2008-11-03-2008-10-31-2008-10-31

Bought 44% WI in 51,000 acres in Drunkard's Wash CBM play in UT, gaining 210 Bcfe proved, 40 MMcfe/d.

Devon Energy Corp., Oklahoma City, (NYSE: DVN) has acquired an interest in the Drunkard's Wash coalbed-gas field in east-central Utah held by a subsidiary of Chevron Corp., San Ramon, Calif., (NYSE: CVX) in a stock-for-assets-and-cash trade worth $961 million. Devon traded its 14.2 million shares of Chevron common stock for $280 million in cash and the interest in Drunkard's Wash Field. Devon valued the stock at $67.71 per share based on a 20-day weighted average ending Oct. 31. The net deal value for the Utah asset is $681 million. Devon has held shares in Chevron since Devon acquired PennzEnergy in 1999. In August, Devon retired exchangeable debt originally held by PennzEnergy that resulted in ownership of the Chevron shares, and freeing the stock for exchange. The deal involves a 44% working interest in approximately 51,000 net acres. Current net production is about 40 million cubic feet of gas equivalent per day (100% gas). Total proved reserves are 210 billion cubic feet. The rough deal value is $3.24 per proved thousand cubic feet equivalent. ConocoPhillips, Houston, (NYSE: COP) is operator with a 25% interest. XTO Energy Corp., Fort Worth, Texas, (NYSE: XTO) holds the remaining 31% interest. Devon president John Richels says, "Drunkard's Wash adds an attractive growth driver to our unconventional-gas portfolio, and the cash we received further enhances our financial flexibility." Devon spokesman Chip Minty adds, "We think this play has attributes to be quite exciting in the long term. We see a good deal of upside potential and further development."