Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - DEVON ENERGY CORP/DE | d541284d8k.htm |
| EX-99.2 - EX-99.2 - DEVON ENERGY CORP/DE | d541284dex992.htm |
| EX-99.1 - EX-99.1 - DEVON ENERGY CORP/DE | d541284dex991.htm |
Exhibit 99.3
DEVON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED COMPREHENSIVE STATEMENTS OF EARNINGS
| Quarter ended December 31, 2017 | ||||||||||||
| Full Cost | Changes | Successful Efforts | ||||||||||
| (millions) | ||||||||||||
| Upstream revenues |
$ | 1,333 | — | $ | 1,333 | |||||||
| Marketing and midstream revenues |
2,650 | — | 2,650 | |||||||||
|
|
|
|
|
|||||||||
| Total revenues |
3,983 | — | 3,983 | |||||||||
|
|
|
|
|
|||||||||
| Production expenses |
463 | — | 463 | |||||||||
| Exploration expenses |
— | 171 | 171 | |||||||||
| Marketing and midstream expenses |
2,378 | — | 2,378 | |||||||||
| Depreciation, depletion and amortization |
417 | 111 | 528 | |||||||||
| Asset impairments |
8 | — | 8 | |||||||||
| Asset dispositions |
1 | (19 | ) | (18 | ) | |||||||
| General and administrative expenses |
174 | 48 | 222 | |||||||||
| Financing costs, net |
124 | 2 | 126 | |||||||||
| Other expenses |
15 | (10 | ) | 5 | ||||||||
|
|
|
|
|
|||||||||
| Total expenses |
3,580 | 303 | 3,883 | |||||||||
|
|
|
|
|
|||||||||
| Earnings before income taxes |
403 | (303 | ) | 100 | ||||||||
| Income tax benefit |
(191 | ) | (13 | ) | (204 | ) | ||||||
|
|
|
|
|
|||||||||
| Net earnings |
594 | (290 | ) | 304 | ||||||||
| Net earnings attributable to noncontrolling interests |
121 | — | 121 | |||||||||
|
|
|
|
|
|||||||||
| Net earnings attributable to Devon |
$ | 473 | (290 | ) | $ | 183 | ||||||
|
|
|
|
|
|||||||||
| Net earnings per share attributable to Devon: |
||||||||||||
| Basic |
$ | 0.90 | $ | (0.55 | ) | $ | 0.35 | |||||
| Diluted |
$ | 0.89 | $ | (0.54 | ) | $ | 0.35 | |||||
|
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 share attributable to Devon. 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 table below summarizes the effects of these items on fourth-quarter 2017 earnings. |
| |||||||||||
| Earnings attributable to Devon (GAAP) |
$ | 0.89 | $ | (0.54 | ) | $ | 0.35 | |||||
| Adjustments: |
||||||||||||
| Asset dispositions |
— | (0.02 | ) | (0.02 | ) | |||||||
| Asset and exploration impairments |
0.01 | 0.17 | 0.18 | |||||||||
| U.S. tax reform |
(0.21 | ) | — | (0.21 | ) | |||||||
| Deferred tax asset valuation allowance |
0.04 | 0.14 | 0.18 | |||||||||
| Fair value changes in financial instruments and foreign currency |
0.06 | — | 0.06 | |||||||||
| Legal entity restructuring |
(0.16 | ) | — | (0.16 | ) | |||||||
|
|
|
|
|
|||||||||
| Core earnings attributable to Devon (Non-GAAP)(1) |
$ | 0.63 | $ | (0.25 | ) | $ | 0.38 | |||||
|
|
|
|
|
|||||||||
| (1) This non-GAAP measure is not an alternative to the GAAP measure, and you should not consider this non-GAAP measure in isolation or as a substitute for analysis of our results as reported under GAAP. This measure is additional disclosure regarding the non-GAAP measures used, including reconciliations to their most directly comparable GAAP measure.
|
| |||||||||||
DEVON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Quarter Ended December 31, 2017 | ||||||||||||
| Full Cost | Changes | Successful Efforts | ||||||||||
| (millions) | ||||||||||||
| Cash flows from operating activities: |
||||||||||||
| Net earnings |
$ | 594 | (290 | ) | $ | 304 | ||||||
| Adjustments to reconcile net earnings to net cash from operating activities: |
||||||||||||
| Depreciation, depletion and amortization |
417 | 111 | 528 | |||||||||
| Exploratory dry hole expense and unproved leasehold impairments |
— | 139 | 139 | |||||||||
| Asset impairments |
8 | — | 8 | |||||||||
| Gains and losses on asset sales |
1 | (19 | ) | (18 | ) | |||||||
| Deferred income tax benefit |
(232 | ) | (13 | ) | (245 | ) | ||||||
| Commodity derivatives |
57 | — | 57 | |||||||||
| Cash settlements on commodity derivatives |
10 | — | 10 | |||||||||
| Other derivatives and financial instruments |
7 | — | 7 | |||||||||
| Cash settlements on other derivatives and financial instruments |
(6 | ) | — | (6 | ) | |||||||
| Asset retirement obligation accretion |
15 | — | 15 | |||||||||
| Share-based compensation |
36 | 11 | 47 | |||||||||
| Other |
26 | (10 | ) | 16 | ||||||||
| Net change in working capital |
(73 | ) | — | (73 | ) | |||||||
| Change in long-term other assets |
(58 | ) | — | (58 | ) | |||||||
| Change in long-term other liabilities |
(6 | ) | — | (6 | ) | |||||||
|
|
|
|
|
|||||||||
| Net cash from operating activities |
796 | (71 | ) | 725 | ||||||||
|
|
|
|
|
|||||||||
| Cash flows from investing activities: |
||||||||||||
| Capital expenditures |
(871 | ) | 72 | (799 | ) | |||||||
| Acquisitions of property, equipment and businesses |
(7 | ) | — | (7 | ) | |||||||
| Divestitures of property and equipment |
102 | (1 | ) | 101 | ||||||||
| Other |
(7 | ) | — | (7 | ) | |||||||
|
|
|
|
|
|||||||||
| Net cash from investing activities |
(783 | ) | 71 | (712 | ) | |||||||
|
|
|
|
|
|||||||||
| Cash flows from financing activities: |
||||||||||||
| Borrowings of long-term debt, net of issuance costs |
168 | — | 168 | |||||||||
| Repayments of long-term debt |
(168 | ) | — | (168 | ) | |||||||
| Issuance of subsidiary units |
15 | — | 15 | |||||||||
| Dividends paid on common stock |
(32 | ) | — | (32 | ) | |||||||
| Contributions from noncontrolling interests |
10 | — | 10 | |||||||||
| Distributions to noncontrolling interests |
(107 | ) | — | (107 | ) | |||||||
| Shares exchanged for tax withholdings |
(1 | ) | — | (1 | ) | |||||||
|
|
|
|
|
|||||||||
| Net cash from financing activities |
(115 | ) | — | (115 | ) | |||||||
|
|
|
|
|
|||||||||
| Effect of exchange rate changes on cash |
(6 | ) | — | (6 | ) | |||||||
|
|
|
|
|
|||||||||
| Net change in cash and cash equivalents |
(108 | ) | — | (108 | ) | |||||||
| Cash and cash equivalents at beginning of period |
2,781 | — | 2,781 | |||||||||
|
|
|
|
|
|||||||||
| Cash and cash equivalents at end of period |
$ | 2,673 | — | $ | 2,673 | |||||||
|
|
|
|
|
|||||||||
DEVON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, 2017 | ||||||||||||
| Full Cost | Changes | Successful Efforts | ||||||||||
| (millions, except share data) | ||||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 2,673 | — | $ | 2,673 | |||||||
| Accounts receivable |
1,670 | — | 1,670 | |||||||||
| Other current assets |
448 | — | 448 | |||||||||
|
|
|
|
|
|||||||||
| Total current assets |
4,791 | — | 4,791 | |||||||||
| Oil and gas property and equipment, based on successful efforts accounting, net |
9,702 | 3,616 | 13,318 | |||||||||
| Midstream and other property and equipment, net |
7,853 | — | 7,853 | |||||||||
|
|
|
|
|
|||||||||
| Total property and equipment, net |
17,555 | 3,616 | 21,171 | |||||||||
| Goodwill |
3,964 | (1,581 | ) | 2,383 | ||||||||
| Other long-term assets |
1,896 | — | 1,896 | |||||||||
|
|
|
|
|
|||||||||
| Total assets |
$ | 28,206 | 2,035 | $ | 30,241 | |||||||
|
|
|
|
|
|||||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable |
$ | 819 | — | $ | 819 | |||||||
| Revenues and royalties payable |
1,180 | — | 1,180 | |||||||||
| Short-term debt |
115 | — | 115 | |||||||||
| Other current liabilities |
1,201 | — | 1,201 | |||||||||
|
|
|
|
|
|||||||||
| Total current liabilities |
3,315 | — | 3,315 | |||||||||
|
|
|
|
|
|||||||||
| Long-term debt |
10,291 | — | 10,291 | |||||||||
| Asset retirement obligations |
1,113 | — | 1,113 | |||||||||
| Other long-term liabilities |
583 | — | 583 | |||||||||
| Deferred income taxes |
434 | 401 | 835 | |||||||||
| Equity: |
||||||||||||
| Common stock, $0.10 par value. Authorized 1.0 billion shares; issued 525 million shares in 2017 |
53 | — | 53 | |||||||||
| Additional paid-in capital |
7,206 | 127 | 7,333 | |||||||||
| Retained earnings |
44 | 658 | 702 | |||||||||
| Accumulated other comprehensive earnings |
317 | 849 | 1,166 | |||||||||
|
|
|
|
|
|||||||||
| Total stockholders’ equity attributable to Devon |
7,620 | 1,634 | 9,254 | |||||||||
| Noncontrolling interests |
4,850 | — | 4,850 | |||||||||
|
|
|
|
|
|||||||||
| Total equity |
12,470 | 1,634 | 14,104 | |||||||||
|
|
|
|
|
|||||||||
| Total liabilities and equity |
$ | 28,206 | 2,035 | $ | 30,241 | |||||||
|
|
|
|
|
|||||||||
DEVON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED COMPREHENSIVE STATEMENTS OF EARNINGS
| 2017, under Successful Efforts | ||||||||||||||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | ||||||||||||||||
| (millions, except per share amounts) | ||||||||||||||||||||
| Upstream revenues |
$ | 1,541 | $ | 1,332 | $ | 1,101 | $ | 1,333 | $ | 5,307 | ||||||||||
| Marketing and midstream revenues |
2,010 | 1,927 | 2,055 | 2,650 | 8,642 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total revenues |
3,551 | 3,259 | 3,156 | 3,983 | 13,949 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Production expenses |
457 | 455 | 448 | 463 | 1,823 | |||||||||||||||
| Exploration expenses |
95 | 57 | 57 | 171 | 380 | |||||||||||||||
| Marketing and midstream expenses |
1,814 | 1,714 | 1,824 | 2,378 | 7,730 | |||||||||||||||
| Depreciation, depletion and amortization |
528 | 506 | 512 | 528 | 2,074 | |||||||||||||||
| Asset impairments |
7 | — | 2 | 8 | 17 | |||||||||||||||
| Asset dispositions |
(3 | ) | (27 | ) | (169 | ) | (18 | ) | (217 | ) | ||||||||||
| General and administrative expenses |
233 | 214 | 203 | 222 | 872 | |||||||||||||||
| Financing costs, net |
128 | 116 | 128 | 126 | 498 | |||||||||||||||
| Other expenses |
(33 | ) | (20 | ) | (76 | ) | 5 | (124 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total expenses |
3,226 | 3,015 | 2,929 | 3,883 | 13,053 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Earnings before income taxes |
325 | 244 | 227 | 100 | 896 | |||||||||||||||
| Income tax expense (benefit) |
8 | (1 | ) | 15 | (204 | ) | (182 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net earnings |
317 | 245 | 212 | 304 | 1,078 | |||||||||||||||
| Net earnings attributable to noncontrolling interests |
14 | 26 | 19 | 121 | 180 | |||||||||||||||
|
|
|
|
|
|
|
|
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|
|||||||||||
| Net earnings attributable to Devon |
$ | 303 | $ | 219 | $ | 193 | $ | 183 | $ | 898 | ||||||||||
|
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|
|
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|
|
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|
|||||||||||
| Net earnings per share attributable to Devon: |
||||||||||||||||||||
| Basic |
$ | 0.58 | $ | 0.41 | $ | 0.37 | $ | 0.35 | $ | 1.71 | ||||||||||
| Diluted |
$ | 0.58 | $ | 0.41 | $ | 0.37 | $ | 0.35 | $ | 1.70 | ||||||||||
|
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 share attributable to Devon. 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 table below summarizes the effects of these items on 2017 quarterly earnings. |
| |||||||||||||||||||
| Earnings attributable to Devon (GAAP) |
$ | 0.58 | $ | 0.41 | $ | 0.37 | $ | 0.35 | $ | 1.70 | ||||||||||
| Adjustments: |
||||||||||||||||||||
| Asset dispositions |
(0.01 | ) | (0.03 | ) | (0.21 | ) | (0.02 | ) | (0.26 | ) | ||||||||||
| Asset and exploration impairments |
0.06 | 0.02 | 0.02 | 0.18 | 0.27 | |||||||||||||||
| U.S. tax reform |
— | — | — | (0.21 | ) | (0.21 | ) | |||||||||||||
| Deferred tax asset valuation allowance |
(0.19 | ) | (0.10 | ) | (0.04 | ) | 0.18 | (0.14 | ) | |||||||||||
| Fair value changes in financial instruments and foreign currency |
(0.31 | ) | (0.20 | ) | 0.07 | 0.06 | (0.38 | ) | ||||||||||||
| Legal entity restructuring |
— | — | — | (0.16 | ) | (0.16 | ) | |||||||||||||
| Early retirement of debt |
— | (0.01 | ) | — | — | (0.01 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Core earnings attributable to Devon (Non-GAAP)(1) |
$ | 0.13 | $ | 0.09 | $ | 0.21 | $ | 0.38 | $ | 0.81 | ||||||||||
|
|
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|
|
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|
|
|
|||||||||||
| (1) This non-GAAP measure is not an alternative to the GAAP measure, and you should not consider this non-GAAP measure in isolation or as a substitute for analysis of our results as reported under GAAP. This measure is additional disclosure regarding the non-GAAP measures used, including reconciliations to their most directly comparable GAAP measure. |
| |||||||||||||||||||
DEVON ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| 2017, under Successful Efforts | ||||||||||||||||||||
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | ||||||||||||||||
| (millions) | ||||||||||||||||||||
| Cash flows from operating activities: |
||||||||||||||||||||
| Net earnings |
$ | 317 | $ | 245 | $ | 212 | $ | 304 | $ | 1,078 | ||||||||||
| Adjustments to reconcile net earnings to net cash from operating activities: |
||||||||||||||||||||
| Depreciation, depletion and amortization |
528 | 506 | 512 | 528 | 2,074 | |||||||||||||||
| Exploratory dry hole expense and unproved leasehold impairments |
42 | 22 | 16 | 139 | 219 | |||||||||||||||
| Asset impairments |
7 | — | 2 | 8 | 17 | |||||||||||||||
| Gains and losses on asset sales |
(3 | ) | (27 | ) | (169 | ) | (18 | ) | (217 | ) | ||||||||||
| Deferred income tax benefit |
(12 | ) | (13 | ) | (24 | ) | (245 | ) | (294 | ) | ||||||||||
| Commodity derivatives |
(232 | ) | (126 | ) | 144 | 57 | (157 | ) | ||||||||||||
| Cash settlements on commodity derivatives |
8 | 11 | 24 | 10 | 53 | |||||||||||||||
| Other derivatives and financial instruments |
(9 | ) | 16 | 9 | 7 | 23 | ||||||||||||||
| Cash settlements on other derivatives and financial instruments |
(2 | ) | 2 | — | (6 | ) | (6 | ) | ||||||||||||
| Asset retirement obligation accretion |
17 | 14 | 16 | 15 | 62 | |||||||||||||||
| Share-based compensation |
55 | 53 | 43 | 47 | 198 | |||||||||||||||
| Other |
(6 | ) | (48 | ) | (84 | ) | 16 | (122 | ) | |||||||||||
| Net change in working capital |
15 | 72 | 7 | (73 | ) | 21 | ||||||||||||||
| Change in long-term other assets |
1 | 9 | 2 | (58 | ) | (46 | ) | |||||||||||||
| Change in long-term other liabilities |
20 | 2 | (10 | ) | (6 | ) | 6 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net cash from operating activities |
746 | 738 | 700 | 725 | 2,909 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Cash flows from investing activities: |
||||||||||||||||||||
| Capital expenditures |
(653 | ) | (649 | ) | (658 | ) | (799 | ) | (2,759 | ) | ||||||||||
| Acquisitions of property, equipment and businesses |
(20 | ) | (13 | ) | (6 | ) | (7 | ) | (46 | ) | ||||||||||
| Divestitures of property and equipment |
32 | 76 | 208 | 101 | 417 | |||||||||||||||
| Proceeds from sale of investment |
190 | — | — | — | 190 | |||||||||||||||
| Other |
(3 | ) | (1 | ) | (1 | ) | (7 | ) | (12 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
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|
|||||||||||
| Net cash from investing activities |
(454 | ) | (587 | ) | (457 | ) | (712 | ) | (2,210 | ) | ||||||||||
|
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|
|
|
|
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|
|||||||||||
| Cash flows from financing activities: |
||||||||||||||||||||
| Borrowings of long-term debt, net of issuance costs |
813 | 982 | 413 | 168 | 2,376 | |||||||||||||||
| Repayments of long-term debt |
(587 | ) | (792 | ) | (571 | ) | (168 | ) | (2,118 | ) | ||||||||||
| Payment of installment payable |
(250 | ) | — | — | — | (250 | ) | |||||||||||||
| Early retirement of debt |
— | (6 | ) | — | — | (6 | ) | |||||||||||||
| Issuance of subsidiary units |
55 | 17 | 414 | 15 | 501 | |||||||||||||||
| Dividends paid on common stock |
(32 | ) | (33 | ) | (30 | ) | (32 | ) | (127 | ) | ||||||||||
| Contributions from noncontrolling interests |
21 | 8 | 18 | 10 | 57 | |||||||||||||||
| Distributions to noncontrolling interests |
(81 | ) | (82 | ) | (84 | ) | (107 | ) | (354 | ) | ||||||||||
| Shares exchanged for tax withholdings |
(61 | ) | (3 | ) | (3 | ) | (1 | ) | (68 | ) | ||||||||||
| Other |
(2 | ) | — | — | — | (2 | ) | |||||||||||||
|
|
|
|
|
|
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|
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|
|||||||||||
| Net cash from financing activities |
(124 | ) | 91 | 157 | (115 | ) | 9 | |||||||||||||
|
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|
|
|
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|
|||||||||||
| Effect of exchange rate changes on cash |
(8 | ) | 8 | 12 | (6 | ) | 6 | |||||||||||||
|
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|
|
|
|
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|
|||||||||||
| Net change in cash and cash equivalents |
160 | 250 | 412 | (108 | ) | 714 | ||||||||||||||
| Cash and cash equivalents at beginning of period |
1,959 | 2,119 | 2,369 | 2,781 | 1,959 | |||||||||||||||
|
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|||||||||||
| Cash and cash equivalents at end of period |
$ | 2,119 | $ | 2,369 | $ | 2,781 | $ | 2,673 | $ | 2,673 | ||||||||||
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