Devon Energy has signed an agreement to sell its 50% stake in Access Pipeline to Wolf Midstream, a portfolio company of Canada Pension Plan Investment Board, in a deal valued at C$1.4bn ($1.1bn).
The pipeline system includes pipelines that transport blended bitumen and diluent between the Christina Lake area of Northeastern Alberta and Edmonton.
The deal also includes the potential for a C$150m ($115.9m) payment based on the development of a new thermal-oil project on the company’s Pike lease in Alberta.
Devon Energy president and CEO Dave Hager said: “With the highly-accretive sale of Access, Devon’s divestiture programme is now complete, with proceeds totalling $3.2bn and surpassing the top end of our $2bn to $3bn guidance range.
Under the agreement, the thermal-oil acreage of Devon is dedicated to Access Pipeline initially for 25 years and a market-based toll will be applied to production from the company’s three Jackfish projects.
Following this, Devon expects its lease operating expense at the Jackfish complex to increase by approximately $100m on an annualised basis.
The agreement also includes the potential for reduction in pipeline toll by as much as 30% with the development of new thermal-oil projects going forward.
Furthermore, the company’s next potential project is the first phase of Pike, located next to the Jackfish complex.
The transaction is subject to regulatory approvals along with customary terms and conditions, and is expected to close during the third quarter of this year.
Last month, Devon signed agreements to sell its non-core assets in the Midland Basin for $858m.
