Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - DEVON ENERGY CORP/DE | d81849e8vk.htm |
Exhibit 99.1
News Release
|
Devon Energy Corporation 20 North Broadway Oklahoma City, OK 73102-8260 |
Investor Contact
|
Shea Snyder | 405 552 4782 | ||
Media Contact
|
Chip Minty | 405 228 8647 |
DEVON ENERGY EARNS $416 MILLION IN FIRST-QUARTER 2011; NORTH AMERICAN ONSHORE PRODUCTION
INCREASES 7 PERCENT
OKLAHOMA CITY — May 4, 2011 — Devon Energy Corporation (NYSE:DVN) today reported net
earnings of $416 million for the quarter ended March 31, 2011, or $0.97 per common share
($0.97 per diluted common share). This compares with first-quarter 2010 net earnings of $1.2
billion, or $2.67 per common share ($2.66 per diluted common share). The decrease in
quarterly earnings is primarily attributable to non-cash, unrealized changes in the fair
value of oil, gas and NGL derivatives.
First-quarter 2011 financial results were impacted by certain items securities analysts
typically exclude from their published estimates. The most significant of the adjusting items
was a non-cash, unrealized loss on oil, gas and NGL derivatives of $254 million before-tax
($166 million after-tax). Excluding these adjusting items, Devon earned $575 million or $1.34
per diluted common share in the first quarter of 2011. The adjusting items are discussed in
more detail later in this news release.
Production Growth Exceeds Guidance, Driven By Strong Liquids Growth
Production from continuing operations averaged 629,000 oil-equivalent barrels (Boe) per day
in the first quarter of 2011, in spite of curtailments related to severe winter weather.
Compared to the first quarter of 2010, Devon’s North American onshore production increased
seven percent and exceeded the top-end of the company’s guidance by 4,000 barrels per day.
First-quarter production benefited from better than expected results from several core
properties, including the Cana-Woodford and Barnett Shale.
Devon continued to deliver strong oil and natural gas liquids production growth in the first
quarter of 2011. In aggregate, liquids production averaged 207,000 barrels per day. This
represents an 11 percent increase in North American onshore liquids production compared to
the first quarter of 2010 and a five percent increase over the fourth quarter of 2010.
Cana-Woodford Shale Production Growth Leads Operating Highlights
| • | Production from the company’s Cana-Woodford Shale play averaged a record 162 million cubic feet of natural gas equivalent per day in the first quarter of 2011. This represents a 120 percent increase compared to the first-quarter of 2010. | |
| • | In the Permian Basin, oil and natural gas liquids production increased 17 percent over the first-quarter 2010. In aggregate, liquids production accounted for nearly 75 percent of the 44,000 equivalent barrels per day produced in the Permian Basin during the first quarter. | |
| • | In Canada, the company plans to commence steam injection at Jackfish 2 in May with first production expected by year-end. At full production Jackfish 2 is expected to produce 35,000 barrels per day before royalties for more than 20 years. | |
| • | Immediately adjacent to its Jackfish lease, the company successfully completed the drilling of 135 appraisal wells on its Pike oil sands lease. The results were consistent with company expectations and will assist in determining the optimal development configuration. Devon anticipates filing a regulatory application for the first phase of Pike in the first half of 2012. |
Page 1 of 12
| • | Net production from the Barnett Shale exceeded 1.2 billion cubic feet of natural gas equivalent per day in the first quarter, including 43,000 barrels per day of liquids. This was an 11 percent increase over the first quarter of 2010. | |
| • | Devon brought six operated Granite Wash wells online in the first quarter. Initial production from these wells averaged 1,760 barrels of oil-equivalent per day, including 250 barrels of oil and 490 barrels of natural gas liquids per day. The company has an average working interest of 84 percent in these wells. |
Although production increased, revenues from oil, gas and natural gas liquids sales declined
10 percent to $1.9 billion in the first quarter of 2011. Lower natural gas prices more than
offset the increase in production.
The company’s average realized natural gas price, before the impact of hedges, decreased 25
percent to $3.62 per thousand cubic feet in the first quarter of 2011, as compared to $4.80
per thousand cubic feet in the first quarter of 2010. Devon’s average realized oil price
increased five percent in the first quarter of 2011, to $70.95 per barrel. This compares with
an average realized price of $67.58 per barrel in the year-ago period. The average realized
natural gas liquids price increased four percent over the first quarter of 2010 to $37.39 per
barrel.
Marketing and midstream operating profit was $122 million in the first quarter of 2011.
Increased gas throughput and strong cost control drove the company’s solid first quarter
result.
Cost Containment Mitigates Industry Inflation
Devon’s cost containment efforts were reflected in first-quarter 2011 expense results. In
spite of rising industry costs and a stronger Canadian dollar, company expenses in most
categories declined or reflected only nominal per-unit increases.
Lease operating expenses (LOE) in the first quarter of 2011 were $424 million. On a unit of
production basis, LOE increased only one percent compared with the first quarter of 2010.
Devon’s focus on controlling costs combined with the divestiture of higher-cost offshore
assets helped offset industry inflation and the strengthening of the Canadian dollar.
First-quarter general and administrative expenses were $130 million, or six percent lower
than the first quarter of 2010. Lower personnel costs and efficiencies gained through the
company’s strategic repositioning drove most of the savings.
Depreciation, depletion and amortization expense (DD&A) increased four percent to $442
million in the first quarter of 2011. However, on a unit of production basis, DD&A increased
only two percent to $7.80 per Boe.
Interest expense for the first quarter of 2011 decreased to $81 million, a six percent
decline year-over-year. The decrease was attributable to lower interest rates.
Financial Position Remains Strong; Share Repurchase Plan on Schedule
Devon generated $1.5 billion of cash flow before balance sheet changes in the first quarter
of 2011, a four percent increase over the year-ago quarter. The company utilized this cash
flow and liquidity provided through asset sales to fund its total capital program and return
nearly $800 million to its shareholders in the form of stock buybacks and dividend payments.
As of March 31, 2011, the company had repurchased 26.4 million shares at a total cost of $1.9
billion. Devon expects to complete the stock repurchase program by the end of 2011.
Devon exited the first quarter of 2011 with cash and short-term investments of $3.4 billion
and a net debt to adjusted capitalization ratio of 15 percent. Reconciliations of cash flow
before balance sheet
changes, net debt and adjusted capitalization, which are non-GAAP measures, are provided in
this release.
Page 2 of 12
Devon Adds Oil and Gas Hedges
The rise in oil prices has provided Devon the opportunity to add historically attractive oil
hedges. For the full-year 2012, the company has entered into various swap and collar
contracts to hedge 76,000 barrels per day of oil production. Of this total, 22,000 barrels
per day of oil production is swapped at a weighted average price of $107 per barrel. The
remaining 54,000 barrels per day utilizes costless collars with a weighted average ceiling of
$126 per barrel and a floor of $86 per barrel. Oil hedges are based on West Texas
Intermediate crude oil delivered at Cushing, Oklahoma.
The recent volatility in the natural gas market also provided the company a chance to bolster
its natural gas hedging position. For the remaining three quarters of 2011, Devon now has 900
million cubic feet per day protected through hedges at a weighted average floor price of
$5.24 per thousand cubic feet. In addition, the company has also initiated a gas hedging
position for 2012 with swap and collar contracts covering 390 million cubic feet per day at a
weighted average floor price of $4.93 per thousand cubic feet.
Strategic Repositioning Nearing Completion
Devon expects to receive regulatory approval for the $3.2 billion sale of its assets in
Brazil during the second quarter of 2011. Following the close of this transaction, Devon will
have substantially completed its planned International and Gulf of Mexico divestitures. In
aggregate, sales proceeds from the combined divestitures will exceed $10 billion with
after-tax proceeds approximating $8 billion.
In accordance with accounting standards, Devon has reclassified the assets, liabilities, and
results of its international segment as discontinued operations for all accounting periods
presented in this release. Although revenues and expenses for prior periods were
reclassified, previously reported net earnings were not impacted. Included with this release
is a table of revenues, expenses, production categories, and the amounts reclassified as
discontinued operations for each period presented.
Items Excluded from Published Earnings Estimates
Devon’s reported net earnings include items of income and expense that are typically excluded
by securities analysts in their published estimates of the company’s financial results. These
items and their effects upon reported earnings for the first quarter of 2011 were as follows:
Items affecting continuing operations:
| • | A change in the fair value of oil, gas and NGL derivative instruments decreased first-quarter earnings by $254 million pre-tax ($166 million after tax). | |
| • | The reversal of previously accrued restructuring costs increased first-quarter earnings by $5 million pre-tax ($3 million after tax). | |
| • | A change in fair value of interest-rate and other financial instruments increased first-quarter earnings by $1 million pre-tax ($1 million after tax). |
Items affecting discontinued operations:
| • | The decision to divest international assets generated financial benefits that increased first-quarter earnings by $10 million pre-tax ($6 million after tax). | |
| • | Restructuring costs decreased first-quarter earnings by $6 million pre-tax ($3 million after tax). |
The following tables summarize the effects of these items on first-quarter 2011 earnings,
income taxes and cash flow.
Page 3 of 12
Summary of Items Typically Excluded by Securities Analysts (in millions)
Continuing Operations — First Quarter 2011
| Pre-tax | After-tax | Cash Flow Before | ||||||||||||||||||||||
| Earnings | Income Tax Effect | Earnings | Balance Sheet | |||||||||||||||||||||
| Effect | Current | Deferred | Total | Effect | Changes Effect | |||||||||||||||||||
Oil, gas, and NGL derivatives |
$ | (254 | ) | — | (88 | ) | (88 | ) | (166 | ) | — | |||||||||||||
Income tax accrual adjustment |
— | (105 | ) | 105 | — | — | 105 | |||||||||||||||||
Restructuring costs |
5 | — | 2 | 2 | 3 | 3 | ||||||||||||||||||
Interest-rate and other financial instruments |
1 | — | — | — | 1 | — | ||||||||||||||||||
Totals |
$ | (248 | ) | (105 | ) | 19 | (86 | ) | (162 | ) | 108 | |||||||||||||
Discontinued Operations — First Quarter 2011
| Pre-tax | After-tax | Cash Flow Before | ||||||||||||||||||||||
| Earnings | Income Tax Effect | Earnings | Balance Sheet | |||||||||||||||||||||
| Effect | Current | Deferred | Total | Effect | Changes Effect | |||||||||||||||||||
Financial benefits of decision to divest assets |
$ | 10 | — | 4 | 4 | 6 | — | |||||||||||||||||
Restructuring costs |
$ | (6 | ) | (3 | ) | — | (3 | ) | (3 | ) | (3 | ) | ||||||||||||
Totals |
$ | 4 | (3 | ) | 4 | 1 | 3 | (3 | ) | |||||||||||||||
In aggregate, these items decreased first-quarter 2011 net earnings by $159 million, or
$0.37 per common share ($0.37 cents per diluted share). These items and their
associated tax effects increased first-quarter 2011 cash flow before balance sheet changes by
$105 million.
Conference Call to be Webcast TodayDevon will discuss its first-quarter 2011 financial and
operating results in a conference call webcast today. The webcast will begin at 10 a.m. Central
Time (11 a.m. Eastern Time). The webcast may be accessed from Devon’s internet home page at
www.devonenergy.com.
This press release includes “forward-looking statements” as defined by the Securities and
Exchange Commission. Such statements are those concerning strategic plans, expectations and
objectives for future operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or developments that the company
expects, believes or anticipates will or may occur in the future are forward-looking statements.
Such statements are subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the company. Statements regarding future drilling and production are subject
to all of the risks and uncertainties normally incident to the exploration for and development and
production of oil and gas. These risks include, but are not limited to the volatility of oil,
natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves;
drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned
that any such statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking statements. The
forward-looking statements in this press release are made as of the date of this press release,
even if subsequently made available by Devon on its website or otherwise. Devon does not undertake
any obligation to update the forward-looking statements as a result of new information, future
events or otherwise.
The United States Securities and Exchange Commission permits oil and gas companies, in their
filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC’s
definitions for such terms, and price and cost sensitivities for such reserves, and prohibits
disclosure of resources that do not constitute such reserves. This release may contain certain
terms, such as resource potential and exploration target size. These estimates are by their nature
more speculative than estimates of proved, probable and possible reserves and accordingly are
subject to substantially greater risk of being actually realized. The SEC guidelines strictly
prohibit us from including these estimates in filings with the SEC. U.S. investors are urged to
consider closely the disclosure in our Form 10-K for the fiscal year ended December 31, 2010,
available from us at Devon Energy Corporation, Attn. Investor Relations, 20 North Broadway,
Oklahoma City, OK 73102. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or
from the SEC’s website at www.sec.gov.
Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil
and gas exploration and production. Devon is a leading U.S.-based independent oil and gas producer
and is included in the S&P 500 Index. For more information about Devon, please visit our website at
www.devonenergy.com.
Page 4 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION (net of royalties)
Excludes discontinued operations
Excludes discontinued operations
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Total Period Production |
||||||||
Natural Gas (Bcf) |
||||||||
U.S. Onshore |
176.8 | 165.9 | ||||||
Canada |
51.2 | 50.8 | ||||||
North American Onshore |
228.0 | 216.7 | ||||||
U.S. Offshore |
— | 9.8 | ||||||
Total Natural Gas |
228.0 | 226.5 | ||||||
Oil (MMBbls) |
||||||||
U.S. Onshore |
3.6 | 3.0 | ||||||
Canada |
6.5 | 6.4 | ||||||
North American Onshore |
10.1 | 9.4 | ||||||
U.S. Offshore |
— | 1.1 | ||||||
Total Oil |
10.1 | 10.5 | ||||||
Natural Gas Liquids (MMBbls) |
||||||||
U.S. Onshore |
7.6 | 6.5 | ||||||
Canada |
0.9 | 0.9 | ||||||
North American Onshore |
8.5 | 7.4 | ||||||
U.S. Offshore |
— | 0.2 | ||||||
Total Natural Gas Liquids |
8.5 | 7.6 | ||||||
Oil Equivalent (MMBoe) |
||||||||
U.S. Onshore |
40.7 | 37.1 | ||||||
Canada |
15.9 | 15.7 | ||||||
North American Onshore |
56.6 | 52.8 | ||||||
U.S. Offshore |
— | 3.0 | ||||||
Total Oil Equivalent |
56.6 | 55.8 | ||||||
Average Daily Production |
||||||||
Natural Gas (MMcf) |
||||||||
U.S. Onshore |
1,964.1 | 1,842.9 | ||||||
Canada |
568.9 | 564.1 | ||||||
North American Onshore |
2,533.0 | 2,407.0 | ||||||
U.S. Offshore |
— | 109.3 | ||||||
Total Natural Gas |
2,533.0 | 2,516.3 | ||||||
Oil (MBbls) |
||||||||
U.S. Onshore |
40.7 | 33.0 | ||||||
Canada |
71.9 | 70.8 | ||||||
North American Onshore |
112.6 | 103.8 | ||||||
U.S. Offshore |
— | 12.9 | ||||||
Total Oil |
112.6 | 116.7 | ||||||
Natural Gas Liquids (MBbls) |
||||||||
U.S. Onshore |
84.1 | 72.5 | ||||||
Canada |
9.9 | 9.8 | ||||||
North American Onshore |
94.0 | 82.3 | ||||||
U.S. Offshore |
— | 1.9 | ||||||
Total Natural Gas Liquids |
94.0 | 84.2 | ||||||
Oil Equivalent (MBoe) |
||||||||
U.S. Onshore |
452.2 | 412.7 | ||||||
Canada |
176.6 | 174.7 | ||||||
North American Onshore |
628.8 | 587.4 | ||||||
U.S. Offshore |
— | 33.0 | ||||||
Total Oil Equivalent |
628.8 | 620.4 | ||||||
Page 5 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
BENCHMARK PRICES
(average prices)
(average prices)
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Natural Gas ($/Mcf) — Henry Hub |
$ | 4.11 | $ | 5.30 | ||||
Oil ($/Bbl) — West Texas Intermediate (Cushing) |
$ | 94.11 | $ | 78.54 | ||||
Quarter Ended March 31, 2011
| Oil | Gas | NGLs | Total | |||||||||||||
| (Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||
U.S. Onshore |
$ | 88.73 | $ | 3.50 | $ | 35.41 | $ | 29.77 | ||||||||
Canada |
$ | 60.86 | $ | 4.03 | $ | 54.18 | $ | 40.78 | ||||||||
North American Onshore |
$ | 70.95 | $ | 3.62 | $ | 37.39 | $ | 32.86 | ||||||||
U.S. Offshore |
$ | — | $ | — | $ | — | $ | — | ||||||||
Realized price without hedges |
$ | 70.95 | $ | 3.62 | $ | 37.39 | $ | 32.86 | ||||||||
Cash settlements |
$ | (0.48 | ) | $ | 0.39 | $ | 0.06 | $ | 1.52 | |||||||
Realized price, including
cash settlements |
$ | 70.47 | $ | 4.01 | $ | 37.45 | $ | 34.38 | ||||||||
Quarter Ended March 31, 2010
| Oil | Gas | NGLs | Total | |||||||||||||
| (Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||
U.S. Onshore |
$ | 74.81 | $ | 4.66 | $ | 34.22 | $ | 32.81 | ||||||||
Canada |
$ | 62.50 | $ | 5.08 | $ | 48.95 | $ | 44.50 | ||||||||
North American Onshore |
$ | 66.41 | $ | 4.76 | $ | 35.98 | $ | 36.29 | ||||||||
U.S. Offshore |
$ | 76.99 | $ | 5.63 | $ | 40.59 | $ | 51.07 | ||||||||
Realized price without hedges |
$ | 67.58 | $ | 4.80 | $ | 36.09 | $ | 37.07 | ||||||||
Cash settlements |
$ | — | $ | 0.42 | $ | — | $ | 1.71 | ||||||||
Realized price, including
cash settlements |
$ | 67.58 | $ | 5.22 | $ | 36.09 | $ | 38.78 | ||||||||
CAPITAL EXPENDITURES (in millions)
Quarter Ended March 31, 2011
Quarter Ended March 31, 2011
| U.S. Onshore | Canada | Total | ||||||||||
Capital Expenditures |
||||||||||||
Exploration |
$ | 103 | 154 | $ | 257 | |||||||
Development |
913 | 351 | 1,264 | |||||||||
Exploration and development capital |
$ | 1,016 | 505 | $ | 1,521 | |||||||
Capitalized G&A |
81 | |||||||||||
Capitalized interest |
11 | |||||||||||
Midstream capital |
77 | |||||||||||
Other capital |
92 | |||||||||||
Total Continuing Operations |
$ | 1,782 | ||||||||||
Discontinued operations |
19 | |||||||||||
Total Operations |
$ | 1,801 | ||||||||||
Page 6 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(in millions, except per share amounts)
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Revenues |
||||||||
Oil, gas, and NGL sales |
$ | 1,860 | $ | 2,070 | ||||
Oil, gas and NGL derivatives |
(168 | ) | 620 | |||||
Marketing and midstream revenues |
455 | 530 | ||||||
Total revenues |
2,147 | 3,220 | ||||||
Expenses and other, net |
||||||||
Lease operating expenses |
424 | 414 | ||||||
Taxes other than income taxes |
108 | 101 | ||||||
Marketing and midstream operating costs and expenses |
333 | 397 | ||||||
Depreciation, depletion and amortization of oil and gas properties |
442 | 426 | ||||||
Depreciation and amortization of non-oil and gas properties |
64 | 63 | ||||||
Accretion of asset retirement obligations |
23 | 26 | ||||||
General and administrative expenses |
130 | 138 | ||||||
Restructuring costs |
(5 | ) | — | |||||
Interest expense |
81 | 86 | ||||||
Interest-rate and other financial instruments |
(17 | ) | (15 | ) | ||||
Other, net |
(16 | ) | (4 | ) | ||||
Total expenses and other, net |
1,567 | 1,632 | ||||||
Earnings from continuing operations before income taxes |
580 | 1,588 | ||||||
Income tax (benefit) expense |
||||||||
Current |
(89 | ) | 299 | |||||
Deferred |
280 | 215 | ||||||
Total income tax expense |
191 | 514 | ||||||
Earnings from continuing operations |
389 | 1,074 | ||||||
Discontinued operations |
||||||||
Earnings from discontinued operations before income taxes |
30 | 137 | ||||||
Discontinued operations income tax expense |
3 | 19 | ||||||
Earnings from discontinued operations |
27 | 118 | ||||||
Net earnings |
$ | 416 | $ | 1,192 | ||||
Basic net earnings per share |
||||||||
Basic earnings from continuing operations per share |
$ | 0.91 | $ | 2.40 | ||||
Basic earnings from discontinued operations per share |
0.06 | 0.27 | ||||||
Basic net earnings per share |
$ | 0.97 | $ | 2.67 | ||||
Diluted net earnings per share |
||||||||
Diluted earnings from continuing operations per share |
$ | 0.91 | $ | 2.39 | ||||
Diluted earnings from discontinued operations per share |
0.06 | 0.27 | ||||||
Diluted net earnings per share |
$ | 0.97 | $ | 2.66 | ||||
Weighted average common shares outstanding |
||||||||
Basic |
428 | 447 | ||||||
Diluted |
430 | 448 | ||||||
Page 7 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions)
(in millions)
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,311 | $ | 2,866 | ||||
Short-term investments |
1,636 | 145 | ||||||
Accounts receivable |
1,269 | 1,202 | ||||||
Current assets held for sale |
533 | 563 | ||||||
Other current assets |
850 | 779 | ||||||
Total current assets |
5,599 | 5,555 | ||||||
Property and equipment, at cost: |
||||||||
Oil and gas, based on full cost accounting: |
||||||||
Subject to amortization |
58,028 | 56,012 | ||||||
Not subject to amortization |
3,508 | 3,434 | ||||||
Total oil and gas |
61,536 | 59,446 | ||||||
Other |
4,609 | 4,429 | ||||||
Total property and equipment, at cost |
66,145 | 63,875 | ||||||
Less accumulated depreciation, depletion and amortization |
(45,064 | ) | (44,223 | ) | ||||
Property and equipment, net |
21,081 | 19,652 | ||||||
Goodwill |
6,151 | 6,080 | ||||||
Long-term assets held for sale |
913 | 859 | ||||||
Other long-term assets |
806 | 781 | ||||||
Total Assets |
$ | 34,550 | $ | 32,927 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable — trade |
$ | 1,353 | $ | 1,411 | ||||
Revenues and royalties due to others |
639 | 538 | ||||||
Short-term debt |
3,003 | 1,811 | ||||||
Current liabilities associated with assets held for sale |
264 | 305 | ||||||
Other current liabilities |
495 | 518 | ||||||
Total current liabilities |
5,754 | 4,583 | ||||||
Long-term debt |
3,800 | 3,819 | ||||||
Asset retirement obligations |
1,468 | 1,423 | ||||||
Liabilities associated with assets held for sale |
34 | 26 | ||||||
Other long-term liabilities |
1,066 | 1,067 | ||||||
Deferred income taxes |
3,199 | 2,756 | ||||||
Stockholders’ equity: |
||||||||
Common stock |
43 | 43 | ||||||
Additional paid-in capital |
5,028 | 5,601 | ||||||
Retained earnings |
12,230 | 11,882 | ||||||
Accumulated other comprehensive earnings |
1,951 | 1,760 | ||||||
Treasury stock, at cost |
(23 | ) | (33 | ) | ||||
Total Stockholders’ Equity |
19,229 | 19,253 | ||||||
Total Liabilities and Stockholders’ Equity |
$ | 34,550 | $ | 32,927 | ||||
Common Shares Outstanding |
425 | 432 | ||||||
Page 8 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(in millions)
| Quarter Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
Cash Flows From Operating Activities |
||||||||
Net earnings |
$ | 416 | $ | 1,192 | ||||
Earnings from discontinued operations, net of tax |
(27 | ) | (118 | ) | ||||
Adjustments to reconcile earnings from continuing operations
to net cash provided by operating activities: |
||||||||
Depreciation, depletion and amortization |
506 | 489 | ||||||
Deferred income tax expense |
280 | 215 | ||||||
Unrealized change in fair value of financial instruments |
253 | (523 | ) | |||||
Other noncash charges |
36 | 56 | ||||||
Net cash from operating activities before balance sheet changes |
1,464 | 1,311 | ||||||
Net (increase) decrease in working capital |
(171 | ) | 50 | |||||
Increase in long-term other assets |
(4 | ) | (2 | ) | ||||
Decrease in long-term other liabilities |
(23 | ) | (18 | ) | ||||
Cash from operating activities — continuing operations |
1,266 | 1,341 | ||||||
Cash from operating activities — discontinued operations |
(6 | ) | 154 | |||||
Net cash from operating activities |
1,260 | 1,495 | ||||||
Cash Flows From Investing Activities |
||||||||
Capital expenditures |
(1,827 | ) | (1,247 | ) | ||||
Purchases of short-term investments |
(1,636 | ) | — | |||||
Redemptions of short-term investments |
145 | — | ||||||
Redemptions of long-term investments |
— | 8 | ||||||
Proceeds from property and equipment divestitures |
5 | 1,257 | ||||||
Other |
(9 | ) | — | |||||
Cash from investing activities — continuing operations |
(3,322 | ) | 18 | |||||
Cash from investing activities — discontinued operations |
(52 | ) | (107 | ) | ||||
Net cash from investing activities |
(3,374 | ) | (89 | ) | ||||
Cash Flows From Financing Activities |
||||||||
Net commercial paper borrowings (repayments) |
1,197 | (1,192 | ) | |||||
Proceeds from stock option exercises |
88 | 8 | ||||||
Repurchases of common stock |
(706 | ) | — | |||||
Dividends paid on common stock |
(68 | ) | (72 | ) | ||||
Excess tax benefits related to share-based compensation |
9 | 3 | ||||||
Net cash from financing activities |
520 | (1,253 | ) | |||||
Effect of exchange rate changes on cash |
20 | 18 | ||||||
Net (decrease) increase in cash and cash equivalents |
(1,574 | ) | 171 | |||||
Cash and cash equivalents at beginning of period
(including assets held for sale) |
3,290 | 1,011 | ||||||
Cash and cash equivalents at end of period (including assets held for sale) |
$ | 1,716 | $ | 1,182 | ||||
Page 9 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
DRILLING ACTIVITY
Gross wells drilled
Gross wells drilled
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Exploration Wells Drilled |
||||||||
U.S. Onshore |
2 | 4 | ||||||
Canada |
8 | 24 | ||||||
Total |
10 | 28 | ||||||
Exploration Wells Success Rate |
||||||||
U.S. Onshore |
100 | % | 100 | % | ||||
Canada |
100 | % | 96 | % | ||||
Total |
100 | % | 96 | % | ||||
Development Wells Drilled |
||||||||
U.S. Onshore |
268 | 297 | ||||||
Canada |
85 | 128 | ||||||
Total |
353 | 425 | ||||||
Development Wells Success Rate |
||||||||
U.S. Onshore |
99 | % | 100 | % | ||||
Canada |
100 | % | 100 | % | ||||
Total |
99 | % | 100 | % | ||||
Total Wells Drilled |
||||||||
U.S. Onshore |
270 | 301 | ||||||
Canada |
93 | 152 | ||||||
Total |
363 | 453 | ||||||
Total Wells Success Rate |
||||||||
U.S. Onshore |
99 | % | 100 | % | ||||
Canada |
100 | % | 99 | % | ||||
Total |
99 | % | 100 | % | ||||
COMPANY OPERATED RIGS
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Number of Company Operated Rigs Running |
||||||||
U.S. Onshore |
70 | 53 | ||||||
Canada |
5 | 6 | ||||||
Total |
75 | 59 | ||||||
KEY OPERATING STATISTICS BY REGION
Quarter Ended March 31, 2011
Quarter Ended March 31, 2011
| Avg. Production | Operated Rigs at | Gross Wells | ||||||||||
| (MBOED) | March 31, 2011 | Drilled | ||||||||||
Barnett Shale |
202.8 | 14 | 74 | |||||||||
Canadian Oilsands — Jackfish / Pike |
29.6 | 1 | 7 | |||||||||
Cana-Woodford Shale |
27.0 | 23 | 43 | |||||||||
Granite Wash |
13.3 | 4 | 16 | |||||||||
Gulf Coast / East Texas |
71.8 | 7 | 19 | |||||||||
Lloydminster |
38.9 | — | 52 | |||||||||
Permian Basin |
44.1 | 17 | 72 | |||||||||
Rocky Mountains |
65.6 | 5 | 28 | |||||||||
Other |
135.7 | 4 | 52 | |||||||||
Total |
628.8 | 75 | 363 | |||||||||
Page 10 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION FROM DISCONTINUED OPERATIONS
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Production from Discontinued Operations |
||||||||
Oil (MMBbls) |
0.5 | 2.8 | ||||||
Natural Gas (Bcf) |
— | 0.5 | ||||||
Total Oil Equivalent (MMBoe) |
0.5 | 2.9 | ||||||
STATEMENTS OF DISCONTINUED OPERATIONS
(in millions)
(in millions)
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Revenues |
||||||||
Total operating revenues |
$ | 43 | $ | 212 | ||||
Expenses and other, net |
||||||||
Operating expenses |
26 | 78 | ||||||
Other, net |
(13 | ) | (3 | ) | ||||
Total expenses |
13 | 75 | ||||||
Earnings before income taxes |
30 | 137 | ||||||
Income tax expense |
||||||||
Current |
3 | 15 | ||||||
Deferred |
— | 4 | ||||||
Total income tax expense |
3 | 19 | ||||||
Earnings from discontinued operations |
$ | 27 | $ | 118 | ||||
Page 11 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
NON-GAAP FINANCIAL MEASURES
The United States Securities and Exchange Commission has adopted disclosure requirements for public
companies such as Devon concerning Non-GAAP financial measures. (GAAP refers to generally accepted
accounting principles). The company must reconcile the Non-GAAP financial measure to related GAAP
information. Cash flow before balance sheet changes is a Non-GAAP financial measure. Devon believes
cash flow before balance sheet changes is relevant because it is a measure of cash available to
fund the company’s capital expenditures, dividends and to service its debt. Cash flow before
balance sheet changes is also used by certain securities analysts as a measure of Devon’s financial
results.
RECONCILIATION TO GAAP INFORMATION
(in millions)
| Quarter Ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Net Cash Provided By Operating Activities (GAAP) |
$ | 1,260 | $ | 1,495 | ||||
Changes in assets and liabilities — continuing operations |
198 | (30 | ) | |||||
Changes in assets and liabilities — discontinued operations |
30 | (32 | ) | |||||
Cash flow before balance sheet changes (Non-GAAP) |
$ | 1,488 | $ | 1,433 | ||||
Devon believes that using net debt for the calculation of “net debt to adjusted
capitalization” provides a better measure than using debt. Devon defines net debt as debt less
cash, cash equivalents and short-term investments. Devon believes that netting these sources of
cash against debt provides a clearer picture of the future demands on cash to repay debt.
RECONCILIATION TO GAAP INFORMATION
(in millions)
(in millions)
| March 31, | ||||||||
| 2011 | 2010 | |||||||
Total debt (GAAP) |
$ | 6,803 | $ | 6,085 | ||||
Adjustments: |
||||||||
Cash and short-term investments |
3,352 | 1,182 | ||||||
Net debt (Non-GAAP) |
$ | 3,451 | $ | 4,903 | ||||
Total debt |
$ | 6,803 | $ | 6,085 | ||||
Stockholders’ equity |
19,229 | 16,955 | ||||||
Total capitalization (GAAP) |
$ | 26,032 | $ | 23,040 | ||||
Net debt |
$ | 3,451 | $ | 4,903 | ||||
Stockholders’ equity |
19,229 | 16,955 | ||||||
Adjusted capitalization (Non-GAAP) |
$ | 22,680 | $ | 21,858 | ||||
Page 12 of 12