Devon Energy pulling out of Canada

The Jackfish SAGD project produces about 105,000 bbl/d and may soon be for sale. (Image: Devon Energy)

Devon Energy has announced plans to transform itself into a U.S. oil growth company. The final step will be to sell its Canadian oilsands and Barnett shale assets, a move that may put more than $30 billion in the treasury.

Devon's oil sands operations are located on the eastern edge of the Athabasca Basin. It put the Jackfish steam assisted gravity drainage project into production in 2007. Since then it has expanded its output by building Jackfish 2 and Jackfish 3. With three phases, Jackfish produces about 105,000 barrels per day.

Devon also holds a 50% interest - and would have been the operator - in the proposed Pike SAGD project with BP Canada Energy Group.

Devon expects to complete its pullout from Canada by the end of this year. Either a spinoff or sale of its Canadian assets should allow the company to focus on high return U.S. oil assets in Wyoming, Texas, New Mexico, and Oklahoma.

Approximately $780 million in cost savings by 2021 at its U.S. projects is anticipated. Four areas will receive scrutiny: general and administrative ($300 million), design and construction ($300 million), interest ($130 million), and per-unit recurring lease operating expenses ($50 million).

The company is also planning a $5 billion share buyback that will reduce the number of outstanding common shares by almost 30%.

This story first appeared in the Canadian Mining Journal.