Oil and gas play,
Devon Energy Corporation
) board of directors gave the go-ahead for the creation of a
publicly traded midstream master limited partnership (MLP). The
company intends to file a registration statement with the
Securities and Exchange Commission in the third quarter of 2013
followed by the issuance of partnership units.
The new partnership will run the natural gas gathering and
processing business and also manage the properties situated in
the states of Oklahoma, Texas and Wyoming. Devon Energy will be
the general partner of the midstream entity and have the entire
incentive distribution rights.
Further, with the conclusion of the offering, Devon Energy
will hold the lion's share of the common units. Devon plans to
use the proceeds from the sale of the MLP units to finance its
continuing operations. This will render the MLP as a minority
owner in Devon's U.S. midstream business.
Of late, the shift towards unconventional resources like shale
gas and oil sands, in North America, has led to the demand for
greater investments in pipeline systems. The new MLP could
not have come at a better time, with midstream opportunities
gaining traction in the country after a weak performance in the
fourth quarter 2012. Moreover, prospects from the international
market look promising.
As per the Energy Information Administration (EIA), imports
from Canada are projected to fall while pipeline exports to
Mexico will receive a substantial boost in the coming years. This
will certainly bode well for the MLP business and help accelerate
Devon Energy's future growth trajectory.
Nevertheless, the contracting coal-to-gas switch in the U.S.
might be a cause of concern. Currently, Devon Energy carries a
Zacks Rank #3 (Hold).
However, other oil and gas operators well-positioned in the
energy domain are Zacks Ranked #2 (Buy)
Anadarko Petroleum Corporation
Oasis Petroleum Inc.
Based in Oklahoma City, Okla., Devon Energy is an independent
energy company and engages primarily in exploration, development,
and production of oil, natural gas, and natural gas liquids.
ANADARKO PETROL (APC): Free Stock Analysis
DEVON ENERGY (DVN): Free Stock Analysis
ENCANA CORP (ECA): Free Stock Analysis Report
OASIS PETROLEUM (OAS): Free Stock Analysis
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