Devon intends to continue paying down debt after $1.2 billion tender

By Devika Patel

Knoxville, Tenn., Nov. 18 – Devon Energy Corp. plans to continue paying down its debt with the aim of addressing near-term maturities and reducing interest expense, according to chief operating officer Tony Vaughn.

To those ends, the company recently repaid $1.2 billion of notes via a tender offer.

“Our debt reduction program is well under way,” Vaughn said at the Bank of America Merrill Lynch Global Energy Conference in Miami on Friday.

“We’re primarily focused on eliminating the near-term debt maturities and reducing our overall annual interest expense.

“We had about $3.2 billion of divestitures earlier this year and our intent was to use about two thirds of those proceeds to repurchase debt,” Vaughn said.

“Thus far this year, we’ve repurchased about $1.2 billion of debt.”

Vaughn said that even though the company does not have official plans to repay specific debt, its intention is still to continue reducing its borrowings.

“We still are retaining some optionality given the circumstances of where we are today with pricing and uncertainty of the industry but still our intent is to repay that debt,” Vaughn said.

“Within the future, you’ll see more action from us on that front, no official plans that we’ve laid out there yet, although we do intend to continue to pay down some debt.”

Vaughn also said the company has an eye on its ratings and will keep its spending in line with cash flow.

“We’re committed to protecting our investment-grade balance sheet,” Vaughn said. “We will balance our annual capital spend with our available cash flow.”

Tenders

On Aug. 4, Devon began tender offers to purchase eight series of notes for a maximum repurchase amount of $1.2 billion.

The offers were divided into two parts, with the company offering to buy any and all of two series of notes and a capped amount of six others.

The offers were for $125 million of outstanding 8.25% notes due 2018 issued by Devon OEI Operating, LLC, which includes about $48 million of privately placed notes, $700 million of outstanding 6.3% notes due 2019, $750 million of outstanding 2.25% notes due 2018, $150 million of outstanding 7.5% notes due 2027, $1.25 billion of outstanding 7.875% debentures due 2031 issued by Devon Financing Co., LLC, $1 billion of outstanding 7.95% debentures due 2032, $500 million of outstanding 4% notes due 2021, $1.25 billion of outstanding 5.6% notes due 2041.

Devon funded the tender offers with proceeds from previously completed asset sales and financing transactions.

Highlights

The company has $6.5 billion of liquidity and $3.5 billion of cash on hand. Net debt is under $5 billion.

The Oklahoma City oil, natural gas and natural gas liquids company has no significant debt maturities until 2021.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.