will expire at the end of 2018.

In conjunction with the sale agreement, Devon's board of directors has increased the size of the company's share-repurchase authorization to $4 billion. It will be a $3 billion increase to the company's previously announced $1 billion share-repurchase program.

The increase in authorization extends through December 31, 2019 and is conditioned upon the closing of the EnLink transaction, which is expected to close in July 2018.

Dave Hager, president and CEO, said, "The sale of our EnLink interests represents a significant step forward in achieving our 2020 Vision to further simplify our asset portfolio and return excess cash to shareholders. This highly accretive transaction provides a strategic exit from EnLink at a value of 12 times cash flow, a substantial premium to Devon's current trading multiple."

The company noted that the EnLink proceeds, combined with proceeds from the non-core E&P assets already sold and those currently being marketed, will exceed $5 billion divestiture target.