Devon Energy Corp. announced Oct. 6 that it had completed the sale of its 50 percent ownership interest in Access Pipeline to Wolf Midstream Inc., a portfolio company of Canada Pension Plan Investment Board (CPBIB), for $1.4 billion (CAD), or $1.1 billion (USD).
The Access Pipeline system includes pipelines that transport blended bitumen and diluent between the Christina Lake area of Northeastern Alberta and Edmonton. Under the terms of the transaction, Devon’s thermal-oil acreage is dedicated to Access for an initial term of 25 years.
In September 2015, Wolf’s management team and Canada Pension Plan Investment Board created a midstream investment vehicle focused on acquisition opportunities in Western Canada.
“Access is an attractive foundational asset for Wolf that provides us with immediate scale in the region. We are pleased to work with Devon as a long-term partner supporting its high-quality oil sands projects, and look forward to expanding service with third-party shippers. We are pleased to have CPPIB’s full support on this significant transaction for Wolf, reinforcing our mutual commitment to build out the vehicle” said Gord Salahor, Wolf’s CEO in a July release about the proposed acquisition.
Devon also has the right to receive an incremental $150 million (CAD) payment from Wolf Midstream with the sanctioning and development of a new thermal-oil project on Devon’s Pike lease in Alberta, Canada. The sale agreement further allows for Access Pipeline tolls to be reduced by as much as 30 percent with the future development of multiple projects at Pike.
With the close of Access Pipeline, Devon’s divestiture program is now complete with total proceeds reaching $3.2 billion (USD). At least two-thirds of the sales proceeds are expected to be utilized for debt reduction, with $1.2 billion of debt repurchased to date.
Based in Oklahoma City and included in the S&P 500, Devon operates in several of the most prolific oil and natural gas plays in the United States and Canada with an emphasis on a balanced portfolio. Devon is the second-largest oil producer among North American onshore independents.Tags: Access Pipeline, Canada, Devon Energy, diluent