UPDATE 4-Devon strikes Texas oil deal, plans to sell assets

Wed Nov 20, 2013 3:54pm EST
 
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(Adds background, details about GeoSouthern CEO, updates stock price)

By Michael Erman

Nov 20 (Reuters) - Devon Energy Corp will buy oil-producing assets in Texas for $6 billion and plans to sell or otherwise monetize some of its natural gas-heavy holdings in response to investor criticism about its lack of exposure to more profitable crude.

The Oklahoma City-based company said it will buy privately held GeoSouthern Energy Corp's core assets in the Eagle Ford shale region of south Texas for $6 billion in cash, as it seeks to revive investor interest in its shares.

Oil and gas deals have been slow in the United States in 2013, compared to previous years when companies like Exxon Mobil , Royal Dutch Shell and BHP Billiton Ltd poured billions into emerging shale assets.

Investors had worried that Devon did not have a position in some of the hottest U.S. shale formations, like the Eagle Ford.

Devon Chief Executive John Richels said after the GeoSouthern deal was announced that Devon was looking to sell or otherwise extract value from its conventional natural gas assets in Canada and other non-core assets in the U.S.

"The new Devon is a significant North American oil producer capable of delivering high rates of growth in high-margin oil production while generating free cash flow," Richels said on a conference call with investors.

Shares of Devon Energy were barely lower in Wednesday afternoon trading, down five cents to $62.72.   Continued...