KALNIN VENTURES SIGNS BARNETT SHALE ACQUISITION
Kalnin Ventures LLC announced Dec. 17 an affiliate of its investment vehicle BKV Oil & Gas Capital Partners, L.P. has entered into a purchase and sale agreement to acquire Devon Energy Corp.’s (NYSE: DVN) assets in the Barnett Shale.
The expected closing date is in 2020, subject to customary closing conditions, and the overall transaction is worth $770 million, Kalnin Ventures said in a news release.
Kalnin Ventures is based in Denver and Devon Energy is based in Oklahoma City.
BKV is financially backed by its sole investor, Banpu Pcl, a Thailand-based coal mining and power-generation company with total assets of approximately $8 billion.
“Devon’s transformation to a U.S. oil growth business is now complete,” Dave Hager, president and CEO, said in a separate news release.
“The timely and tax-efficient exit from Canada and the Barnett this year has generated $3.6 billion of proceeds at accretive multiples to Devon’s current valuation. Furthermore, these transactions accelerate efforts to focus exclusively on our resource-rich U.S. oil portfolio, where we have the ability to substantially increase returns, margins and profitability,” Hager said.
“The Barnett Shale has been a cornerstone asset for Devon over the past two decades,” Hager said. “With this change in ownership, it is great to see our talented and innovative employees supporting this high-quality gas asset transition to a world-class company like Banpu.”
The transaction with Devon includes more than 320,000 gross acres and 4,200 producing wells, making BKV the largest natural gas producer in the Barnett Shale. This acquisition marks the BKV’s seventh major transaction and first position in the Barnett Shale play. BKV has invested or committed over $1.3 billion since its formation 2015, Kalnin Ventures said.
Net production from the Barnett Shale properties averaged 597 million cubic feet equivalent per day in the third quarter of 2019. At year-end 2018, proved reserves associated with these properties amounted to approximately 4 trillion cubic feet equivalent.
“We are excited to announce this acquisition in the Barnett Shale, as this continues our strategy of PDP weighted cash flow yielding investments, where we can leverage technology to drive operational performance” said Christopher Kalnin, CEO of BKV. “Devon has done wonderful work in the Barnett Shale and we look forward to continuing that tradition, delivering high-quality returns for many years to come.”
Devon said in its announcement that it expects no incremental cash taxes associated with the divestiture of the assets.
In a related announcement, Devon also announced that its board of directors has authorized a new $1 billion share-repurchase program, bringing the total repurchase authorization to $6 billion. The new program expires on Dec. 31, 2020, and $800 million of the $1 billion authorization is conditioned upon the closing of the Barnett transaction. To date, Devon has repurchased 144 million shares, or nearly 30 percent of outstanding shares, at a total cost of $4.8 billion, the company said.
“[The] announcement to expand our industry-leading share repurchase program is consistent with our disciplined capital allocation strategy and demonstrates our firm commitment to return capital to shareholders,” said Jeff Ritenour, executive vice president and chief financial officer.
“Given our strong balance sheet and projected free cash flow, this new authorization will provide us additional flexibility to continue the return of cash to our shareholders,” Ritenour said in the announcement.
Jefferies and Citi acted as financial advisors to Devon on the Barnett Shale transaction. Vinson & Elkins LLP acted as legal advisor to Devon. Willkie Farr & Gallagher LLP acted as legal advisor to BKV.
Kalnin Ventures is backed by investors with significant equity commitments from Banpu Pcl and seeks to invest in attractive upstream oil and gas opportunities in North America with the goal of creating long‐term sustainable value in the energy industry, the company said.
Devon Energy is an independent energy company engaged in finding and producing oil and natural gas and is included in the S&P 500, the company said.
Devon says it operates in several of the most prolific oil and natural gas plays in the U.S. with an emphasis on achieving strong returns and capital-efficient cash-flow growth.
– FWBP Staff