OKLAHOMA CITY (AP) — Independent oil and gas producer Devon Energy Corp. said Monday it will divest its Gulf of Mexico and international assets.

Devon expects the divestitures will create after-tax proceeds of $4.5 billion to $7.5 billion. The company plans to use the proceeds to invest in its U.S. and Canadian portfolio and retire debt. The sales will add to earnings, cash flow, production and reserves beginning in 2011, the company said.

CEO J. Larry Nichols said the company does not believe the value of the assets are adequately reflected in Devon’s stock price.

“Following the divestitures, Devon will be uniquely positioned to deliver high organic growth on a sustainable basis, funded entirely with internally generated funds,” he said.

Devon is expected emerge with a stronger balance sheet and one of the lowest cost structures in its peer group, Nichols added.

The company expects to begin divesting the properties in the first quarter of 2010 and will complete the divestitures throughout next year.

Devon’s Gulf of Mexico and international properties represent about 7 percent of its companywide proved reserves of 2.8 billion barrels of oil equivalent. Oil and natural gas liquids are expected to account for about 43 percent of Devon’s estimated proved reserves by the end of 2009.

The company’s balance between liquids and natural gas will change only slightly as a result of the divestiture, Devon said.

Devon Energy, which is based in Oklahoma City, reported earlier this month that its sales from oil, gas and natural gas liquids fell 54 percent to $1.17 billion in the third quarter. Significantly lower product prices more than offset the growth in natural gas and liquids production.

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