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Devon Energy to divest Barnett Shale assets for $770M

Rounding out its goal to become a U.S. oil growth business, Devon Energy Corp. agreed to sell its assets in the Barnett Shale to an affiliate of Kalnin Ventures LLC's investment vehicle BKV Oil & Gas Capital Partners LP for $770 million.

The deal includes over 320,000 gross acres and 4,200 producing wells, according to a Dec. 17 release from Kalnin Ventures. Net production from the Barnett Shale properties averaged 597 MMcfe/d in the third quarter.

The deal would also make BKV the largest natural gas producer in the Barnett Shale, according to Kalnin Ventures. It is expected to close in the second quarter of 2020, subject to customary closing conditions.

"The timely and tax-efficient exit from Canada and the Barnett this year has generated $3.6 billion of proceeds at accretive multiples to Devon's current valuation," said Devon CEO Dave Hager. "Furthermore, these transactions accelerate efforts to focus exclusively on our resource-rich U.S. oil portfolio, where we have the ability to substantially increase returns, margins and profitability."

Devon's board authorized a $1 billion share repurchase program, according to a separate Dec. 17 release. The new program will expire on Dec. 31, 2020, with $800 million of the $1 billion conditioned on the closing of the Barnett Shale transaction. The company said that it has repurchased 144 million shares, or almost 30% of its outstanding shares, to date.

Jefferies and Citi acted as financial advisers to Devon on the Barnett Shale transaction.

Kalnin Ventures is a principal investment firm based in Denver. It is also backed by investors with significant equity commitments from Thailand-based coal mining and power company Banpu PCL.