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8-K - FORM 8-K - DEVON ENERGY CORP/DE | d85446e8vk.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 $1.0 BILLION IN THIRD-QUARTER 2011; LIQUIDS PRODUCTION INCREASES 17
PERCENT
OKLAHOMA CITY November 2, 2011 Devon Energy Corporation (NYSE:DVN) today reported
net earnings of $1.0 billion for the quarter ended September 30, 2011, or $2.51 per common
share ($2.50 per diluted share). This compares with third-quarter 2010 net earnings of $2.1
billion, or $4.81 per common share ($4.79 per diluted share). The companys third-quarter
2010 earnings were enhanced by a one-time gain of $1.5 billion resulting from the divestiture
of assets in Azerbaijan.
Earnings Increased to $1.54 per Share Excluding Items Not Estimated by Analysts
Devons third-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 an unrealized gain on oil, gas and natural gas liquids derivatives of
$642 million before-tax ($415 million after-tax). Excluding these adjusting items, the
company earned $638 million or $1.54 per diluted share in the third quarter. The adjusting
items are discussed in more detail later in this news release.
Strong Liquids Production Growth and Higher Prices Drive Sales
Devon continued to deliver strong oil and natural gas liquids production growth in
the third quarter of 2011. In aggregate, liquids production averaged 226,000 barrels per day.
This represents a 17 percent increase in liquids production compared to the third quarter of
2010.
Total production of oil, natural gas and natural gas liquids averaged 661,000 oil-equivalent
barrels (Boe) per day in the third quarter of 2011, an eight percent increase over the
year-ago quarter.
Higher overall production and improved oil and natural gas liquids prices drove sales of oil,
natural gas and natural gas liquids to $2.1 billion in the third quarter of 2011. This
represents a 25 percent increase over the year-ago quarter.
Devons marketing and midstream operating profit rose 11 percent over the third quarter of
2010, to $138 million. The increase was attributable to higher natural gas liquids prices and
production.
Oil and Natural Gas Liquids Production Growth Leads Operating Highlights
| In the Permian Basin, Devon increased oil and natural gas liquids production 17 percent compared to the third quarter of 2010. Liquids production accounted for 75 percent of the 50,000 oil-equivalent barrels per day produced in the Permian Basin during the third quarter. | |
| At the Bone Spring play in the Permian Basin, the company added 11 new wells to production in the third quarter of 2011. Initial daily production from the 11 wells averaged 540 Boe per day per well. | |
| In Canada, average net production from Devons 100 percent-owned Jackfish 1 and Jackfish 2 projects reached a record 36,000 barrels per day during the third quarter. Devons net production from its Jackfish 2 oil sands project continued to ramp-up ahead of schedule. | |
| Also in Canada, Devon completed 19 exploration wells targeting oil and liquids-rich opportunities across its more than 4 million net acres in the Western Canadian Sedimentary Basin. The company tied in 10 of these wells to production in the third quarter. This activity was highlighted by results in the Ferrier area where the company commenced production on three Cardium wells with initial production averaging 770 Boe per day per well. |
Page 1 of 12
| Third-quarter production from the Cana-Woodford Shale increased 71 percent compared to the year-ago quarter. Net production averaged a record 200 million cubic feet of natural gas equivalent per day in the quarter, including 8,100 barrels per day of liquids. The companys Cana-Woodford gas processing facility remains on schedule to be fully operational in the fourth quarter. | |
| The companys Barnett Shale production totaled 1.3 billion cubic feet of natural gas equivalent per day in the third quarter, an eight percent increase over the third-quarter 2010. Liquids production in the Barnett Shale averaged 46,000 barrels per day, a 15 percent year-over-year increase. | |
| Devon brought 10 operated Granite Wash wells online in the third quarter. Initial production from these wells averaged 1,250 barrels of oil-equivalent per day, including 180 barrels of oil and 405 barrels of natural gas liquids per day. The company has an average working interest of 86 percent in these wells. |
Balance Sheet and Liquidity Remain Strong; Share Repurchase Plan on Schedule
Devon generated $1.9 billion of cash flow before balance sheet changes in the third quarter
of 2011, a six percent increase over the year-ago quarter. The company comfortably funded its
total capital program during the third quarter and returned nearly $800 million to its
shareholders in the form of stock buybacks and dividend payments.
In May 2010, Devon commenced a program to repurchase $3.5 billion of its common stock. During
the third-quarter 2011 the company repurchased $697 million of common stock. As of September
30, 2011, the company had repurchased $3.2 billion of stock and expects to complete the stock
repurchase program during the fourth quarter of 2011.
Devon exited the third quarter of 2011 with cash and short-term investments of $6.8 billion
and a net debt to adjusted capitalization ratio of 10 percent. Reconciliations of cash flow
before balance sheet changes, net debt and adjusted capitalization, which are non-GAAP
measures, are provided in this release.
Expenses in Line with Forecasts
The companys lease operating expenses (LOE) totaled $475 million in the third quarter. On a
unit of production basis, LOE increased six percent compared to the third quarter of 2010.
The increase in LOE reflects higher industry costs and the impact of a stronger Canadian
dollar.
Taxes other than income were $108 million in the third quarter of 2011. The year-over-year
increase of 14 percent was driven by higher production taxes resulting from the significant
increase in oil and natural gas liquids revenues.
Third-quarter 2011 general and administrative expenses (G&A) totaled $138 million, or $2.27
per Boe. G&A per Boe declined three percent compared to the third quarter of 2010.
Total depreciation, depletion and amortization expenses (DD&A) were $566 million in the third
quarter of 2011. Compared to the year-ago quarter, unit DD&A increased 14 percent, to $9.32
per Boe.
Interest expense for the third quarter was $104 million, a $21 million increase over the
third quarter of 2010. Higher average debt balances drove the increase.
Third-quarter income tax expense from continuing operations totaled $498 million, or 32
percent of pre-tax earnings. After adjusting for items generally excluded by securities
analysts, Devons third quarter tax rate was 35 percent of pre-tax earnings from continuing
operations.
Divestitures Impact Reported Financial and Operational Results
In accordance with accounting standards, Devon has classified the assets, liabilities, and
results of its international segment as discontinued operations for all accounting periods
presented in this release. Included with this release is a table of revenues, expenses,
production by category, and the amounts classified as discontinued operations for each period
presented.
Page 2 of 12
Items Typically Excluded from Analysts Published Earnings Estimates
Devons reported net earnings include items of income and expense that are typically excluded
by securities analysts in their published estimates of the companys financial results. These
items and their effects upon reported earnings for the third-quarter 2011 are described
below:
Items affecting continuing operations:
| A change in the fair value of oil, gas and NGL derivative instruments increased third-quarter earnings by $642 million pre-tax ($415 million after tax). | |
| Income tax accrual adjustments increased third-quarter earnings by $42 million. | |
| The reversal of previously accrued restructuring costs increased third-quarter earnings by $3 million pre-tax ($2 million after tax). | |
| A change in fair value of interest-rate and other financial instruments decreased third-quarter earnings by $92 million pre-tax ($59 million after tax). |
The following tables summarize the effects of these items on third-quarter 2011 earnings,
income taxes and cash flow.
Continuing Operations Third Quarter 2011
Pre-tax | After-tax | Cash Flow Before | ||||||||||||||||||||||
Earnings | Income Tax Effect | Earnings | Balance Sheet | |||||||||||||||||||||
(in millions) | Effect | Current | Deferred | Total | Effect | Changes Effect | ||||||||||||||||||
Oil, gas and NGL derivatives |
$ | 642 | | 227 | 227 | 415 | | |||||||||||||||||
Income tax accrual adjustment |
| (128 | ) | 86 | (42 | ) | 42 | 128 | ||||||||||||||||
Restructuring costs |
3 | | 1 | 1 | 2 | 2 | ||||||||||||||||||
Interest-rate and other financial instruments |
(92 | ) | | (33 | ) | (33 | ) | (59 | ) | | ||||||||||||||
Totals |
$ | 553 | (128 | ) | 281 | 153 | 400 | 130 | ||||||||||||||||
In aggregate, these items increased third-quarter 2011 net earnings by $400 million, or
$0.97 per common share ($0.96 cents per diluted share). These items and their
associated tax effects increased third-quarter 2011 cash flow before balance sheet changes by
$130 million.
Conference Call to be Webcast Today
Devon will discuss its third-quarter 2011 financial and operating results in a conference call that
will be webcast today at 10 a.m. Central Time (11 a.m. Eastern Time). The webcast may be accessed
from Devons internet home page at www.devonenergy.com.
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.
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 SECs
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
Page 3 of 12
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 SECs website at www.sec.gov.
Page 4 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION (net of royalties)
Excludes discontinued operations
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Total Period Production |
||||||||||||||||
Natural Gas (Bcf) |
||||||||||||||||
U.S. Onshore |
186.5 | 178.7 | 547.9 | 518.0 | ||||||||||||
Canada |
53.4 | 53.5 | 160.3 | 161.6 | ||||||||||||
North American Onshore |
239.9 | 232.2 | 708.2 | 679.6 | ||||||||||||
U.S. Offshore |
| | | 16.8 | ||||||||||||
Total Natural Gas |
239.9 | 232.2 | 708.2 | 696.4 | ||||||||||||
Oil (MMBbls) |
||||||||||||||||
U.S. Onshore |
4.3 | 3.5 | 12.2 | 9.8 | ||||||||||||
Canada |
7.2 | 6.0 | 20.2 | 19.1 | ||||||||||||
North American Onshore |
11.5 | 9.5 | 32.4 | 28.9 | ||||||||||||
U.S. Offshore |
| | | 1.9 | ||||||||||||
Total Oil |
11.5 | 9.5 | 32.4 | 30.8 | ||||||||||||
Natural Gas Liquids (MMBbls) |
||||||||||||||||
U.S. Onshore |
8.4 | 7.3 | 24.3 | 20.8 | ||||||||||||
Canada |
0.9 | 0.9 | 2.7 | 2.7 | ||||||||||||
North American Onshore |
9.3 | 8.2 | 27.0 | 23.5 | ||||||||||||
U.S. Offshore |
| | | 0.3 | ||||||||||||
Total Natural Gas Liquids |
9.3 | 8.2 | 27.0 | 23.8 | ||||||||||||
Oil Equivalent (MMBoe) |
||||||||||||||||
U.S. Onshore |
43.8 | 40.6 | 127.8 | 117.0 | ||||||||||||
Canada |
17.0 | 15.8 | 49.7 | 48.7 | ||||||||||||
North American Onshore |
60.8 | 56.4 | 177.5 | 165.7 | ||||||||||||
U.S. Offshore |
| | | 5.0 | ||||||||||||
Total Oil Equivalent |
60.8 | 56.4 | 177.5 | 170.7 | ||||||||||||
Average Daily Production |
||||||||||||||||
Natural Gas (MMcf) |
||||||||||||||||
U.S. Onshore |
2,027.7 | 1,941.9 | 2,007.1 | 1,897.3 | ||||||||||||
Canada |
580.0 | 581.6 | 587.1 | 592.0 | ||||||||||||
North American Onshore |
2,607.7 | 2,523.5 | 2,594.2 | 2,489.3 | ||||||||||||
U.S. Offshore |
| | | 61.5 | ||||||||||||
Total Natural Gas |
2,607.7 | 2,523.5 | 2,594.2 | 2,550.8 | ||||||||||||
Oil (MBbls) |
||||||||||||||||
U.S. Onshore |
46.7 | 38.5 | 44.6 | 36.0 | ||||||||||||
Canada |
78.3 | 65.0 | 74.1 | 69.9 | ||||||||||||
North American Onshore |
125.0 | 103.5 | 118.7 | 105.9 | ||||||||||||
U.S. Offshore |
| | | 7.0 | ||||||||||||
Total Oil |
125.0 | 103.5 | 118.7 | 112.9 | ||||||||||||
Natural Gas Liquids (MBbls) |
||||||||||||||||
U.S. Onshore |
91.0 | 79.6 | 89.0 | 76.2 | ||||||||||||
Canada |
10.2 | 9.6 | 10.0 | 9.9 | ||||||||||||
North American Onshore |
101.2 | 89.2 | 99.0 | 86.1 | ||||||||||||
U.S. Offshore |
| | | 1.2 | ||||||||||||
Total Natural Gas Liquids |
101.2 | 89.2 | 99.0 | 87.3 | ||||||||||||
Oil Equivalent (MBoe) |
||||||||||||||||
U.S. Onshore |
475.6 | 441.7 | 468.1 | 428.4 | ||||||||||||
Canada |
185.2 | 171.6 | 181.9 | 178.5 | ||||||||||||
North American Onshore |
660.8 | 613.3 | 650.0 | 606.9 | ||||||||||||
U.S. Offshore |
| | | 18.4 | ||||||||||||
Total Oil Equivalent |
660.8 | 613.3 | 650.0 | 625.3 | ||||||||||||
Page 5 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
BENCHMARK PRICES
(average prices)
(average prices)
Quarter Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Natural Gas ($/Mcf) Henry Hub |
$ | 4.20 | $ | 4.38 | $ | 4.21 | $ | 4.59 | ||||||||
Oil ($/Bbl) West Texas Intermediate (Cushing) |
$ | 89.55 | $ | 76.08 | $ | 95.42 | $ | 77.59 | ||||||||
Quarter Ended September 30, 2011 | Oil | Gas | NGLs | Total | ||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||
U.S. Onshore |
$ | 86.30 | $ | 3.71 | $ | 40.95 | $ | 32.11 | ||||||||
Canada |
$ | 61.70 | $ | 3.93 | $ | 54.85 | $ | 41.42 | ||||||||
North American Onshore |
$ | 70.89 | $ | 3.76 | $ | 42.35 | $ | 34.72 | ||||||||
U.S. Offshore |
$ | | $ | | $ | | $ | | ||||||||
Realized price without hedges |
$ | 70.89 | $ | 3.76 | $ | 42.35 | $ | 34.72 | ||||||||
Cash settlements |
$ | (0.13 | ) | $ | 0.40 | $ | 0.09 | $ | 1.58 | |||||||
Realized price, including cash settlements |
$ | 70.76 | $ | 4.16 | $ | 42.44 | $ | 36.30 | ||||||||
Oil | Gas | NGLs | Total | |||||||||||||
Quarter Ended September 30, 2010 | (Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | ||||||||||||
U.S. Onshore |
$ | 71.47 | $ | 3.65 | $ | 27.21 | $ | 27.18 | ||||||||
Canada |
$ | 56.89 | $ | 3.72 | $ | 43.89 | $ | 36.62 | ||||||||
North American Onshore |
$ | 62.31 | $ | 3.67 | $ | 29.01 | $ | 29.82 | ||||||||
U.S. Offshore |
$ | | $ | | $ | | $ | | ||||||||
Realized price without hedges |
$ | 62.31 | $ | 3.67 | $ | 29.01 | $ | 29.82 | ||||||||
Cash settlements |
$ | | $ | 1.00 | $ | | $ | 4.14 | ||||||||
Realized price, including cash settlements |
$ | 62.31 | $ | 4.67 | $ | 29.01 | $ | 33.96 | ||||||||
Oil | Gas | NGLs | Total | |||||||||||||
Nine Months Ended September 30, 2011 | (Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | ||||||||||||
U.S. Onshore |
$ | 91.18 | $ | 3.64 | $ | 39.05 | $ | 31.73 | ||||||||
Canada |
$ | 65.30 | $ | 4.01 | $ | 55.92 | $ | 42.61 | ||||||||
North American Onshore |
$ | 75.04 | $ | 3.73 | $ | 40.74 | $ | 34.78 | ||||||||
U.S. Offshore |
$ | | $ | | $ | | $ | | ||||||||
Realized price without hedges |
$ | 75.04 | $ | 3.73 | $ | 40.74 | $ | 34.78 | ||||||||
Cash settlements |
$ | (0.70 | ) | $ | 0.37 | $ | 0.07 | $ | 1.35 | |||||||
Realized price, including cash settlements |
$ | 74.34 | $ | 4.10 | $ | 40.81 | $ | 36.13 | ||||||||
Oil | Gas | NGLs | Total | |||||||||||||
Nine Months Ended September 30, 2010 | (Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | ||||||||||||
U.S. Onshore |
$ | 73.56 | $ | 3.91 | $ | 29.92 | $ | 28.83 | ||||||||
Canada |
$ | 57.90 | $ | 4.24 | $ | 46.34 | $ | 39.33 | ||||||||
North American Onshore |
$ | 63.22 | $ | 3.99 | $ | 31.81 | $ | 31.92 | ||||||||
U.S. Offshore |
$ | 77.81 | $ | 5.12 | $ | 38.22 | $ | 49.06 | ||||||||
Realized price without hedges |
$ | 64.12 | $ | 4.02 | $ | 31.90 | $ | 32.42 | ||||||||
Cash settlements |
$ | | $ | 0.83 | $ | | $ | 3.40 | ||||||||
Realized price, including cash settlements |
$ | 64.12 | $ | 4.85 | $ | 31.90 | $ | 35.82 | ||||||||
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 | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
||||||||||||||||
Oil, gas and NGL sales |
$ | 2,111 | $ | 1,683 | $ | 6,171 | $ | 5,535 | ||||||||
Oil, gas and NGL derivatives |
738 | 209 | 986 | 874 | ||||||||||||
Marketing and midstream revenues |
653 | 461 | 1,712 | 1,396 | ||||||||||||
Total revenues |
3,502 | 2,353 | 8,869 | 7,805 | ||||||||||||
Expenses and other, net |
||||||||||||||||
Lease operating expenses |
475 | 415 | 1,352 | 1,271 | ||||||||||||
Taxes other than income taxes |
108 | 95 | 336 | 288 | ||||||||||||
Marketing and midstream operating costs and expenses |
515 | 336 | 1,304 | 1,013 | ||||||||||||
Depreciation, depletion and amortization of oil and gas properties |
504 | 397 | 1,431 | 1,249 | ||||||||||||
Depreciation and amortization of non-oil and gas properties |
62 | 66 | 191 | 192 | ||||||||||||
Accretion of asset retirement obligation |
23 | 21 | 69 | 71 | ||||||||||||
General and administrative expenses |
138 | 131 | 403 | 399 | ||||||||||||
Restructuring costs |
(3 | ) | 63 | (2 | ) | 55 | ||||||||||
Interest expense |
104 | 83 | 270 | 280 | ||||||||||||
Interest-rate and other financial instruments |
40 | 56 | 33 | 121 | ||||||||||||
Other, net |
(2 | ) | (9 | ) | (14 | ) | (34 | ) | ||||||||
Total expenses and other, net |
1,964 | 1,654 | 5,373 | 4,905 | ||||||||||||
Earnings from continuing operations before income taxes |
1,538 | 699 | 3,496 | 2,900 | ||||||||||||
Income tax expense (benefit) |
||||||||||||||||
Current |
(248 | ) | (310 | ) | (301 | ) | 696 | |||||||||
Deferred |
746 | 580 | 2,184 | 349 | ||||||||||||
Total income tax expense |
498 | 270 | 1,883 | 1,045 | ||||||||||||
Earnings from continuing operations |
1,040 | 429 | 1,613 | 1,855 | ||||||||||||
Discontinued operations |
||||||||||||||||
Earnings from discontinued operations before income taxes |
(4 | ) | 1,710 | 2,584 | 2,320 | |||||||||||
Discontinued operations income tax expense (benefit) |
(2 | ) | 49 | | 187 | |||||||||||
Earnings (loss) from discontinued operations |
(2 | ) | 1,661 | 2,584 | 2,133 | |||||||||||
Net earnings |
$ | 1,038 | $ | 2,090 | $ | 4,197 | $ | 3,988 | ||||||||
Basic earnings from continuing operations per share |
$ | 2.51 | $ | 0.99 | $ | 3.83 | $ | 4.20 | ||||||||
Basic earnings from discontinued operations per share |
| 3.82 | 6.14 | 4.82 | ||||||||||||
Basic net earnings per share |
$ | 2.51 | $ | 4.81 | $ | 9.97 | $ | 9.02 | ||||||||
Diluted earnings from continuing operations per share |
$ | 2.50 | $ | 0.98 | $ | 3.82 | $ | 4.18 | ||||||||
Diluted earnings from discontinued operations per share |
| 3.81 | 6.11 | 4.81 | ||||||||||||
Diluted net earnings per share |
$ | 2.50 | $ | 4.79 | $ | 9.93 | $ | 8.99 | ||||||||
Weighted average common shares outstanding |
||||||||||||||||
Basic |
414 | 435 | 421 | 442 | ||||||||||||
Diluted |
415 | 436 | 423 | 444 |
Page 7 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions)
(in millions)
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 5,618 | $ | 2,866 | ||||
Short-term investments |
1,231 | 145 | ||||||
Accounts receivable |
1,430 | 1,202 | ||||||
Current assets held for sale |
26 | 563 | ||||||
Other current assets |
1,302 | 779 | ||||||
Total current assets |
9,607 | 5,555 | ||||||
Property and equipment, at cost: |
||||||||
Oil and gas, based on full cost accounting: |
||||||||
Subject to amortization |
59,331 | 56,012 | ||||||
Not subject to amortization |
4,061 | 3,434 | ||||||
Total oil and gas |
63,392 | 59,446 | ||||||
Other |
4,778 | 4,429 | ||||||
Total property and equipment, at cost |
68,170 | 63,875 | ||||||
Less accumulated depreciation, depletion and amortization |
(45,000 | ) | (44,223 | ) | ||||
Property and equipment, net |
23,170 | 19,652 | ||||||
Goodwill |
5,951 | 6,080 | ||||||
Long-term assets held for sale |
111 | 859 | ||||||
Other long-term assets |
1,027 | 781 | ||||||
Total Assets |
$ | 39,866 | $ | 32,927 | ||||
Liabilities and Stockholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable trade |
$ | 1,512 | $ | 1,411 | ||||
Revenues and royalties due to others |
659 | 538 | ||||||
Short-term debt |
3,288 | 1,811 | ||||||
Current liabilities associated with assets held for sale |
50 | 305 | ||||||
Other current liabilities |
522 | 518 | ||||||
Total current liabilities |
6,031 | 4,583 | ||||||
Long-term debt |
5,969 | 3,819 | ||||||
Asset retirement obligations |
1,460 | 1,423 | ||||||
Liabilities associated with assets held for sale |
2 | 26 | ||||||
Other long-term liabilities |
493 | 1,067 | ||||||
Deferred income taxes |
4,809 | 2,756 | ||||||
Stockholders equity: |
||||||||
Common stock |
41 | 43 | ||||||
Additional paid-in capital |
3,827 | 5,601 | ||||||
Retained earnings |
15,870 | 11,882 | ||||||
Accumulated other comprehensive earnings |
1,412 | 1,760 | ||||||
Treasury stock, at cost |
(48 | ) | (33 | ) | ||||
Total Stockholders Equity |
21,102 | 19,253 | ||||||
Total Liabilities and Stockholders Equity |
$ | 39,866 | $ | 32,927 | ||||
Common Shares Outstanding |
407 | 432 | ||||||
Page 8 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Cash Flows From Operating Activities |
||||||||||||||||
Net earnings |
$ | 1,038 | $ | 2,090 | $ | 4,197 | $ | 3,988 | ||||||||
Loss (earnings) from discontinued operations, net of tax |
2 | (1,661 | ) | (2,584 | ) | (2,133 | ) | |||||||||
Adjustments to reconcile earnings from continuing |
||||||||||||||||
operations to net cash provided by operating activities: |
||||||||||||||||
Depreciation, depletion and amortization |
566 | 463 | 1,622 | 1,441 | ||||||||||||
Deferred income tax expense |
746 | 580 | 2,184 | 349 | ||||||||||||
Unrealized change in fair value of financial instruments |
(587 | ) | 95 | (661 | ) | (136 | ) | |||||||||
Other noncash charges |
103 | 73 | 185 | 154 | ||||||||||||
Net cash from operating activities before balance sheet changes |
1,868 | 1,640 | 4,943 | 3,663 | ||||||||||||
Net (decrease) increase in working capital |
(219 | ) | (417 | ) | (308 | ) | 164 | |||||||||
Decrease in long-term other assets |
6 | 14 | 51 | 28 | ||||||||||||
(Decrease) increase in long-term other liabilities |
(258 | ) | 56 | (459 | ) | 57 | ||||||||||
Cash from operating activities continuing operations |
1,397 | 1,293 | 4,227 | 3,912 | ||||||||||||
Cash from operating activities discontinued operations |
7 | 51 | (13 | ) | 324 | |||||||||||
Net cash from operating activities |
1,404 | 1,344 | 4,214 | 4,236 | ||||||||||||
Cash Flows From Investing Activities |
||||||||||||||||
Capital expenditures |
(1,795 | ) | (1,572 | ) | (5,515 | ) | (4,793 | ) | ||||||||
Proceeds from property and equipment divestitures |
8 | 2 | 13 | 4,131 | ||||||||||||
Purchases of short-term investments |
(1,231 | ) | | (5,751 | ) | | ||||||||||
Redemptions of short-term investments |
3,367 | | 4,665 | | ||||||||||||
Redemptions of long-term investments |
9 | 2 | 10 | 20 | ||||||||||||
Other |
| (13 | ) | (33 | ) | (13 | ) | |||||||||
Cash from investing activities continuing operations |
358 | (1,581 | ) | (6,611 | ) | (655 | ) | |||||||||
Cash from investing activities discontinued operations |
(8 | ) | 1,869 | 3,162 | 2,298 | |||||||||||
Net cash from investing activities |
350 | 288 | (3,449 | ) | 1,643 | |||||||||||
Cash Flows From Financing Activities |
||||||||||||||||
Net commercial paper borrowings (repayments) |
856 | | 3,196 | (1,432 | ) | |||||||||||
Proceeds from borrowing of long-term debt, net of issuance costs |
2,221 | | 2,221 | | ||||||||||||
Debt repayments |
(1,760 | ) | | (1,760 | ) | (350 | ) | |||||||||
Proceeds from stock option exercises |
5 | 3 | 101 | 18 | ||||||||||||
Repurchases of common stock |
(697 | ) | (499 | ) | (1,987 | ) | (929 | ) | ||||||||
Dividends paid on common stock |
(69 | ) | (69 | ) | (209 | ) | (211 | ) | ||||||||
Excess tax benefits related to share-based compensation |
(1 | ) | 1 | 11 | 7 | |||||||||||
Net cash from financing activities |
555 | (564 | ) | 1,573 | (2,897 | ) | ||||||||||
Effect of exchange rate changes on cash |
(42 | ) | 14 | (10 | ) | 5 | ||||||||||
Net increase in cash and cash equivalents |
2,267 | 1,082 | 2,328 | 2,987 | ||||||||||||
Cash and cash equivalents at beginning of period |
3,351 | 2,916 | 3,290 | 1,011 | ||||||||||||
Cash and cash equivalents at end of period |
$ | 5,618 | $ | 3,998 | $ | 5,618 | $ | 3,998 | ||||||||
Page 9 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
COMPANY OPERATED RIGS
As of September 30, | ||||||||
2011 | 2010 | |||||||
Number of Company Operated Rigs Running |
||||||||
U.S. Onshore |
59 | 59 | ||||||
Canada |
11 | 8 | ||||||
KEY OPERATING STATISTICS BY REGION
Quarter Ended September 30, 2011
Quarter Ended September 30, 2011
Avg. Production | Operated Rigs at | Gross Wells | ||||||||||
(MBOED) | September 30, 2011 | Drilled | ||||||||||
| | | | ||||||||||||
Barnett Shale |
216.3 | 12 | 78 | |||||||||
Canadian Oilsands Jackfish / Pike |
35.6 | 1 | 7 | |||||||||
Cana-Woodford Shale |
33.3 | 17 | 58 | |||||||||
Granite Wash |
16.4 | 4 | 18 | |||||||||
Gulf Coast / East Texas |
69.5 | 5 | 19 | |||||||||
Lloydminster |
40.0 | 4 | 79 | |||||||||
Permian Basin |
49.9 | 19 | 65 | |||||||||
Rocky Mountains |
64.5 | 1 | 26 | |||||||||
Other |
135.3 | 7 | 27 | |||||||||
Total |
660.8 | 70 | 377 | |||||||||
CAPITAL EXPENDITURES (in millions)
Quarter Ended September 30, 2011
Quarter Ended September 30, 2011
U.S. Onshore | Canada | Total | ||||||||||
Capital Expenditures |
||||||||||||
Exploration |
$ | 252 | 67 | $ | 319 | |||||||
Development |
1,024 | 284 | 1,308 | |||||||||
Exploration and development capital |
$ | 1,276 | 351 | $ | 1,627 | |||||||
Capitalized G&A |
85 | |||||||||||
Capitalized interest |
13 | |||||||||||
Midstream capital |
87 | |||||||||||
Other capital |
139 | |||||||||||
Total Continuing Operations |
$ | 1,951 | ||||||||||
Discontinued operations |
12 | |||||||||||
Total Operations |
$ | 1,963 | ||||||||||
CAPITAL EXPENDITURES (in millions)
Nine Months Ended September 30, 2011
Nine Months Ended September 30, 2011
U.S. Onshore | Canada | Total | ||||||||||
Capital Expenditures |
||||||||||||
Exploration |
$ | 593 | 243 | $ | 836 | |||||||
Development |
2,935 | 908 | 3,843 | |||||||||
Exploration and development capital |
$ | 3,528 | 1,151 | $ | 4,679 | |||||||
Capitalized G&A |
247 | |||||||||||
Capitalized interest |
35 | |||||||||||
Midstream capital |
241 | |||||||||||
Other capital |
364 | |||||||||||
Total Continuing Operations |
$ | 5,566 | ||||||||||
Discontinued operations |
46 | |||||||||||
Total Operations |
$ | 5,612 | ||||||||||
Page 10 of 12
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION FROM DISCONTINUED OPERATIONS
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Production from Discontinued Operations |
||||||||||||||||
Oil (MMBbls) |
| 2.0 | 0.5 | 7.8 | ||||||||||||
Natural Gas (Bcf) |
| 0.4 | | 1.3 | ||||||||||||
Total Oil Equivalent (MMBoe) |
| 2.1 | 0.5 | 8.0 | ||||||||||||
STATEMENTS OF DISCONTINUED OPERATIONS
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Operating revenues |
$ | | $ | 139 | $ | 43 | $ | 573 | ||||||||
Expenses and other, net |
||||||||||||||||
Operating expenses |
| 42 | 33 | 176 | ||||||||||||
Gain on sale of oil and gas properties |
| (1,535 | ) | (2,546 | ) | (1,843 | ) | |||||||||
Other, net |
4 | (78 | ) | (28 | ) | (80 | ) | |||||||||
Total expenses and other, net |
4 | (1,571 | ) | (2,541 | ) | (1,747 | ) | |||||||||
Earnings before income taxes |
(4 | ) | 1,710 | 2,584 | 2,320 | |||||||||||
Income tax (benefit) expense |
(2 | ) | 49 | | 187 | |||||||||||
Earnings
from discontinued operations |
$ | (2 | ) | $ | 1,661 | $ | 2,584 | $ | 2,133 | |||||||
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 companys 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 Devons financial
results.
RECONCILIATION TO GAAP INFORMATION
Quarter Ended | ||||||||
September 30, | ||||||||
(in millions) | 2011 | 2010 | ||||||
Net Cash Provided By Operating Activities (GAAP) |
$ | 1,404 | $ | 1,344 | ||||
Changes in assets and liabilities continuing operations |
471 | 347 | ||||||
Changes in assets and liabilities discontinued operations |
1 | 76 | ||||||
Cash flow before balance sheet changes (Non-GAAP) |
$ | 1,876 | $ | 1,767 | ||||
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
and short-term investments. Devon believes that because cash and short-term investments can be used
to repay indebtedness, netting cash and short-term investments against debt provides a clearer
picture of the future demands on cash to repay debt.
RECONCILIATION TO GAAP INFORMATION
September 30, | ||||||||
(in millions) | 2011 | 2010 | ||||||
Total debt (GAAP) |
$ | 9,257 | $ | 5,629 | ||||
Adjustments: |
||||||||
Cash and short-term investments |
6,849 | 3,998 | ||||||
Net debt (Non-GAAP) |
$ | 2,408 | $ | 1,631 | ||||
Total debt |
$ | 9,257 | $ | 5,629 | ||||
Stockholders equity |
21,102 | 18,652 | ||||||
Total capitalization (GAAP) |
$ | 30,359 | $ | 24,281 | ||||
Net debt |
$ | 2,408 | $ | 1,631 | ||||
Stockholders equity |
21,102 | 18,652 | ||||||
Adjusted capitalization (Non-GAAP) |
$ | 23,510 | $ | 20,283 | ||||
Page 12 of 12