Devon Energy Corp. has announced the sale of its 12.5% equity stake in the Matterhorn Express Pipeline for approximately $375 million. The transaction, expected to close in the second quarter, follows the pipeline’s recent startup and rapid ramp-up of operations in the Permian Basin.
While Devon’s Q1 earnings release did not name the buyer, a Reuters report cited sources indicating that I Squared Capital is in advanced discussions to assemble a controlling stake in the pipeline. Devon has confirmed, however, that its contracted gas transportation capacity on Matterhorn will remain unchanged post-transaction.
“Proceeds from the divestiture will be used to further strengthen the company’s investment-grade financial position. The monetization of Devon’s equity ownership will not change the terms or conditions of the company’s secured capacity on the pipeline,” Devon stated in its Q1 earnings release.
Updated Ownership Structure
The sale is part of a broader shift in Matterhorn’s ownership. Following the divestitures by Devon and Ridgemont Equity Partners, the updated equity breakdown will be as follows:
· WhiteWater (Operator): 65% stake
· MPLX LP: 10% stake (up from 5%; additional 5% acquired for $151 million)
· Enbridge Inc.: 10% stake (joining as a new equity holder)
Previously, the joint venture included:
· WhiteWater: 67.5%
· EnLink (owned by ONEOK): 15%
· Devon: 12.5%
· MPLX LP: 5%
A joint statement from WhiteWater and its new backers confirmed that the operator’s equity interest will now be jointly backed by I Squared Capital and FIC. WhiteWater will retain operational control of the pipeline.
About the Matterhorn Express Pipeline
Brought online in November 2024, Matterhorn Express is a 580-mile pipeline system with a 2.5 Bcf/d capacity, designed to move natural gas from the Waha hub in the Permian Basin to Wharton, Texas, with additional delivery capabilities to Katy. The system includes a 510-mile mainline, two 36-inch diameter laterals (approximately 50 and 85 miles long), and associated compression infrastructure.
East Daley Analytics has reported that Matterhorn has ramped up faster than expected and remains fully contracted—underlining its strategic role in relieving Permian takeaway bottlenecks.
Devon's Q1 2025 Performance and Broader Strategy
The divestiture is aligned with Devon’s previously stated objective of improving its annual pretax free cash flow by $1 billion. This includes $300 million in spending reductions through midstream optimization and cost structure adjustments.
Key Q1 2025 Financials:
· Net income: $494 million (vs. $639 million in Q4 2024)
· Core earnings (adjusted): $779 million, or $1.21/share (below consensus estimate of $1.27)
· Total production: 815,000 boe/d, comprising:
· Oil: 388,000 bpd
· NGLs: 203,000 bpd
· Natural gas: 1.35 Bcf/d
· Cash from operations: $1.94 billion (up from $1.66 billion in Q4)
· Cash & equivalents: $1.23 billion
· Share repurchases: 8.5 million shares for $301 million
· Dividend declared: $0.24/share
· Asset impairments: $254 million from real estate divestitures
Strategic Portfolio Adjustments
In addition to the pipeline sale, Devon disclosed the dissolution of its Blackhawk field joint venture with BPX in the Eagle Ford Shale. Devon now holds a 95% operating stake across 46,000 net acres, enhancing operational control and streamlining its asset footprint.
About the Partners:
WhiteWater is an Austin-based infrastructure operator behind key assets like the Whistler, Blackcomb, and Matterhorn Express pipelines.
MPLX LP, a master limited partnership, operates an extensive suite of midstream infrastructure, including crude and refined product pipelines, storage, and logistics assets.
Enbridge Inc. is one of North America’s leading energy infrastructure companies, with diversified operations across natural gas, oil pipelines, and renewable energy.
