EXHIBIT 99.1

 

		Devon Energy Corporation 333 West Sheridan Avenue Oklahoma City, OK 73102-5015

NEWS RELEASE

Devon Energy Reports Fourth-Quarter and Full-Year 2015 Results; Provides 2016 Capital and Production Outlook

 

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Delivered oil production growth of 26 percent from year-ago quarter

 

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Reduced field-level costs by nearly $400 million in 2015

 

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Maintained significant financial flexibility with nearly $4 billion of liquidity

 

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Decreased 2016 E&P capital spending outlook by 75 percent

 

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Reduced operating and G&A expense outlook by $800 million annually

 

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Adjusted quarterly dividend to improve cash flow by $320 million annually

OKLAHOMA CITY – Feb. 16, 2016 – Devon Energy Corp. (NYSE: DVN) today announced core earnings of $319 million, or $0.77 per diluted share, for the fourth quarter of 2015. On a reported basis, due to non-cash, asset-impairment charges, the Company had a net loss of $4.5 billion, or $11.12 per diluted share, for the fourth quarter of 2015.

Devon’s operating cash flow totaled $1.1 billion in the quarter, a 12 percent increase compared to the fourth quarter of 2014. For the full-year 2015, operating cash flows reached $5.4 billion. Combined with the $761 million of cash received from the sale of EnLink units and asset divestitures, Devon’s total cash inflows reached $6.1 billion for 2015.

“With the challenging industry conditions, Devon continues to be highly focused on delivering meaningful cost reductions and efficiency gains across our asset portfolio,” said Dave Hager, president and CEO. “These efforts drove down field-level operating costs nearly $400 million in 2015. Additionally, our drilling programs consistently generated top-tier industry results that exceeded type-curve expectations through higher production rates and rapidly declining capital costs.”

“Last year was also pivotal for Devon’s portfolio as we continued to sharpen our focus on the very best resource plays in North America,” said Hager. “In December, we announced material additions to our STACK and Powder River Basin positions, two of the best emerging plays in the U.S., and we announced our intent to divest of $2 billion to $3 billion of non-core E&P properties, as well as our 50 percent interest in the Access pipeline. These strategic actions will further strengthen our financial position and provide Devon with a resource-rich asset base able to generate differentiating value for many years.”

“Devon’s top priority in 2016 is to protect the balance sheet,” said Hager. “We are tailoring activity to current market conditions and are prepared to adjust capital plans throughout the year to ensure we balance capital investment with cash inflows. Additionally, we anticipate further enhancing our financial strength by utilizing upstream asset divestiture proceeds to reduce debt, have plans in place to reduce our operating and G&A costs by around $800 million annually, have significant flexibility around our capital program, and we are reducing our dividend by 75 percent. All these efforts are targeted at strengthening Devon’s financial position to take advantage of our top-tier assets when prices recover.”

Quarterly Dividend Adjusted

Devon today announced that its board of directors declared a quarterly cash dividend of $0.06 per share on the Company’s common stock for the second quarter of 2016. This compares to the previous quarterly dividend of $0.24 per share. The adjusted dividend is payable on June 30, 2016, to stockholders of record at the close of business on June 15, 2016.

 

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“We believe the decision to adjust the quarterly dividend is prudent given the current commodity price environment and the uncertain duration of this downturn,” commented Hager. “This action provides us additional flexibility to balance spending with cash flow, aligns with our priority of maintaining a strong balance sheet, and moves the dividend yield and payout ratios in line with historic norms. The adjusted dividend will improve Devon’s cash flow by approximately $320 million annually.”

Significant Financial Flexibility

Devon maintained its strong balance sheet and liquidity position during the fourth quarter. Pro forma for the closing of the Felix acquisition, which closed in early January, the Company had $3.9 billion of liquidity at year end, consisting of $1.5 billion of cash and $2.4 billion of capacity on its senior credit facility.

Devon exited 2015 with net debt, excluding non-recourse EnLink obligations, totaling $7.7 billion. The Company has managed its debt-maturity schedule to provide maximum flexibility with near-term liquidity and has no significant debt maturities until December 2018. The weighted-average cost of Devon’s outstanding debt is only 5 percent.

Core Assets Deliver Strong Production Results

Devon’s reported oil production averaged 278,000 barrels per day in the fourth quarter, a 16 percent increase compared to the fourth quarter of 2014. Of this amount, 247,000 barrels per day were from the Company’s core asset portfolio where investment will be focused going forward. Oil production from these core assets increased 26 percent year over year, driven by Delaware Basin and Rockies growth in the U.S. and the Jackfish 3 project in Canada.

Overall, net production from Devon’s core assets averaged 571,000 oil-equivalent barrels (Boe) per day during the fourth quarter, representing a 7 percent increase compared to the fourth quarter of 2014. With the strong growth in higher-margin production, oil is now the largest component of Devon’s product mix at 43 percent of total production.

Operations Report Highlights

For additional details on Devon’s E&P operations, please refer to the Company’s fourth-quarter 2015 operations report at www.devonenergy.com. Highlights from the report include:

 

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Delaware Basin delivered strong production growth

 

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Bone Spring drilling efficiencies drove lower well costs

 

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STACK play generated record-setting well results

 

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Meramec type curves continued to improve

 

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Eagle Ford cost savings enhanced returns

 

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Jackfish LOE declined nearly 60 percent from peak rates

Revenues Enhanced by Hedges and EnLink Profits

Revenue from oil, natural gas and natural gas liquids sales totaled $1.1 billion in the fourth quarter of 2015, with oil revenue accounting for nearly 70 percent of the total. Cash settlements related to oil and natural gas hedges increased revenue by more than $700 million, or approximately $12 per Boe, in the fourth quarter.

Devon’s midstream business generated operating profits of $210 million in the fourth quarter, bringing the full-year 2015 total to $840 million. The majority of this profitability was attributable to the Company’s investment in EnLink Midstream. For the full-year 2015, EnLink-related operating profits expanded by 8 percent compared to 2014.

 

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Field-Level Costs Decline Nearly $400 Million; Further Savings Expected in 2016

Field-level operating costs, which include both lease operating expenses (LOE) and production taxes, declined 20 percent compared to the fourth quarter of 2014 to $8.82 per Boe. For the full-year 2015, field-level operating costs were nearly $400 million lower compared to 2014.

The most significant operating cost savings came from LOE, which is Devon’s largest field-level cost. LOE declined to $479 million, or $7.66 per Boe in the fourth quarter. This represents a per-unit decrease of 18 percent compared to the fourth quarter of 2014.

Devon will continue to drive field-level operating costs lower across all regions of its portfolio in 2016. Led by additional LOE savings, the Company expects field-level costs to decline an incremental $300 million to $400 million for the full-year 2016.

Additional G&A Cost Reduction Initiatives Underway

Devon also realized significant general and administrative (G&A) cost savings in the fourth quarter. G&A expenses totaled $194 million, or $3.10 per Boe. This result represents a 25 percent decline in G&A year over year, saving nearly $60 million during the fourth quarter. This decrease was driven by lower employee-related costs.

The Company will continue to deliver meaningful G&A reductions in 2016 by reducing its cost structure to meet the needs of the business in the current commodity price environment.

Devon’s workforce reduction program, which includes G&A as well as operating personnel, will decrease Devon’s employee count by approximately 20 percent in the first quarter of 2016, bringing the total workforce reduction to more than 25 percent over the past 12 months. These workforce and non-personnel related cost reductions are expected to decrease G&A costs by approximately $400 million to $500 million on an annual basis, exclusive of reorganization charges, and are designed to maintain capacity to respond appropriately to increased activity levels when the commodity price environment improves.

Reorganization charges are expected to approximate $225 million to $275 million, with the majority projected to be incurred in the first quarter of 2016. Roughly one-quarter of the estimated restructuring charges are non-cash.

Reserve Base Shifting Toward Higher-Margin Liquids

Devon’s estimated proved reserves of oil, natural gas, and natural gas liquids were 2.2 billion Boe at Dec. 31, 2015, with proved developed reserves accounting for 83 percent of the total. Of this total, 1.9 billion Boe was attributable to Devon’s core asset portfolio, with oil and liquids increasing to 55 percent of the total.

During the year, the Company’s drilling programs added 118 million Boe of reserves through drilling (extensions and discoveries). About 90 percent of these additions resulted from oil-focused drilling in the U.S., led by successful drilling in the Delaware Basin and STACK.

Revisions reduced reserves by 444 million Boe. These adjustments were primarily driven by price revisions due to the lower commodity price environment. The Company’s risked recoverable resource was unaffected by these adjustments.

Acquisitions Closed and Divestiture Programs Advance

In December, Devon announced the acquisition of 80,000 net acres in the Anadarko Basin STACK play through its purchase of privately held Felix Energy. The Company also agreed to acquire 253,000 net acres in the Powder River Basin. Both acquisitions are now complete, with the Powder River transaction closing on Dec. 17, 2015, and the STACK transaction closing on Jan. 7, 2016.

 

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To further enhance the Company’s financial strength, Devon is monetizing midstream and select upstream assets with a target of $2 billion to $3 billion in divestiture proceeds in 2016.

The Company is negotiating a sale for its 50 percent interest in the Access Pipeline which services Devon’s thermal heavy oil operations in Canada. The Company expects to announce a sale of the pipeline in the first half of 2016.

Devon’s upstream divestitures will include up to 80,000 Boe per day of production from properties in the Midland Basin, East Texas and Mid-Continent region. Key assets within these regions include: 15,000 net undeveloped acres in Martin County, Texas, the southern Midland Wolfcamp, Carthage, Granite Wash and the Mississippi-Lime.

2016 Capital and Production Outlook

Detailed forward-looking guidance for the first quarter and full-year of 2016 is provided later in this release. With current industry conditions, Devon’s top priority is to protect its balance sheet and manage its capital program to be within cash flows.

In 2016, Devon’s E&P capital investment is estimated to range from $900 million to $1.1 billion, a decrease of 75 percent from 2015. Capitalized G&A and other non-E&P capital requirements are projected at approximately $300 million. Importantly, should commodity price volatility continue, the Company’s capital programs have significant flexibility because of minimal exposure to long-term service contracts, no long-cycle project commitments and negligible leasehold expiration issues.

Devon’s E&P investment in 2016 will be focused entirely on its core asset portfolio. This level of investment is expected to maintain relatively flat oil production from the Company’s core assets compared to the full-year 2015. Top-line production from core assets is expected to decline by 6 percent driven by lower gas volumes.

Non-GAAP Reconciliations

Pursuant to regulatory disclosure requirements, Devon is required to reconcile non-GAAP financial measures to the related GAAP information (GAAP refers to generally accepted accounting principles). Core earnings and net debt are non-GAAP financial measures referenced within this release. Reconciliations of these non-GAAP measures are provided later in this release.

Conference Call Webcast and Supplemental Earnings Materials

Please note that as soon as practicable today, Devon will post an operations report to its website at www.devonenergy.com. The Company’s fourth-quarter conference call will be held at 10 a.m. Central (11 a.m. Eastern) on Wednesday, Feb. 17, 2016, and will serve primarily as a forum for analyst and investor questions and answers.

Forward-Looking Statements

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission (SEC). Such statements include those concerning strategic plans, expectations and objectives for future operations, and are often identified by use of the words “expects,” “believes,” “will,” “would,” “could,” “forecasts,” “projections,” “estimates,” “plans,” “expectations,” “targets,” “opportunities,” “potential,” “anticipates,” “outlook” and other similar terminology. 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 our business and operations 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, gas and NGL prices, including the currently depressed commodity price environment; uncertainties inherent in estimating oil, gas and NGL reserves; the

 

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extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in exploration and development activities; risks related to our hedging activities; counterparty credit risks; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks relating to our indebtedness; our ability to successfully complete mergers, acquisitions and divestitures; the extent to which insurance covers any losses we may experience; our limited control over third parties who operate our oil and gas properties; midstream capacity constraints and potential interruptions in production; competition for leases, materials, people and capital; cyberattacks targeting our systems and infrastructure; and any of the other risks and uncertainties identified in our Form 10-K and our other filings with the SEC. 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 SEC 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. Investors are urged to consider closely the disclosure in our Form 10-K, available at www.devonenergy.com. 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.

About Devon Energy

Devon Energy is a leading independent energy company engaged in finding and producing oil and natural gas. Based in Oklahoma City and included in the S&P 500, Devon operates in several of the most prolific oil and natural gas plays in the U.S. and Canada with an emphasis on a balanced portfolio. The Company is the second-largest oil producer among North American onshore independents. For more information, please visit www.devonenergy.com.

Investor Contacts

Howard Thill, 405-552-3693

Scott Coody, 405-552-4735

Shea Snyder, 405-552-4782

Media Contact

John Porretto, 405-228-7506

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

		Quarter Ended								Year Ended
PRODUCTION NET OF ROYALTIES		December 31,								December 31,
		2015				2014				2015				2014
Oil and bitumen (MBbls/d)
U.S. - Core			126				103				127				83
Canada - Core			121				93				111				82
Core assets			247				196				238				165
Other			31				43				37				49
Total			278				239				275				214
Natural gas liquids (MBbls/d)
U.S. - Core			108				106				104				97
Other			31				35				32				42
Total			139				141				136				139
Gas (MMcf/d)
U.S. - Core			1,274				1,376				1,284				1,344
Canada - Core			24				23				22				23
Core assets			1,298				1,399				1,306				1,367
Other			285				311				304				553
Total			1,583				1,710				1,610				1,920
Oil equivalent (MBoe/d)
U.S. - Core			445				438				445				403
Canada - Core			126				97				115				86
Core assets			571				535				560				489
Other			110				130				120				184
Total			681				665				680				673

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

KEY OPERATING STATISTICS BY REGION
		Quarter Ended December 31, 2015
		Avg. Production				Gross Wells				Operated Rigs at
		(MBoe/d)				Drilled				December 31, 2015
Delaware Basin			66				40				5
STACK			70				58				5
Eagle Ford			111				59				—
Rockies			23				17				—
Heavy Oil			126				37				—
Barnett Shale			175				5				—
Core assets			571				216				10
Other			110				33				—
Total			681				249				10

 

		Year Ended December 31, 2015
		Avg. Production				Gross Wells
		(MBoe/d)				Drilled
Delaware Basin			61				167
STACK			64				130
Eagle Ford			115				275
Rockies			23				65
Heavy Oil			115				79
Barnett Shale			182				5
Core assets			560				721
Other			120				129
Total			680				850

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

PRODUCTION TREND		2014				2015
		Quarter 4				Quarter 1				Quarter 2				Quarter 3				Quarter 4
Oil and bitumen (MBbls/d)
Delaware Basin			27				33				41				41				42
STACK			5				6				6				6				7
Eagle Ford			60				75				67				62				60
Rockies			9				12				16				16				16
Heavy Oil			93				104				98				121				121
Barnett Shale			2				1				1				1				1
Core assets			196				231				229				247				247
Other			43				41				41				35				31
Total			239				272				270				282				278
Natural gas liquids (MBbls/d)
Delaware Basin			8				8				10				8				11
STACK			26				22				16				22				23
Eagle Ford			18				23				24				26				27
Rockies			1				1				1				2				1
Barnett Shale			53				51				49				44				46
Core assets			106				105				100				102				108
Other			35				34				34				32				31
Total			141				139				134				134				139
Gas (MMcf/d)
Delaware Basin			66				66				75				70				82
STACK			262				230				221				216				235
Eagle Ford			127				143				146				154				151
Rockies			43				38				41				41				38
Heavy Oil			23				28				20				16				24
Barnett Shale			878				827				805				788				768
Core assets			1,399				1,332				1,308				1,285				1,298
Other			311				313				319				301				285
Total			1,710				1,645				1,627				1,586				1,583
Oil equivalent (MBoe/d)
Delaware Basin			46				52				64				61				66
STACK			76				65				59				64				70
Eagle Ford			99				122				114				113				111
Rockies			16				19				24				25				23
Heavy Oil			97				109				101				124				126
Barnett Shale			201				191				185				176				175
Core assets			535				558				547				563				571
Other			130				127				127				117				110
Total			665				685				674				680				681

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

 

BENCHMARK PRICES
(average prices)		Quarter 4								December YTD
		2015				2014				2015				2014
Oil ($/Bbl) - West Texas Intermediate (Cushing)		$	42.15			$	73.05			$	48.87			$	93.01
Natural Gas ($/Mcf) - Henry Hub		$	2.27			$	4.04			$	2.67			$	4.43
REALIZED PRICES		Quarter Ended December 31, 2015
		Oil /Bitumen				NGL				Gas				Total
		(Per Bbl)				(Per Bbl)				(Per Mcf)				(Per Boe)
United States		$	38.04			$	8.80			$	1.76			$	17.90
Canada (1)		$	18.03			$	N/M			$	0.84			$	17.62
Realized price without hedges		$	29.31			$	8.81			$	1.75			$	17.85
Cash settlements		$	24.36			$	—			$	0.70			$	11.59
Realized price, including cash settlements		$	53.67			$	8.81			$	2.45			$	29.44
		Quarter Ended December 31, 2014
		Oil /Bitumen				NGL				Gas				Total
		(Per Bbl)				(Per Bbl)				(Per Mcf)				(Per Boe)
United States		$	68.19			$	17.79			$	3.53			$	32.45
Canada (1)		$	45.71			$	54.32			$	0.87			$	44.01
Realized price without hedges		$	59.46			$	17.75			$	3.49			$	34.14
Cash settlements		$	10.34			$	0.04			$	0.20			$	4.23
Realized price, including cash settlements		$	69.80			$	17.79			$	3.69			$	38.37
		Year Ended December 31, 2015
		Oil /Bitumen				NGL				Gas				Total
		(Per Bbl)				(Per Bbl)				(Per Mcf)				(Per Boe)
United States		$	44.01			$	9.32			$	2.17			$	21.12
Canada (1)		$	25.14			$	N/M			$	0.67			$	24.46
Realized price without hedges		$	36.39			$	9.32			$	2.14			$	21.68
Cash settlements		$	20.72			$	—			$	0.57			$	9.74
Realized price, including cash settlements		$	57.11			$	9.32			$	2.71			$	31.42
		Year Ended December 31, 2014
		Oil /Bitumen				NGL				Gas				Total
		(Per Bbl)				(Per Bbl)				(Per Mcf)				(Per Boe)
United States		$	85.64			$	24.46			$	3.92			$	37.96
Canada (1)		$	60.05			$	50.52			$	3.64			$	53.11
Realized price without hedges		$	75.55			$	24.89			$	3.90			$	40.33
Cash settlements		$	1.16			$	0.02			$	(0.05	)		$	0.22
Realized price, including cash settlements		$	76.71			$	24.91			$	3.85			$	40.55

 

(1)	The reported Canadian gas volumes include volumes that are produced from certain of our leases and then transported to our Jackfish operations where the gas is used as fuel. However, the revenues and expenses related to this consumed gas are eliminated in our consolidated financials.

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)		Quarter Ended								Year Ended
		December 31,								December 31,
		2015				2014				2015				2014
Oil, gas and NGL sales		$	1,118			$	2,086			$	5,382			$	9,910
Oil, gas and NGL derivatives			77				1,960				503				1,989
Marketing and midstream revenues			1,691				1,949				7,260				7,667
Total operating revenues			2,886				5,995				13,145				19,566
Lease operating expenses			479				568				2,104				2,332
Marketing and midstream operating expenses			1,481				1,723				6,420				6,815
General and administrative expenses			194				252				855				847
Production and property taxes			73				108				388				535
Depreciation, depletion and amortization			641				910				3,129				3,319
Asset impairments			5,341				1,953				20,820				1,953
Restructuring costs			78				2				78				46
Gains and losses on asset sales			(2	)			—				—				(1,072	)
Other operating items			26				19				78				93
Total operating expenses			8,311				5,535				33,872				14,868
Operating income (loss)			(5,425	)			460				(20,727	)			4,698
Net financing costs			139				167				517				526
Other nonoperating items			(22	)			2				24				113
Earnings (loss) before income taxes			(5,542	)			291				(21,268	)			4,059
Income tax expense (benefit)			(630	)			670				(6,065	)			2,368
Net earnings (loss)			(4,912	)			(379	)			(15,203	)			1,691
Net earnings (loss) attributable to noncontrolling interests			(380	)			29				(749	)			84
Net earnings (loss) attributable to Devon		$	(4,532	)		$	(408	)		$	(14,454	)		$	1,607
Net earnings (loss) per share attributable to Devon:
Basic		$	(11.12	)		$	(1.01	)		$	(35.55	)		$	3.93
Diluted		$	(11.12	)		$	(1.01	)		$	(35.55	)		$	3.91
Weighted average common shares outstanding:
Basic			413				409				412				409
Diluted			413				409				412				411

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)		Quarter Ended								Year Ended
		December 31,								December 31,
		2015				2014				2015				2014
Cash flows from operating activities:
Net earnings (loss)		$	(4,912	)		$	(379	)		$	(15,203	)		$	1,691
Adjustments to reconcile net earnings (loss) to net cash from operating activities:
Depreciation, depletion and amortization			641				910				3,129				3,319
Asset impairments			5,341				1,953				20,820				1,953
Gains and losses on asset sales			(2	)			—				—				(1,072	)
Deferred income tax expense (benefit)			(480	)			1,091				(5,828	)			1,891
Derivatives and other financial instruments			(132	)			(2,027	)			(738	)			(2,070	)
Cash settlements on derivatives and financial instruments			775				305				2,688				104
Other noncash charges			102				100				537				457
Net change in working capital			(394	)			(716	)			(301	)			50
Change in long-term other assets			74				(306	)			285				(421	)
Change in long-term other liabilities			68				32				(6	)			79
Net cash from operating activities			1,081				963				5,383				5,981
Cash flows from investing activities:
Capital expenditures			(1,079	)			(1,975	)			(5,308	)			(6,988	)
Acquisitions of property, equipment and businesses			(577	)			(207	)			(1,107	)			(6,462	)
Divestitures of property and equipment			72				(82	)			107				5,120
Redemptions of long-term investments			—				—				—				57
Other			(8	)			2				(16	)			89
Net cash from investing activities			(1,592	)			(2,262	)			(6,324	)			(8,184	)
Cash flows from financing activities:
Borrowings of long-term debt, net of issuance costs			1,444				1,182				4,772				5,340
Repayments of long-term debt			(861	)			(2,924	)			(2,634	)			(7,189	)
Net short-term debt borrowings (repayments)			625				933				(307	)			(385	)
Stock option exercises			—				1				4				93
Sale of subsidiary units			—				—				654				—
Issuance of subsidiary units			12				338				25				410
Dividends paid on common stock			(100	)			(99	)			(396	)			(386	)
Distributions to noncontrolling interests			(68	)			(48	)			(254	)			(235	)
Other			(6	)			2				(16	)			(2	)
Net cash from financing activities			1,046				(615	)			1,848				(2,354	)
Effect of exchange rate changes on cash			(12	)			(14	)			(77	)			(29	)
Net change in cash and cash equivalents			523				(1,928	)			830				(4,586	)
Cash and cash equivalents at beginning of period			1,787				3,408				1,480				6,066
Cash and cash equivalents at end of period		$	2,310			$	1,480			$	2,310			$	1,480

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

CONSOLIDATED BALANCE SHEETS
(in millions)
		December 31,				December 31,
		2015				2014
Current assets:
Cash and cash equivalents		$	2,310			$	1,480
Accounts receivable			1,105				1,959
Derivatives, at fair value			43				1,993
Income taxes receivable			147				522
Other current assets			421				544
Total current assets			4,026				6,498
Property and equipment, at cost:
Oil and gas, based on full cost accounting:
Subject to amortization			78,190				75,738
Not subject to amortization			2,584				2,752
Total oil and gas			80,774				78,490
Midstream and other			10,380				9,695
Total property and equipment, at cost			91,154				88,185
Less accumulated depreciation, depletion and amortization			(72,086	)			(51,889	)
Property and equipment, net			19,068				36,296
Goodwill			5,032				6,303
Other long-term assets			1,406				1,540
Total assets		$	29,532			$	50,637
Current liabilities:
Accounts payable		$	906			$	1,400
Revenues and royalties payable			763				1,193
Short-term debt			976				1,432
Deferred income taxes			—				730
Other current liabilities			650				1,180
Total current liabilities			3,295				5,935
Long-term debt			12,137				9,830
Asset retirement obligations			1,370				1,339
Other long-term liabilities			853				948
Deferred income taxes			888				6,244
Stockholders’ equity:
Common stock			42				41
Additional paid-in capital			4,996				4,088
Retained earnings			1,781				16,631
Accumulated other comprehensive earnings			230				779
Total stockholders’ equity attributable to Devon			7,049				21,539
Noncontrolling interests			3,940				4,802
Total stockholders’ equity			10,989				26,341
Total liabilities and stockholders’ equity		$	29,532			$	50,637
Common shares outstanding			418				409

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
		Quarter Ended December 31, 2015
		Devon U.S. & Canada				EnLink				Eliminations				Total
Oil, gas and NGL sales		$	1,118			$	—			$	—			$	1,118
Oil, gas and NGL derivatives			77				—				—				77
Marketing and midstream revenues			805				1,066				(180	)			1,691
Total operating revenues			2,000				1,066				(180	)			2,886
Lease operating expenses			479				—				—				479
Marketing and midstream operating expenses			805				856				(180	)			1,481
General and administrative expenses			162				32				—				194
Production and property taxes			63				10				—				73
Depreciation, depletion and amortization			543				98				—				641
Asset impairments			4,577				764				—				5,341
Restructuring costs			78				—				—				78
Gains and losses on asset sales			—				(2	)			—				(2	)
Other operating items			26				—				—				26
Total operating expenses			6,733				1,758				(180	)			8,311
Operating loss			(4,733	)			(692	)			—				(5,425	)
Net financing costs			108				31				—				139
Other nonoperating items			(16	)			(6	)			—				(22	)
Loss before income taxes			(4,825	)			(717	)			—				(5,542	)
Income tax expense (benefit)			(632	)			2				—				(630	)
Net loss			(4,193	)			(719	)			—				(4,912	)
Net loss attributable to noncontrolling interests			—				(380	)			—				(380	)
Net loss attributable to Devon		$	(4,193	)		$	(339	)		$	—			$	(4,532	)

 

OTHER KEY STATISTICS
(in millions)		Quarter Ended December 31, 2015
		Devon U.S. & Canada				EnLink				Eliminations				Total
Cash flow statement related items:
Operating cash flow		$	946			$	135			$	—			$	1,081
Capital expenditures		$	(956	)		$	(123	)		$	—			$	(1,079	)
Acquisitions of property, equipment and businesses		$	(384	)		$	(193	)		$	—			$	(577	)
EnLink distributions received (paid) (1)		$	62			$	(130	)		$	—			$	(68	)
Balance sheet statement items:
Net debt(2)		$	7,731			$	3,072			$	—			$	10,803

 

(1)	Includes $(4) million adjustment for the sale of the Victoria Express Pipeline.

(2)	Net debt is a non-GAAP measure. For a reconciliation of the comparable GAAP measure, see “Non-GAAP Financial Measures” later in this release.

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

CAPITAL EXPENDITURES

(in millions)

		Quarter Ended December 31, 2015				Year Ended December 31, 2015
Exploration and development capital		$	856			$	3,899
Capitalized G&A and interest			99				426
Acquisitions			590				789
Midstream (1)			2				50
Corporate and other			25				91
Devon capital expenditures		$	1,572			$	5,255

 

(1)	Excludes $201 million and $978 million attributable to EnLink for the fourth quarter and year end of 2015, respectively.

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

COSTS INCURRED		Total
(in millions)		Year Ended December 31,
		2015				2014
Property acquisition costs:
Proved properties		$	195			$	5,210
Unproved properties			717				1,177
Exploration costs			587				322
Development costs			3,671				5,463
Costs Incurred		$	5,170			$	12,172
		United States
		Year Ended December 31,
		2015				2014
Property acquisition costs:
Proved properties		$	193			$	5,210
Unproved properties			634				1,176
Exploration costs			478				270
Development costs			3,269				4,400
Costs Incurred		$	4,574			$	11,056
		Canada
		Year Ended December 31,
		2015				2014
Property acquisition costs:
Proved properties		$	2			$	—
Unproved properties			83				1
Exploration costs			109				52
Development costs			402				1,063
Costs Incurred		$	596			$	1,116

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

RESERVES RECONCILIATION

		Total
		Oil / Bitumen (MMBbls)				Gas (Bcf)				NGL (MMBbls)				Total (MMBoe)
As of December 31, 2014:
Proved developed			415				6,984				486				2,065
Proved undeveloped			480				703				92				689
Total Proved			895				7,687				578				2,754
Revisions due to prices			54				(1,421	)			(119	)			(302	)
Revisions other than price			(134	)			(9	)			(6	)			(142	)
Extensions and discoveries			65				171				24				118
Purchase of reserves			5				17				1				9
Production			(101	)			(587	)			(50	)			(248	)
Sale of reserves			—				(37	)			—				(7	)
As of December 31, 2015:
Proved developed			444				5,707				411				1,806
Proved undeveloped			340				114				17				376
Total Proved			784				5,821				428				2,182
		United States
		Oil / Bitumen (MMBbls)				Gas (Bcf)				NGL (MMBbls)				Total (MMBoe)
As of December 31, 2014:
Proved developed			255				6,948				486				1,900
Proved undeveloped			96				703				92				305
Total Proved			351				7,651				578				2,205
Revisions due to prices			(53	)			(1,412	)			(119	)			(408	)
Revisions other than price			(52	)			(3	)			(6	)			(59	)
Extensions and discoveries			51				171				24				104
Purchase of reserves			5				17				1				9
Production			(60	)			(579	)			(50	)			(206	)
Sale of reserves			—				(37	)			—				(7	)
As of December 31, 2015:
Proved developed			203				5,694				411				1,563
Proved undeveloped			39				114				17				75
Total Proved			242				5,808				428				1,638
		Canada
		Oil / Bitumen (MMBbls)				Gas (Bcf)				NGL (MMBbls)				Total (MMBoe)
As of December 31, 2014:
Proved developed			160				36				—				165
Proved undeveloped			384				—				—				384
Total Proved			544				36				—				549
Revisions due to prices			107				(9	)			—				106
Revisions other than price			(82	)			(6	)			—				(83	)
Extensions and discoveries			14				—				—				14
Purchase of reserves			—				—				—				—
Production			(41	)			(8	)			—				(42	)
Sale of reserves			—				—				—				—
As of December 31, 2015:
Proved developed			241				13				—				243
Proved undeveloped			301				—				—				301
Total Proved			542				13				—				544

 

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DEVON ENERGY CORPORATION

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.

CORE EARNINGS

(in millions)

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. Accordingly, the Company also uses the measures of core earnings and core earnings per diluted share. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on fourth-quarter and total-year 2015 earnings.

 

		Quarter Ended December 31, 2015
		Before-Tax				After-Tax
Net loss attributable to Devon (GAAP)						$	(4,532	)
Asset impairments			5,341				3,767
Deferred tax asset valuation allowance and repatriation tax							1,001
Fair value changes in financial instruments and foreign currency			633				434
Restructuring costs			78				52
Core earnings before noncontrolling interest (non-GAAP)							722
Noncontrolling interest (1)							403
Core earnings attributable to Devon (non-GAAP)						$	319
Diluted share count							415
Core diluted earnings per share attributable to Devon (non-GAAP)						$	0.77

 

(1)	Noncontrolling interest adjustment relates to EnLink’s asset impairments.

 

		Year Ended December 31, 2015
		Before-Tax				After-Tax
Net loss attributable to Devon (GAAP)						$	(14,454	)
Asset impairments			20,820				13,923
Deferred tax asset valuation allowance and repatriation tax							1,001
Fair value changes in financial instruments and foreign currency			1,967				1,346
Restructuring costs			78				52
Core earnings before noncontrolling interest (non-GAAP)							1,868
Noncontrolling interest (1)							824
Core earnings attributable to Devon (non-GAAP)						$	1,044
Diluted share count							414
Core diluted earnings per share attributable to Devon (non-GAAP)						$	2.52

 

(1)	Noncontrolling interest adjustment relates to EnLink’s asset impairments.

 

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DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 

NET DEBT

(in millions)

Devon defines net debt as debt less cash and cash equivalents and net debt attributable to the consolidation of EnLink Midstream as presented in the following table. Devon believes that netting these sources of cash against debt and adjusting for EnLink net debt provides a clearer picture of the future demands on cash from Devon to repay debt.

 

		December 31, 2015
		Devon U.S. & Canada				EnLink				Devon Consolidated
Total debt (GAAP)		$	10,023			$	3,090			$	13,113
Less cash and cash equivalents			(2,292	)			(18	)			(2,310	)
Net debt (non-GAAP)		$	7,731			$	3,072			$	10,803

 

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DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE

 

PRODUCTION GUIDANCE		Quarter 1								Full Year
		Low				High				Low				High
Oil and bitumen (MBbls/d)
U.S. - core			125				130				105				110
Canada - core			120				125				122				127
Core assets			245				255				227				237
Other			27				32				22				27
Total			272				287				249				264
Natural gas liquids (MBbls/d)
U.S. - core			104				109				95				100
Other			25				30				22				27
Total			129				139				117				127
Gas (MMcf/d)
U.S. - core			1,275				1,315				1,150				1,200
Canada - core			14				17				14				17
Core assets			1,289				1,332				1,164				1,217
Other			248				268				222				242
Total			1,537				1,600				1,386				1,459
Oil equivalent (MBoe/d)
U.S. - core			442				458				392				410
Canada - core			122				128				124				130
Core assets			564				586				516				540
Other			93				107				81				94
Total			657				693				597				634

 

PRICE REALIZATIONS GUIDANCE		Quarter 1								Full Year
		Low				High				Low				High
Oil and bitumen - % of WTI
U.S.			83	%			93	%			85	%			95	%
Canada			17	%			27	%			29	%			39	%
NGL - realized price		$	4			$	7			$	5			$	9
Natural gas - % of Henry Hub			76	%			86	%			76	%			86	%

 

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DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE

 

OTHER GUIDANCE ITEMS		Quarter 1								Full Year
($ millions, except %)		Low				High				Low				High
Marketing & midstream operating profit		$	205			$	225			$	900			$	950
Lease operating expenses		$	450			$	480			$	1,800			$	1,900
General & administrative expenses		$	190			$	210			$	625			$	675
Production and property taxes		$	80			$	85			$	285			$	315
Depreciation, depletion and amortization		$	575			$	625			$	2,200			$	2,400
Other operating items		$	15			$	20			$	50			$	75
Net financing costs (1)		$	145			$	155			$	650			$	700
Current income tax rate			0	%			0	%			0	%			0	%
Deferred income tax rate			35	%			45	%			35	%			45	%
Total income tax rate			35	%			45	%			35	%			45	%
Net earnings attributable to noncontrolling interests		$	5			$	25			$	75			$	125

 

(1)	Full year 2016 includes $50 million of non-cash installment purchase obligations related to EnLink.

 

CAPITAL EXPENDITURES GUIDANCE		Quarter 1								Full Year
(in millions)		Low				High				Low				High
Exploration and development		$	375			$	425			$	900			$	1,100
Capitalized G&A			60				70				200				250
Capitalized interest			10				15				40				50
Midstream (2)			—				5				—				10
Corporate and other			5				10				30				35
Devon capital expenditures		$	450			$	525			$	1,170			$	1,445

 

(2)	Excludes capital expenditures related to EnLink.

 

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DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE

 

COMMODITY HEDGES

 

Oil Call Options Sold
Period		Volume (Bbls/d)		Weighted Average Price ($/Bbl)
Q1-Q4 2016		18,500		$73.18

 

Oil Basis Swaps
Period		Index		Volume (Bbls/d)		Weighted Average Differential to WTI ($/Bbl)
Q1-Q4 2016		Western Canadian Select		5,249		$ (13.67)

 

Natural Gas Price Swaps
Period		Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)
Q1-Q4 2016		54,650		$3.17
Natural Gas Call Options Sold
Period		Volume (MMBtu/d)		Weighted Average Price ($/MMBtu)
Q1-Q4 2016		400,000		$4.30

Devon’s oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devon’s natural gas derivatives settle against the Inside FERC first of the month Henry Hub index.

 

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