Devon Energy to offload interests in EnLink Midstream for $3.125bn

US exploration company Devon Energy has signed an agreement to divest its stakes in EnLink Midstream Partners (ENLK) and EnLink Midstream (ENLC) for $3.125bn to reduce consolidated debt by 40%.

The sale agreement, which is in line with Devon’s $5bn asset divestment programme, was reached with an affiliate of Global Infrastructure Partners (GIP).

Pursuant to the terms of the deal, GIP will acquire Devon’s 95 million units in the master limited partnership ENLK and 115 million units in the general partner ENLC.

Devon has also increased the size of its share buyback programme to $4bn from the previously announced $1bn.

Devon Energy president and CEO Dave Hager said: “The sale of our EnLink interests represents a significant step forward in achieving our 2020 Vision to further simplify our asset portfolio and return excess cash to shareholders.

“This highly accretive transaction provides a strategic exit from EnLink at a value of 12 times cash flow, a substantial premium to Devon’s current trading multiple.

“The EnLink proceeds, combined with proceeds from the non-core E&P assets already sold and those currently being marketed, will exceed our $5bn divestiture target.”

According to Reuters, Devon is planning to drill beyond the Permian basin in Texas and focus on Oklahoma-based shale producing areas of SCOOP and STACK to increase production.

As of 31 December last year, the company’s total consolidated indebtedness was $10.29bn.

The buyback programme is subject to the completion of the EnLink transaction, which is anticipated to close next month.

In April, the company downsized its workforce by 9% or 300 jobs to reduce costs.