Canadian Natural Resources Ltd. agreed to buy the Canadian business of Devon Energy Corp. for C$3.8 billion ($2.8 billion), gaining heavy-oil assets in the province of Alberta.
Devon’s Canadian land and facilities are within Canadian Natural’s core production areas, allowing the Calgary-based company to curb costs while boosting output. For Oklahoma-based Devon, the deal allows an increased focus on U.S. growth.
The Canadian asset portfolio had net production averaging 113,000 oil-equivalent barrels in the first quarter, Devon said Wednesday in a statement. At the end of last year, proved reserves associated with the properties amounted to about 409 million barrels of oil.
“These high-quality assets complement our existing asset base and provide further balance to our production profile,” Canadian Natural President Tim McKay said in a separate statement. Synergies are expected to provide benefits of C$135 million on an annualized basis, he said.
The transaction is due to close by the end of the second quarter, with Devon using the proceeds for debt reduction. As the company focuses more on “high-return U.S. oil growth,” it’s also divesting its Barnett Shale gas assets in Texas. Data rooms for the Barnett will open shortly and Devon expects to exit the assets by the end of the year.