Devon Energy Corp. agreed to sell its 50 percent stake in Canada’s Access Pipeline to Canada Pension Plan Investment Board-backed Wolf Midstream Inc. for C$1.4 billion ($1.1 billion).
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The Access system transports blended bitumen from the oil sands region of Alberta to the Edmonton areas and diluent from Edmonton to the oil sands.
The purchase is the third in roughly five weeks for Canada Pension-backed companies in Western Canada, and the first since Wolf was formed last September.
Devon CEO Dave Hager said in a release his company’s divestiture plans are now complete after the deal announced Thursday brings its total sales to US$3.2 billion. “Furthermore, the divestiture proceeds significantly strengthen our investment-grade balance sheet and position us to further accelerate investment in our best-in-class USA resource plays, led by the STACK and Delaware Basin”.
The agreement also includes the potential for the Access Pipeline toll to be reduced by as much as 30 percent with the development of new thermal-oil projects in the future. As a result, the company sees its lease operating expense at the Jackfish complex to increase by about $100 million on a full year basis.
The transaction is subject to regulatory approvals along with customary terms and conditions.
The deal announced today is expected to close by October 1. Peters & Co. Limited acted as financial advisor and Norton Rose Fulbright Canada LLP acted as legal advisor to Wolf on this transaction.
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More recently, the Oklahoma City-based producer has struggled along with other drillers to withstand the global plunge in oil and gas prices.
