Devon Energy Corp (NYSE: DVN) is having an overwhelmingly strong start to the trading session this morning after the company announced an asset sale. Of course, the sale will drive a massive amount of funding, leading to excitement among investors and sending the stock screaming for the top. Today, we’ll talk about:
- The asset sale;
- what we’re seeing from DVN;
- and what we’ll be watching for with regard to the stock ahead.
DVN Heads For The Top On Asset Sale
As mentioned above, Devon Energy is having an incredibly strong start to the trading session in the pre-market hours this morning after the company announced an asset sale. In a press release issued early this morning, the company announced that it has entered into an agreement to sell its aggegate ownership interest in EnLink Midstream Partners, LP (ENLK) and EnLink Midstream Partners, LLC (ENLC). In the release, DVN said that the interest will be sold to an affiliate of Global Infrastructure partnes (GIP) for a total price of $3.125 billion. Also, as a result of the sale, the board of directors at DVN has increased its share-repurchase authorization to $4 billion. In a statement, Dave Hager, President and CEO at DVN, had the following to offer:
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 $5 billion divestiture target.
Consistent with our disciplined multi-year plan, we will return proceeds from this transaction to our shareholders. Our board has authorized an increase in our share-repurchase program to $4 billion, which represents approximately 20 percent of our outstanding shares.
Looking ahead, we will continue to build upon our strong relationship with EnLink and GIP. EnLink remains a preferred partner for us in the midstream space, and we will continue to pursue mutually beneficial ways to grow our respective businesses across North America’s most prolific growth basins.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news causes moves. In the case of Devon Energy, the news proved to be overwhelmingly positive. With this asset sale, the company will drive more than $3 billion in funding. So, it’s no surprise that investors are excited and the stock is being taken on a ride toward the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:16), DVN is trading at $41.85 per share after a gain of $2.53 per share or 6.43% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on DVN. In particular, we’re interested in following the story surrounding the company’s asset sale and what it does with the funding the sale drives. Nonetheless, we’ll continue to follow the news and bring it to you as it breaks!
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