Canadian Natural Buy Devon Assets for $2.86 Billion

 

Canadian Natural Resources Ltd. (CNQ), the nation’s second-largest natural gas producer, agreed to buy Devon Energy Corp. (DVN)’s conventional assets in Canada for C$3.13 billion ($2.86 billion) to boost output.

The cash purchase will add 2.2 million undeveloped acres near Canadian Natural’s fields in western Canada, President Steve Laut said in a conference call today. The acquisition, which is about 70 percent gas, will increase production at the Calgary-based company by the equivalent of 86,633 barrels a day. “This adds value in the near-, mid- and long-term,” Laut said. The company expects “pretty strong gas pricing” this year and next, he said.

Canadian Natural is making its largest acquisition since 2006 as prices for the heating fuel reach a four-year high. The purchase will reduce the percentage of company output that is heavy oil to about 41 percent from 45 percent, according to Phil Skolnick, an analyst at Canaccord Genuity Corp.

The decision to add to its holdings comes after Canadian Natural said last month it wouldn’t sell 250,000 acres of shale gas fields in British Columbia because the bids it received were insufficient.

Devon’s assets will add about C$75 million in cash flow for Canadian Natural this year. The sale, expected to close April 1, includes gross proved reserves of 272.2 million barrels of oil equivalent and six gas plants. Canadian Natural gained 4.1 percent to C$40.78 at 10:31 a.m. in Toronto, the biggest intraday increase since Oct. 10. Devon climbed 2.1 percent to $64.21 in New York.