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Overview: Millennium Management's 1Q14 positions

Part 5
Overview: Millennium Management's 1Q14 positions (Part 5 of 7)

Why Millennium Management increases position in Devon Energy

Millennium Management and Devon Energy

Millennium Management has top new positions in Rice Energy Inc. (RICE) and Anixter International Inc. (AXE). Positions were increased in PPL Corp. (PPL), Devon Energy (DVN), Teva Pharmaceuticals (TEVA), and Edison International (EIX).

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Millennium Management upped its position in Devon Energy (DVN) to 4,284,820 shares, which now accounts for 0.83% of the fund’s portfolio. Millennium earlier owned  846,121 shares in Devon that accounted for 0.17% of the portfolio in 4Q13. George Soros’ Soros Fund Management also added a new position in Devon Energy last quarter.

Devon Energy is an independent energy company engaged primarily in the exploration, development, and production of oil, natural gas, and natural gas liquids (or NGLs). Its operations are concentrated in various North American onshore areas in the U.S. and Canada.

Devon closes GeoSouthern acquisition, sells non-core assets

In February, Devon closed the GeoSouthern acquisition and acquired GeoSouthern’s Eagle Ford Shale assets and operations in south Texas for approximately $6 billion. This acquisition included approximately 250 million barrels of oil equivalent (MMBoe) of proved reserves and was announced in November last year. The acquisition was funded with a combination of cash on hand and borrowings. Devon said it expects to repay the borrowings with free cash flow and proceeds from the monetization of non-core assets.

In April, as part of the above strategy to sell non-core assets, the Oklahoma City-based Devon Energy completed the sale of its Canadian conventional assets to Canadian Natural Resources Limited for $2.8 billion. It also recently acquired 50,000 net acres and associated production, primarily in the Cana-Woodford Shale for $249 million in cash.

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Devon and Crosstex combine midstream assets

In March, Devon, Dallas-based Crosstex Energy Inc., and Crosstex Energy L.P. finalized a deal to combine substantially all of Devon’s U.S. midstream assets with Crosstex’s assets to form a new midstream business. The new business will consist of EnLink Midstream Partners L.P.and EnLink Midstream LLC, a master limited partnership (or MLP) and a general partner entity, respectively, which are publicly traded. In exchange for a controlling interest in both the new general partner entity and the MLP, Devon contributed its equity interest in a newly formed Devon subsidiary (EnLink Midstream Holdings) and $100 million in cash. It said its contributed assets are valued at $4.8 billion. EnLink Midstream Holdings owns Devon’s former midstream assets in the Barnett Shale in north Texas, the Cana and Arkoma Woodford Shales in Oklahoma, and a contractual right to the benefits and burdens of Devon’s interest in Gulf Coast Fractionators in Mt. Belvieu, Texas. The MLP and the general partner each own 50% of EnLink Midstream Holdings.

First quarter results beat estimates

Devon’s 1Q14 results beat estimates with a profit of $324 million, or $0.79 per share, compared to a loss of $1.3 billion, or $3.34 per share, in the same period the previous year. Revenue surged 89% to $3.73 billion. Devon said the improved 2014 results were driven primarily by increases in oil and gas prices, liquids volumes, and oil realizations.

A November report on the Market Realist website on Devon’s Eagle Ford acquisition noted that with the addition of the Eagle Ford properties and the exclusion of the assets to be sold, Devon will have significantly more oil production and will continue to shift more towards oil and less towards natural gas. For more on the acquisition, please read Must-know points from Devon Energy’s $6 billion acquisition.

The above series also states that Devon and other companies located in the Eagle Ford are part of energy ETFs such as the Energy Select Sector SPDR (XLE), the Vanguard Energy ETF (VDE), the iShares U.S. Energy ETF (IYE), and the Oil & Gas Exploration & Production SPDR (XOP).

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