Tickers in this Article: DVN, CEO, BP, APA
Devon Energy (NYSE:DVN) spent 2010 completing its strategic repositioning to an onshore exploration and production company focused on North America. The company announced this strategy late in 2009 and included the sale of all its Gulf of Mexico and international assets. IN PICTURES: 10 Tips For The Successful Long-Term Investor

Strategic Plan
In November 2009, Devon Energy announced that the company would sell its Gulf of Mexico and international assets and morph to an onshore exploration and production company focused only in the United States and Canada. The assets that Devon Energy intended to sell had proved reserves of 196 million barrels of oil equivalent (BOE) as of December 31, 2009, or 7% of the company's total.

Devon Energy spent 2010 marketing these assets, and it did considerably better in monetizing its international and Gulf of Mexico properties than originally planned. The company's initial estimate was that it would get after-tax proceeds of $4.5 billion to $7.5 billion from the sales, and it now stands to get from $7.7 billion to $8.3 billion.

Devon Energy had an attractive portfolio of assets in the international area, and the divestitures came fairly quickly here. BP (NYSE:BP) was the main buyer, paying $2 billion for a field located offshore Azerbaijan in the Caspian Sea. The field had production of 17,000 BOE per day. BP also spent $3.2 billion to purchase assets from Devon Energy located offshore Brazil. Devon also had assets located offshore China, and CNOOC (NYSE:CEO) purchased the Panyu oil field for $515 million.

Gulf Of Mexico
Devon Energy had great timing in selling its deepwater and shallow water properties in the Gulf of Mexico, as the deals were all signed prior to the BP oil spill, which might have lowered the selling prices dramatically.

The company was involved in three projects in the deepwater that targeted the Lower Tertiary trend, and it sold these for gross proceeds of $1.3 billion.

In the Gulf of Mexico shelf area, Devon Energy sold assets for gross proceeds of $1.05 billion to Apache (NYSE:APA). The company had interests in 158 blocks off the coasts of Alabama, Texas and Louisiana.

BP purchased the rest of the properties in the Gulf of Mexico for gross proceeds of $1.8 billion. All of the deals closed in the first half of 2010, and Devon Energy was out of the Gulf of Mexico by June 2010.

Devon Energy also has substantial oil sands properties in Canada and will continue to develop these. The company recently sanctioned Jackfish 3, the third phase of its oil sands project in Alberta.

The company used the proceeds of the divestitures for various purposes, including a $3.5 billion stock repurchase program and repayment of $1.7 billion in debt. The funds were also used to add leasehold in the United States, as the company added 635,000 net acres in various plays. These include the Cana-Woodford Shale, Bone Springs and Wolfberry plays. Devon Energy now expects to grow its total production by 6% to 8% in 2011, and the company will spend 90% of its capital on developing oil and liquids plays.

An Onshore Company
Devon Energy is almost finished with its strategic repositioning to an onshore exploration and production company working to develop oil and gas properties in the onshore area of the United States and Canada. (For related reading, see How Does Crude Oil Affect Gas Prices?)

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