Devon Energy Corp., U.S. oil and natural gas producer said it would sell assets in Texas for nearly $1 billion to fund drilling and lower debt.
Devon said on Monday it would sell producing assets in east Texas for $525 million and its position in the Anadarko Basin’s Granite Wash area for $310 million.
The oil producer will also sell its royalty interests in the northern Midland Basin in the Texas region for $139 million.
“Devon’s proceeds from divestitures of natural gas-focused assets would total $1.3 billion,” Chief Executive Dave Hager said.
“Proceeds for the entire divestiture program are well on their way to achieving our previously announced range of $2 billion to $3 billion in 2016,” Hager added.
The global oil-price crash since 2015 has forced Devon and the rest of the companies in the industry to cut off costs, lay off workers and cut dividends and exploration budgets. Although prices have rebounded in some extent this year, it’s still not enough for Devon to grow production again.
“We expect the market to react positively to this news as there was some concern that the sale program would not be executed successfully,” Paul Westervelt, a trader at Iberia Capital Partners, said in a research report Monday. “The realized sale prices seem healthy.”
The company tries to use nearly a third of sales to boost this year’s capital spending and pay down debt with the rest. Before considering an increase in production, the company would need to sell some of its assets first.