Devon Energy Corp. has entered into a definitive agreement to sell its 50 percent ownership interest in Access Pipeline to Wolf Midstream Inc., a portfolio company of CanadaPension Plan Investment Board, for CAD $1.4 billion, or USD $1.1 billion, using current exchange rates. The agreement also includes the potential for an incremental CAD $150 million payment with the sanctioning and development of a new thermal-oil project on Devon’s Pike lease in Alberta, Canada.
Under terms of the sale agreement, Devon’s thermal-oil acreage is dedicated to Access Pipeline for an initial term of 25 years. A market-based toll will be applied to production from the Company’s three Jackfish projects, which are fully operational. As a result, Devon expects its lease operating expense at the Jackfish complex to increase by approximately USD $100 million on an annualized basis.
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.
The transaction is subject to regulatory approvals along with customary terms and conditions. Closing is expected in the third quarter of 2016.