UPDATE 2-Devon sells gas assets to focus on oil production
* Deal includes assets onshore Gulf Coast, Rockies, mid-continent
* Assets being sold produce 275 mmcfe gas per day (Adds details from statements, background)
June 30 (Reuters) - Devon Energy Corp said it would sell its remaining non-core gas-rich properties to peer Linn Energy LLC for $2.3 billion to focus on more lucrative oil assets and cut debt.
This is Linn's biggest deal since it bought Berry Petroleum Co in December through a holding company set up for acquisitions.
The asset sale by Devon includes about 900,000 net acres spread across the Rockies, onshore Gulf Coast and some mid-continent regions, including all or parts of Kansas, Oklahoma, Texas, Arkansas and Louisiana.
These assets produce 275 million cubic feet of gas equivalent per day, about 80 percent of which is natural gas. They contributed about 7 percent to Devon's total oil and gas output in the first quarter.
Devon and many other North American oil and gas producers have been selling off their natural gas holdings to focus on more profitable crude oil assets. Prices of natural have slumped after a shale boom in the United States.
Encana Corp, Canada's largest natural gas producer , said last week it would sell its Bighorn gas properties in Alberta, properties in Wyoming's Jonah natural gas field and about 90,000 net acres in east Texas.
Devon itself has raised more than $5 billion from the sale of non-core assets over the past few quarters.
It sold off some natural gas assets in Canada late last year and bought oil-producing assets in the Eagle Ford shale region of south Texas.
The company said on Monday it expects to have reduced its net debt by more than $4 billion this year after the completion of the deal, likely by the end of the third quarter.
"With this sale, we now see a new Devon emerging with fourth quarter as the first clean quarter for the clean, go forward portfolio that is expected to deliver on peer leading growth," Global Hunter Securities analysts wrote in a note.
Oil and natural gas liquids are expected to account for about 60 percent of Devon's output by year-end, Chief Executive John Richels said, adding that the company was targeting multi-year oil production growth of more than 20 percent.
Linn said it would fund the deal by selling its Granite Wash assets spread over Texas Panhandle and western Oklahoma as well as other non-producing acreage. It has also secured a $2.3 billion loan.
Devon's shares were little changed at $79.49 in afternoon trading on the New York Stock Exchange. Linn's shares were up nearly 2 percent at $32.44 on the Nasdaq.
Jefferies LLC and Credit Suisse Securities (USA) LLC were financial advisers to Devon. Vinson & Elkins LLP was its legal adviser. Scotia Waterous was the financial adviser for Linn. ($1 = 1.0664 Canadian Dollars) (Reporting by Anannya Pramanick in Bangalore; Editing by Don Sebastian and Saumyadeb Chakrabarty)
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