© 2016 The Texas Lawbook.
By Natalie Posgate
(June 17) – Devon Energy said Wednesday that it has agreed to sell the rest of its non-core assets in the Midland Basin in two separate transactions that total $858 million.
The Oklahoma City energy company said the new deal totals the divestitures of its non-core assets to $2.1 billion.
Pioneer Natural Resources is the buyer in one of the Midland Basin transactions, which is worth $435 million. The buyer for the other divestiture, worth $423 million, is undisclosed.
Devon turned to V&E to handle the divestitures, and Pioneer hired V&E to handle an $827 million common stock offering that will fund the Irving-based company’s Midland Basin assets acquisition. The underwriters of the offering turned to Baker Botts.
Houston corporate partners John B. Connally, Mingda Zhao and Shay Kuperman led the V&E team that handled the divestitures. The V&E corporate deal team also included Houston associates Destinee Roman, Tan Lu, Danny Hatch and Davis Zapffe.
Other V&E attorneys on the deal included tax partners Todd Way and Tom Crichton and associate Julia Pashin in Dallas and environmental partner Larry Nettles, labor & employment partner Sean Becker, executive compensation/benefits partner Stephen Jacobson and intellectual property partner Peter Mims in Houston.
Connally and Zhao have been leading other non-core asset sales for Devon. Earlier this month, Connally led another string of Devon divestitures to a group of undisposed buyers involving non-core upstream assets in east Texas, the Anadarko Basin and an overriding royalty interest in the northern Midland Basin. The assets totaled to nearly $1 billion. In April, Connally and Zhao represented Devon when it agreed to sell its non-core Mississippian assets in northern Oklahoma to a fellow Oklahoma City company, White Star Petroleum, for $200 million.
Investment bankers from Jeffries led the financial advice for Devon. RBC Richardson Barr also acted as a financial advisor to Devon.
Bankers on the Jeffries deal team included managing director Bill Marko and Ajay Khurana in Houston, as well as Ralph Eads in New York, The Deal Pipeline reports.
Houston banker Scott Richardson advised Devon from RBC Richardson Barr’s deal team.
Proceeds from the deal, which is expected to close in the third quarter, will help Devon improve its balance sheet and reinvest in resource plays, Devon CEO Dave Hager said in the company release.
The two separate transactions involve Devon selling its northern Midland Basin working interest across 15,000 net acres for $435 million and southern Midland Basin assets for $423 million. The current net production of the northern assets is approximately 1,000 Boe per day, with oil accounting for roughly 70 percent.
Current production for the southern assets is approximately 22,000 Boe per day, of which 33 percent is oil.
Devon anticipates incurring “minimal” taxes associated with the divestitures.
Pioneer is turned to Dallas V&E partner Robert Kimball to lead the securities offering that will raise cash for the Midland Basin assets acquisition. Kimball received assistance from Dallas counsel Lanchi Huynh and associates Ryan Clyde and Alex Robertson.
The offering, which is anticipated to close on June 21, is for 5.25 million shares of common stock. The underwriters (Credit Suisse, J.P. Morgan, Deutsche Bank Securities and Morgan Stanley) have the option to purchase an additional 787,500 shares over the next 30 days.
A primarily Dallas-based team from Baker Botts led by corporate partner Doug Rayburn is representing the underwriters in the offering. Rayburn received assistance from tax partner Steve Marcus, corporate associates Kevin Henderson and Jessica Phillips and summer associate Cale Curtin. Environmental associate Devi Chandrasekaran and global projects associate Leah Burcat, both based in Houston, were also involved.
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