Devon Energy Corporation (DVN)

[Timothy Smith]

$DVN (+2%) announces strategic midstream partnership
with Crosstex (XTEX/XTXI); could be a trend-setter. DVN
plans to contribute its midstream assets and $100MM for a
70% interest in Crosstex GP (XTXI) and 53% of Crosstex LP
(XTEX).

This transaction allows an immediate value-mark for
DVN’s midstream assets (Both LP and GP), reduces risk and
time associated with MLP start-up, and improves the LT growth
profile of the MLP.

It also provides Crosstex with a critical
upstream sponsor for future growth. The transaction is a
“win-win” for both parties in our view and could mark the
beginning of a trend for upstream operators (strategic
partnerships rather than MLP formation). Deal to close 1Q14.