Devon sells non-core U.S. assets to Linn Energy for $2.3 bn

Devon Energy Corporation has entered into a definitive agreement to sell all of its non-core U.S. oil and gas properties to Linn Energy for $2.3 billion, or approximately $1.8 billion after tax.

The agreement covers Devon’s remaining assets targeted for divestiture and includes properties in the Rockies, onshore Gulf Coast, and Mid-Continent regions of the U.S.

“With the sale of our remaining non-core assets, the portfolio transformation that we announced late last year is now complete,” said John Richels, president and CEO of Devon. “In a short period of time we transformed our portfolio through three significant steps: the accretive Eagle Ford entry, the innovative creation of EnLink Midstream, and the sale of our non-core properties. The sale of Canadian and U.S. non-core properties over the past few months has generated in excess of $5 billion of proceeds at an accretive multiple of nearly 7 times 2013 EBITDA.”

“Devon is now concentrated in some of the most attractive North America resource plays, with liquids expected to approach 60% of our production by year-end and multi-year oil production growth projected to be in excess of 20%,” said Richels.

Devon’s production from these non-core U.S. assets is currently 275 million cubic feet of gas equivalent per day, of which approximately 80% is natural gas. At December 31, 2013, proved reserves associated with these properties amounted to 1.242 Tcf of gas equivalent. EBITDA accompanying these assets totaled $350 million in 2013.

The transaction is subject to customary terms and conditions and is expected to close in the third quarter of 2014, with an effective date of April 1, 2014.

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Exxon, BP Evacuate Iraq workers amid limited oil drilling impact

Exxon Mobil and BP began removing employees in Iraq as militants continued a push toward Baghdad and a battle raged for control of the nation’s largest oil refinery.

The evacuations come amid government and company assertions that Iraq’s output of almost 3 MMbpd should remain unaffected by escalating sectarian tensions. Exxon has removed some workers from the West Qurna oil field as operations continue, according to a person familiar with the company’s Iraq operations. BP has removed non-essential workers, CEO Bob Dudley said.

While violence is sweeping northern Iraq, the conflict so far spared Iraq’s crude production in the south and the Kirkuk oilfield in the north is being defended by Kurds.

“The only infrastructure that is currently producing and supplying international markets is in the south and will remain untouched,” said Kyle Stelma, managing director of Dunia Frontier Consultants, which researches Iraq for clients.

Fighters from ISIL battled government forces for control of the Baiji refinery in northern Iraq today, a day after clashes in Baquba, 55 km northeast of the capital. A military spokesman said elite Iraqi forces were defending the Baiji refinery, but the comments contradicted local police who said militants had captured the facility.

A fuel tank at the refinery caught fire after shelling by militants, according to the Salahuddin provincial police command. The refinery halted operations because its storage tanks were full, according to Iraq’s Oil Ministry.

The market impact of the clashing continued to be muted, with Brent crude little changed at $114.23 a barrel on the London-based ICE Futures Europe exchange New York.

Companies such as Chevron, Total and Marathon Oil, which are drilling in the Kurdistan region, are continuing to operate. Marathon hasn’t evacuated employees, spokeswoman Lee Warren said. Chevron’s operations continue “as normal,” spokesman Kurt Glaubitz said. Oryx Petroleum reported successful testing and a ramp up in drilling activity in Kurdistan.

The rapid battlefield success of the Islamic State in Iraq and the Levant, or ISIL, a Sunni Muslim al-Qaeda breakaway group also embroiled in battles in neighboring Syria, threatens to re-ignite a sectarian civil war in Iraq. It also risks escalating into a wider conflict that draws in the United States and Iran in defense of PM Nouri al-Maliki’s Shiite-led government three years after the withdrawal of United States forces. Iraq is the largest oil producer in OPEC after Saudi Arabia.

BP CEO Bob Dudley said the violence, which he called “terrible” and said would have “far-reaching, wide-ranging implications” for the region, isn’t likely to spread all the way to the country’s southern oil fields.

“The implications for oil production at the moment appear limited,” he told reporters yesterday in Moscow. “We are of course very vigilant.”

Anti-terrorism forces killed a Saudi fighter identified as Abu Yamama al-Dossary during the “failed attack” on the Baiji refinery. A fuel tank at the plant caught fire during the clashes. The refinery has halted operations since June 15, the police said. Baiji has about 40% of Iraq’s refining capacity, data compiled by Bloomberg show.

“Iraq will have to increase the import of oil products to make up for the loss of Baiji’s production,” Robin Mills, the head of consulting at Manaar Energy Consulting and Project Management, said “Baiji mainly supplies the north, but also Baghdad.”

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Weatherford introduces Katy, Texas rod pump facility

In response to growing demand for artificial lift solutions in the North American shale plays, Weatherford has built a 354,000 sq-ft manufacturing facility and world-class training center on a 174-acre site in the suburban area west of Houston.

The new plant is currently producing 120 rod pump units per month, with the capacity to manufacture as many as 800 units per month. The plant employs 135 employees, but the company projects to fill 335 positions by year end.

“We use lean manufacturing techniques and cutting-edge robotics technology to increase operational efficiency, which includes machining, fabrication, painting, and assembly,” explained Karl Sakocius, Sr. Marketing Manager, during a media tour. “Our Katy facility delivers American-made rod pumping units to the market. We are the only original equipment manufacturer to engineer, service, repair, and refurbish pumping units.”

The Weatherford manufacturing facility features banks of advanced numerically controlled machine tools and includes a robotic welding unit. A systematic, single-piece flow process?as opposed to the traditional process of batching and sub-optimizing by department?reduces the amount of inventory in the plant, which reduces the potential for accidents. Emissions within the plant are minimized through the use of trolleys and conveyor systems instead of forklifts.

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CGG to acquire multi-year 3D land seismic in Saudi Arabia

CGG has announced that ARGAS, its joint venture with TAQA in Saudi Arabia, has been awarded a major contract by Saudi Aramco for an extensive, high-density land seismic program across the Kingdom. Sercel, CGG' s equipment division, will supply all the seismic equipment deployed on this survey program.

The three-year contract provides for two optional extension periods of one year each. The program is expected to start in the fourth quarter of 2014 and cover a wide variety of terrain. It will be acquired by a 50,000-channel mega-crew operating with the Sercel 428XL acquisition system, Sercel SG-10 geophones and a fleet of 24 Sercel Nomad 65 Neo vibrators. A mix of high-productivity and conventional acquisition techniques will be deployed depending on survey requirements. CGG' s broadband UltraSeis technology portfolio will be deployed to acquire the high-resolution data.

Jean-Georges Malcor, CEO, CGG, said: "We are delighted that Saudi Aramco is continuing its long-term relationship with CGG by awarding what is one of the world' s largest land seismic survey programs to our ARGAS joint venture with TAQA. With Sercel also supplying the new seismic equipment, this program marks a key milestone in our 2014-2016 strategic roadmap to benefit from the expansion of ultra-high-channel-count surveys in the Middle East region."

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