Devon Energy Corp (DVN.N) on Thursday said it plans to form a publicly-traded master limited partnership (MLP) for its U.S. natural gas gathering and processing assets in a bid to increase the valuation of its shares.
Devon and other energy companies including Kinder Morgan KMP.N have turned to tax-advantaged master limited partnerships as a means of unlocking the value for the infrastructure that is used to transport oil and natural gas to market.
Devon's share price has been depressed over the last several years due to the company's broad exposure to natural gas prices. In the last two years, Devon's shares have fallen about 30 percent compared with a 25 percent gain in the Standard & Poor's 1500 index.
The MLP is expected to initially hold a minority stake in the oil and gas company's so-called midstream business, which includes assets in Texas, Oklahoma and Wyoming. Devon will own the general partner of the MLP.
The company expects the MLP to file a registration statement with the Securities and Exchange Commission in the third quarter.
Shares of Devon fell 93 cents to $55.71, a decline of 1.6 percent, in morning New York Stock Exchange trading.
(Reporting by Michael Erman; editing by John Wallace and Theodore d'Afflisio)