Devon to Sell Shale Oil Assets to Crescent for $4.2 Billion

Devon Energy Corp. agreed to sell its drilling portfolio in the Eagle Ford shale basin of South Texas to Crescent Energy Co., an oil producer backed by KKR & Co., for about $4.2 billion.

Crescent will pay cash for the assets, which include about 90,000 net acres in Karnes, DeWitt, and Gonzales counties, Devon said in a statement Thursday. Bloomberg reported earlier that Devon and Crescent were in advanced talks.

Houston-based Devon, which has a $53 billion market capitalization, is under growing pressure from activist investors to speed up the timeline to sell assets outside its core holdings in the Permian Basin of West Texas and New Mexico, or else sell itself entirely.

Devon shares rose as much as 2.8% before the start of regular trading in New York. Crescent slumped 7% before paring some losses.

Since closing on a deal for Coterra Energy Inc. in May for about $25 billion, Devon has been evaluating its entire portfolio, which also includes wells in the US Rockies, the Anadarko formation in Oklahoma and the Marcellus Shale in Pennsylvania.

One of the activists pushing Devon to sell assets, Kimmeridge Energy Management Co., called the sale to Crescent “a positive step toward.”

“We encourage continued decisive action in the near-term to unlock shareholder value,” Mark Viviano, a managing partner and lead portfolio manager at Kimmeridge, said in an email.

Devon plans to use proceeds from the sale to speed up its share buybacks and pay down debt. The deal is expected to close near the end of the year.

Selling the Eagle Ford business with output that is roughly 60% oil was expected to be the “logical first step” for Devon’s divestments, Timm Schneider, founder of the Schneider Capital Group, wrote in a September note to clients.

Operators in the US shale patch have been looking to sell smaller assets to help pay down debt following a consolidation wave in the hundreds of billions of dollars that kicked off in 2023. Drillers are merging so they can lock down the best remaining drilling spots following more than a decade of breakneck growth.

Devon’s shares have gained about 30% this year.

Crescent, which has a market value of about $4.5 billion, is based in Houston. The deal will help the company consolidate its position in the Eagle Ford basin, an oil-and-gas-rich stretch of shale in South Texas where the company had already been expanding .

RBC Richardson Barr was Devon’s financial adviser on the deal, and Kirkland & Ellis LLP was its legal adviser.