Devon Energy Reports Third-Quarter 2014 Results
Download- Achieved record oil production exceeding company guidance
- Generated U.S. oil production growth of 77 percent year over year
- Increased full-year production outlook
- Improved pre-tax cash margin by 20 percent year over year
-
Closed
$2.3 billion asset sale further enhancing strong financial position
Adjusting for items securities analysts typically exclude from their
published estimates, the company earned
Devon generated cash flow from operations totaling
“Devon’s repositioned portfolio delivered outstanding growth in
production and margins in the third quarter,” said
“Based on our strong year-to-date results and the confidence we have in our portfolio, we are raising our full-year production growth outlook to 14 percent, up from our previous guidance of 11 percent,” Richels said. “And we are delivering this incremental production growth without any increase in capital spending.”
Oil Production Exceeds Expectations
In the third quarter, total production from Devon’s retained assets averaged 640,000 oil-equivalent barrels (Boe) per day. This result exceeded the company’s guidance range and represents a 19 percent increase year over year. Oil and liquids production accounted for 55 percent of the company’s retained asset production mix in the third quarter.
Devon delivered record oil production in
Growth in U.S. production was largely attributable to strong results
from Devon’s oil development plays. In the third quarter, the company’s
world-class Eagle Ford assets continued to deliver prolific well
results. Net production in the Eagle Ford increased to an average of
87,000 Boe per day in September, an increase of 76 percent compared to
Devon’s first month of ownership in
In
Devon Raises Full-Year Production Outlook
Detailed forward-looking guidance for the fourth quarter of 2014 is provided later in the release. Based on year-to-date results and Devon’s fourth-quarter outlook, most operating and financial metrics remain relatively unchanged compared to previous full-year guidance disclosures. A notable update is the company raising the midpoint of its 2014 production outlook from retained assets by 3 percent to approximately 617,000 Boe per day. This incremental production growth is expected to be delivered without additional capital spending.
Operations Report
For additional details on Devon’s core and emerging assets, please refer to the company’s third-quarter 2014 operations report at www.devonenergy.com. Highlights from the operations report include:
- Raising the Bone Spring type curve
- Eagle Ford on track to meet production targets
- Canadian heavy-oil results outperform guidance
-
Raising Cana-
Woodford type curve -
Powder River Basin delivers high-rate development wells
Oil Revenue Grows and Margins Expand
Revenue from oil, natural gas and natural gas liquids sales totaled
Devon’s marketing and midstream operating profit reached
The company’s strong cost-containment efforts were reflected in
third-quarter expense results. Pre-tax cash costs totaled
Overall, the benefits of higher-margin oil production and a low-cost
structure resulted in expanded cash margin for Devon. Pre-tax cash
margin reached
Balance Sheet and Liquidity Remain Strong
With investment-grade credit ratings and cash balances of
Subsequent to quarter end, in mid-October, Devon announced the
redemption of
Attractive Hedges Protect Future Cash Flow
With rapid growth in high-margin production, the company has taken
measures to protect its future cash flow. For the fourth quarter of
2014, the company has entered into various swap-and-collar contracts to
hedge approximately 60 percent of its expected oil production at an
average floor price of
For full-year 2015, the company has 138,000 barrels per day protected
through swaps and collars at an average floor price of
Portfolio Transformation Complete
On
Devon’s retained asset portfolio is now concentrated in some of the most attractive North American resource plays. This formidable and focused asset base creates a platform that supports competitive, high-margin growth for many years.
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 general accepted accounting principles). Adjusted earnings, net debt and pre-tax cash margin 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
additional information, consisting of an operations report and
management commentary with associated slides, to its website at www.devonenergy.com.
The company’s third-quarter 2014 conference call will be held at
Forward-Looking Statements
This press release includes "forward-looking statements" as defined
by the
The
About
Quarter Ended | Nine Months Ended | |||||||||||||||
PRODUCTION NET OF ROYALTIES | September 30, | September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Oil / Bitumen (MBbls/d) | ||||||||||||||||
United States | 136 | 77 | 121 | 70 | ||||||||||||
Canada | 80 | 73 | 78 | 79 | ||||||||||||
Retained assets | 216 | 150 | 199 | 149 | ||||||||||||
Divested assets | 3 | 15 | 7 | 16 | ||||||||||||
Total Oil / Bitumen | 219 | 165 | 206 | 165 | ||||||||||||
Natural Gas (MMcf/d) | ||||||||||||||||
United States | 1,690 | 1,656 | 1,656 | 1,666 | ||||||||||||
Canada | 26 | 17 | 24 | 29 | ||||||||||||
Retained assets | 1,716 | 1,673 | 1,680 | 1,695 | ||||||||||||
Divested assets | 138 | 710 | 311 | 720 | ||||||||||||
Total Natural Gas | 1,854 | 2,383 | 1,991 | 2,415 | ||||||||||||
Natural Gas Liquids (MBbls/d) | ||||||||||||||||
United States | 138 | 110 | 129 | 105 | ||||||||||||
Divested assets | 5 | 19 | 9 | 19 | ||||||||||||
Total Natural Gas Liquids | 143 | 129 | 138 | 124 | ||||||||||||
Oil Equivalent (Mboe/d) | ||||||||||||||||
United States | 556 | 462 | 526 | 453 | ||||||||||||
Canada | 84 | 76 | 82 | 84 | ||||||||||||
Retained assets | 640 | 538 | 608 | 537 | ||||||||||||
Divested assets | 31 | 153 | 68 | 155 | ||||||||||||
Total Oil Equivalent | 671 | 691 | 676 | 692 |
KEY OPERATING STATISTICS BY REGION | |||||||||||||
Quarter Ended September 30, 2014 | |||||||||||||
Avg. Production |
Gross Wells |
Operated Rigs at |
|||||||||||
Permian Basin | 98 | 81 | 21 | ||||||||||
Eagle Ford | 78 | 57 | 3 | ||||||||||
Canadian Heavy Oil | 84 | 57 | 5 | ||||||||||
Barnett Shale | 205 | 13 | - | ||||||||||
Anadarko Basin | 98 | 38 | 3 | ||||||||||
Mississippian-Woodford Trend | 21 | 52 | 6 | ||||||||||
Rockies | 22 | 17 | 4 | ||||||||||
Other Assets | 34 | - | - | ||||||||||
Retained Assets - Total | 640 | 315 | 42 | ||||||||||
Divested assets | 31 | - | - | ||||||||||
Devon - Total | 671 | 315 | 42 |
PRODUCTION TREND | 2013 | 2014 | |||||||||||||||||
Quarter 3 | Quarter 4 | Quarter 1 | Quarter 2 | Quarter 3 | |||||||||||||||
Oil (MBbls/d) | |||||||||||||||||||
Permian Basin | 49 | 50 | 55 | 55 | 56 | ||||||||||||||
Eagle Ford | - | - | 11 | 40 | 46 | ||||||||||||||
Canadian Heavy Oil | 73 | 81 | 78 | 77 | 80 | ||||||||||||||
Barnett Shale | 2 | 2 | 2 | 2 | 2 | ||||||||||||||
Anadarko Basin | 10 | 9 | 9 | 11 | 10 | ||||||||||||||
Mississippian-Woodford Trend | 5 | 8 | 10 | 9 | 10 | ||||||||||||||
Rockies | 8 | 8 | 8 | 8 | 10 | ||||||||||||||
Other assets | 3 | 3 | 2 | 3 | 2 | ||||||||||||||
Retained assets | 150 | 161 | 175 | 205 | 216 | ||||||||||||||
Divested assets | 15 | 16 | 15 | 4 | 3 | ||||||||||||||
Total | 165 | 177 | 190 | 209 | 219 | ||||||||||||||
Gas (MMcf/d) | |||||||||||||||||||
Permian Basin | 109 | 116 | 121 | 134 | 136 | ||||||||||||||
Eagle Ford | - | - | 22 | 86 | 107 | ||||||||||||||
Canadian Heavy Oil | 17 | 28 | 19 | 23 | 26 | ||||||||||||||
Barnett Shale | 1,009 | 995 | 931 | 932 | 896 | ||||||||||||||
Anadarko Basin | 297 | 294 | 281 | 309 | 323 | ||||||||||||||
Mississippian-Woodford Trend | 14 | 19 | 28 | 28 | 32 | ||||||||||||||
Rockies | 76 | 75 | 65 | 67 | 66 | ||||||||||||||
Other assets | 151 | 141 | 140 | 135 | 130 | ||||||||||||||
Retained assets | 1,673 | 1,668 | 1,607 | 1,714 | 1,716 | ||||||||||||||
Divested assets | 710 | 660 | 585 | 217 | 138 | ||||||||||||||
Total | 2,383 | 2,328 | 2,192 | 1,931 | 1,854 | ||||||||||||||
NGL (MBbls/d) | |||||||||||||||||||
Permian Basin | 15 | 16 | 16 | 18 | 19 | ||||||||||||||
Eagle Ford | - | - | 3 | 10 | 14 | ||||||||||||||
Canadian Heavy Oil | - | - | - | - | - | ||||||||||||||
Barnett Shale | 57 | 56 | 55 | 55 | 54 | ||||||||||||||
Anadarko Basin | 24 | 27 | 29 | 31 | 34 | ||||||||||||||
Mississippian-Woodford Trend | 1 | 3 | 5 | 5 | 6 | ||||||||||||||
Rockies | 1 | 1 | 1 | 1 | 1 | ||||||||||||||
Other assets | 12 | 11 | 10 | 10 | 10 | ||||||||||||||
Retained assets | 110 | 114 | 119 | 130 | 138 | ||||||||||||||
Divested assets | 19 | 18 | 16 | 6 | 5 | ||||||||||||||
Total | 129 | 132 | 135 | 136 | 143 | ||||||||||||||
Combined (MBoe/d) | |||||||||||||||||||
Permian Basin | 82 | 86 | 91 | 95 | 98 | ||||||||||||||
Eagle Ford | - | - | 17 | 65 | 78 | ||||||||||||||
Canadian Heavy Oil | 76 | 86 | 81 | 81 | 84 | ||||||||||||||
Barnett Shale | 226 | 224 | 213 | 212 | 205 | ||||||||||||||
Anadarko Basin | 83 | 85 | 85 | 93 | 98 | ||||||||||||||
Mississippian-Woodford Trend | 9 | 14 | 19 | 18 | 21 | ||||||||||||||
Rockies | 23 | 21 | 20 | 21 | 22 | ||||||||||||||
Other assets | 39 | 37 | 37 | 35 | 34 | ||||||||||||||
Retained assets | 538 | 553 | 563 | 620 | 640 | ||||||||||||||
Divested assets | 153 | 143 | 128 | 47 | 31 | ||||||||||||||
Total | 691 | 696 | 691 | 667 | 671 |
BENCHMARK PRICES | |||||||||||||||||||
(average prices) | Quarter 3 | September YTD | |||||||||||||||||
FY2014 | FY2013 | FY2014 | FY2013 | ||||||||||||||||
Natural Gas ($/Mcf) - Henry Hub | $ | 4.07 | $ | 3.58 | $ | 4.57 | $ | 3.67 | |||||||||||
Oil ($/Bbl) - West Texas Intermediate (Cushing) | $ | 97.26 | $ | 105.94 | $ | 99.67 | $ | 98.18 | |||||||||||
REALIZED PRICES | Quarter Ended September 30, 2014 | ||||||||||||||||||
Oil /Bitumen |
Gas | NGL | Total | ||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | ||||||||||||||||
United States | $ | 90.23 | $ | 3.61 | $ | 25.82 | $ | 38.90 | |||||||||||
Canada (1) | $ | 65.88 | $ | 0.76 | $ | 63.46 | $ | 63.23 | |||||||||||
Realized price without hedges | $ | 81.37 | $ | 3.57 | $ | 25.90 | $ | 41.92 | |||||||||||
Cash settlements | $ | (1.06 | ) | $ | 0.15 | $ | 0.01 | $ | 0.07 | ||||||||||
Realized price, including cash settlements | $ | 80.31 | $ | 3.72 | $ | 25.91 | $ | 41.99 | |||||||||||
Quarter Ended September 30, 2013 | |||||||||||||||||||
Oil /Bitumen | Gas | NGL | Total | ||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | ||||||||||||||||
United States | $ | 101.40 | $ | 3.08 | $ | 24.36 | $ | 32.72 | |||||||||||
Canada (1) | $ | 79.88 | $ | 2.67 | $ | 48.48 | $ | 49.65 | |||||||||||
Realized price without hedges | $ | 90.51 | $ | 3.00 | $ | 26.23 | $ | 36.84 | |||||||||||
Cash settlements | $ | (4.00 | ) | $ | 0.24 | $ | 0.02 | $ | (0.12 | ) | |||||||||
Realized price, including cash settlements | $ | 86.51 | $ | 3.24 | $ | 26.25 | $ | 36.72 | |||||||||||
Nine Months Ended September 30, 2014 | |||||||||||||||||||
Oil | Gas | NGL | Total | ||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | ||||||||||||||||
United States | $ | 92.55 | $ | 4.04 | $ | 26.80 | $ | 39.81 | |||||||||||
Canada (1) | $ | 65.54 | $ | 3.80 | $ | 50.57 | $ | 55.85 | |||||||||||
Realized price without hedges | $ | 81.84 | $ | 4.02 | $ | 27.34 | $ | 42.38 | |||||||||||
Cash settlements | $ | (2.43 | ) | $ | (0.12 | ) | $ | - | $ | (1.11 | ) | ||||||||
Realized price, including cash settlements | $ | 79.41 | $ | 3.90 | $ | 27.34 | $ | 41.27 | |||||||||||
Nine Months Ended September 30, 2013 | |||||||||||||||||||
Oil | Gas | NGL | Total | ||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | ||||||||||||||||
United States | $ | 93.94 | $ | 3.13 | $ | 25.12 | $ | 31.12 | |||||||||||
Canada (1) | $ | 60.14 | $ | 3.05 | $ | 46.54 | $ | 41.29 | |||||||||||
Realized price without hedges | $ | 75.48 | $ | 3.11 | $ | 26.83 | $ | 33.71 | |||||||||||
Cash settlements | $ | 0.02 | $ | 0.14 | $ | 0.08 | $ | 0.50 | |||||||||||
Realized price, including cash settlements | $ | 75.50 | $ | 3.25 | $ | 26.91 | $ | 34.21 | |||||||||||
(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.
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
(in millions, except per share amounts) | Quarter Ended | Nine Months Ended | |||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Oil, gas and NGL sales | $ | 2,588 | $ | 2,341 | $ | 7,824 | $ | 6,367 | |||||||||||||||
Oil, gas and NGL derivatives | 748 | (141 | ) | 29 | (95 | ) | |||||||||||||||||
Marketing and midstream revenues | 2,000 | 514 | 5,718 | 1,501 | |||||||||||||||||||
Total operating revenues | 5,336 | 2,714 | 13,571 | 7,773 | |||||||||||||||||||
Lease operating expenses | 584 | 600 | 1,764 | 1,684 | |||||||||||||||||||
Marketing and midstream operating expenses | 1,781 | 383 | 5,092 | 1,128 | |||||||||||||||||||
General and administrative expenses | 195 | 143 | 595 | 460 | |||||||||||||||||||
Production and property taxes | 140 | 115 | 427 | 353 | |||||||||||||||||||
Depreciation, depletion and amortization | 842 | 691 | 2,409 | 2,069 | |||||||||||||||||||
Asset impairments | - | 7 | - | 1,960 | |||||||||||||||||||
Restructuring costs | 2 | 4 | 44 | 50 | |||||||||||||||||||
Gains and losses on asset sales | - | 11 | (1,072 | ) | 11 | ||||||||||||||||||
Other operating items | 18 | 27 | 74 | 82 | |||||||||||||||||||
Total operating expenses | 3,562 | 1,981 | 9,333 | 7,797 | |||||||||||||||||||
Operating income (loss) | 1,774 | 733 | 4,238 | (24 | ) | ||||||||||||||||||
Net financing costs | 116 | 100 | 359 | 306 | |||||||||||||||||||
Other nonoperating items | 4 | (6 | ) | 111 | (4 | ) | |||||||||||||||||
Earnings (loss) before income taxes | 1,654 | 639 | 3,768 | (326 | ) | ||||||||||||||||||
Income tax expense (benefit) | 613 | 210 | 1,698 | (99 | ) | ||||||||||||||||||
Net earnings (loss) | 1,041 | 429 | 2,070 | (227 | ) | ||||||||||||||||||
Net earnings attributable to noncontrolling interests | 25 | - | 55 | - | |||||||||||||||||||
Net earnings (loss) attributable to Devon | $ | 1,016 | $ | 429 | $ | 2,015 | $ | (227 | ) | ||||||||||||||
Net earnings (loss) per share attributable to Devon: | |||||||||||||||||||||||
Basic | $ | 2.48 | $ | 1.06 | $ | 4.94 | $ | (0.57 | ) | ||||||||||||||
Diluted | $ | 2.47 | $ | 1.05 | $ | 4.91 | $ | (0.57 | ) | ||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | 409 | 406 | 408 | 406 | |||||||||||||||||||
Diluted | 411 | 407 | 410 | 407 |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||
Quarter ended September 30, 2014 | ||||||||||||||||||||||
Devon U.S. |
EnLink | Eliminations | Total | |||||||||||||||||||
Oil, gas and NGL sales | $ | 2,588 | $ | - | $ | - | $ | 2,588 | ||||||||||||||
Oil, gas and NGL derivatives | 748 | - | - | 748 | ||||||||||||||||||
Marketing and midstream revenues | 1,344 | 855 | (199 | ) | 2,000 | |||||||||||||||||
Total operating revenues | 4,680 | 855 | (199 | ) | 5,336 | |||||||||||||||||
Lease operating expenses | 584 | - | - | 584 | ||||||||||||||||||
Marketing and midstream expenses | 1,320 | 660 | (199 | ) | 1,781 | |||||||||||||||||
General and administrative expenses | 170 | 25 | - | 195 | ||||||||||||||||||
Production and property taxes | 132 | 8 | - | 140 | ||||||||||||||||||
Depreciation, depletion and amortization | 768 | 74 | - | 842 | ||||||||||||||||||
Restructuring costs | 2 | - | - | 2 | ||||||||||||||||||
Other operating items | 20 | (2 | ) | - | 18 | |||||||||||||||||
Total operating expenses | 2,996 | 765 | (199 | ) | 3,562 | |||||||||||||||||
Operating income | 1,684 | 90 | - | 1,774 | ||||||||||||||||||
Net financing costs | 102 | 14 | - | 116 | ||||||||||||||||||
Other nonoperating items | 12 | (8 | ) | - | 4 | |||||||||||||||||
Earnings before income taxes | 1,570 | 84 | - | 1,654 | ||||||||||||||||||
Income tax expense | 595 | 18 | - | 613 | ||||||||||||||||||
Net earnings | 975 | 66 | - | 1,041 | ||||||||||||||||||
Net earnings attributable to noncontrolling interests | - | 25 | - | 25 | ||||||||||||||||||
Net earnings attributable to Devon | $ | 975 | $ | 41 | $ | - | $ | 1,016 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
(in millions) | Quarter Ended | Nine Months | |||||||||||||||||||||
September 30, | Ended September 30, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net earnings (loss) | $ | 1,041 | $ | 429 | $ | 2,070 | $ | (227 | ) | ||||||||||||||
Adjustments to reconcile net earnings (loss) | |||||||||||||||||||||||
to net cash from operating activities: | |||||||||||||||||||||||
Depreciation, depletion and amortization | 842 | 691 | 2,409 | 2,069 | |||||||||||||||||||
Gains and losses on asset sales | - | 11 | (1,072 | ) | 11 | ||||||||||||||||||
Asset impairments | - | 7 | - | 1,960 | |||||||||||||||||||
Deferred income tax expense (benefit) | 23 | 260 | 800 | (181 | ) | ||||||||||||||||||
Derivatives and other financial instruments | (804 | ) | 168 | (43 | ) | 65 | |||||||||||||||||
Cash settlements on derivatives and financial instruments | 44 | (2 | ) | (201 | ) | 147 | |||||||||||||||||
Other noncash charges | 128 | 19 | 357 | 195 | |||||||||||||||||||
Net change in working capital | 296 | 24 | 766 | (104 | ) | ||||||||||||||||||
Change in long-term other assets | (38 | ) | (50 | ) | (115 | ) | (28 | ) | |||||||||||||||
Change in long-term other liabilities | 27 | 44 | 47 | 92 | |||||||||||||||||||
Net cash from operating activities | 1,559 | 1,601 | 5,018 | 3,999 | |||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Acquisitions of property, equipment and businesses |
(31 |
) |
- |
(6,255 |
) | - | |||||||||||||||||
Capital expenditures |
(1,672 |
) | (1,650 | ) |
(5,013 |
) | (5,219 | ) | |||||||||||||||
Proceeds from property and equipment divestitures | 2,260 | 282 | 5,202 | 316 | |||||||||||||||||||
Purchases of short-term investments | - | - | - | (1,076 | ) | ||||||||||||||||||
Redemptions of short-term investments | - | 869 | - | 3,419 | |||||||||||||||||||
Redemptions of long-term investments | - | - | 57 | - | |||||||||||||||||||
Other | 3 | 1 | 87 | 83 | |||||||||||||||||||
Net cash from investing activities | 560 | (498 | ) | (5,922 | ) | (2,477 | ) | ||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Proceeds from borrowings of long-term debt, net of issuance costs | 438 | - | 4,158 | - | |||||||||||||||||||
Net short-term debt repayments | (456 | ) | (82 | ) | (1,318 | ) | (1,577 | ) | |||||||||||||||
Long-term debt repayments | (275 | ) | - | (4,265 | ) | - | |||||||||||||||||
Proceeds from stock option exercises | 9 | - | 92 | 1 | |||||||||||||||||||
Proceeds from issuance of subsidiary units | 52 | - | 72 | - | |||||||||||||||||||
Dividends paid on common stock | (98 | ) | (89 | ) | (287 | ) | (259 | ) | |||||||||||||||
Distributions to noncontrolling interests | (46 | ) | - | (187 | ) | - | |||||||||||||||||
Other | (13 | ) | - | (4 | ) | 5 | |||||||||||||||||
Net cash from financing activities | (389 | ) | (171 | ) | (1,739 | ) | (1,830 | ) | |||||||||||||||
Effect of exchange rate changes on cash | (28 | ) | 25 | (15 | ) | (9 | ) | ||||||||||||||||
Net change in cash and cash equivalents | 1,702 | 957 | (2,658 | ) | (317 | ) | |||||||||||||||||
Cash and cash equivalents at beginning of period | 1,706 | 3,363 | 6,066 | 4,637 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 3,408 | $ | 4,320 | $ | 3,408 | $ | 4,320 |
CONSOLIDATED BALANCE SHEETS | |||||||||||
(in millions) | |||||||||||
September 30, | December 31, | ||||||||||
Current assets: | 2014 | 2013 | |||||||||
Cash and cash equivalents | $ | 3,408 | $ | 6,066 | |||||||
Accounts receivable | 2,009 | 1,520 | |||||||||
Other current assets | 556 | 419 | |||||||||
Total current assets | 5,973 | 8,005 | |||||||||
Property and equipment, at cost: | |||||||||||
Oil and gas, based on full-cost accounting: |
|||||||||||
Subject to amortization | 73,733 | 73,995 | |||||||||
Not subject to amortization | 3,642 | 2,791 | |||||||||
Total oil and gas | 77,375 | 76,786 | |||||||||
Other | 9,204 | 6,195 | |||||||||
Total property and equipment, at cost | 86,579 | 82,981 | |||||||||
Less accumulated depreciation, depletion and amortization | (51,410 | ) | (54,534 | ) | |||||||
Property and equipment, net | 35,169 | 28,447 | |||||||||
Goodwill | 8,310 | 5,858 | |||||||||
Other long-term assets | 1,387 | 567 | |||||||||
Total assets | $ | 50,839 | $ | 42,877 | |||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 1,344 | $ | 1,229 | |||||||
Revenues and royalties payable | 1,455 | 786 | |||||||||
Short-term debt | 1,898 | 4,066 | |||||||||
Income taxes payable | 651 | 1 | |||||||||
Other current liabilities | 646 | 573 | |||||||||
Total current liabilities | 5,994 | 6,655 | |||||||||
Long-term debt | 10,161 | 7,956 | |||||||||
Asset retirement obligations | 1,348 | 2,140 | |||||||||
Other long-term liabilities | 926 | 834 | |||||||||
Deferred income taxes | 5,642 | 4,793 | |||||||||
Stockholders' equity: | |||||||||||
Common stock | 41 | 41 | |||||||||
Additional paid-in capital | 4,004 | 3,780 | |||||||||
Retained earnings | 17,138 | 15,410 | |||||||||
Accumulated other comprehensive earnings | 993 | 1,268 | |||||||||
Total stockholders' equity attributable to Devon | 22,176 | 20,499 | |||||||||
Noncontrolling interests | 4,592 |
- |
|||||||||
Total stockholders' equity | 26,768 | 20,499 | |||||||||
Total liabilities and stockholders' equity | $ | 50,839 | $ | 42,877 | |||||||
Common shares outstanding | 409 | 406 |
CAPITAL EXPENDITURES | ||||||||||||||
(in millions) | Quarter Ended September 30, 2014 | |||||||||||||
U.S. | Canada | Total | ||||||||||||
Exploration | $ | 49 | $ | 2 | $ | 51 | ||||||||
Development |
1,044 |
213 |
1,257 | |||||||||||
Exploration and development capital | $ |
1,093 |
$ |
215 |
$ | 1,308 | ||||||||
Capitalized G&A | 94 | |||||||||||||
Capitalized interest | 12 | |||||||||||||
Acquisitions | 6 | |||||||||||||
Devon midstream capital | 96 | |||||||||||||
Other capital | 32 | |||||||||||||
Total (1) | $ | 1,548 | ||||||||||||
(1) Excludes $207 million attributable to EnLink. | ||||||||||||||
Nine Months Ended September 30, 2014 | ||||||||||||||
U.S. | Canada | Total | ||||||||||||
Exploration | $ | 187 | $ | 34 | $ | 221 | ||||||||
Development |
|
2,872 | 684 | 3,556 | ||||||||||
Exploration and development capital | $ | 3,059 | $ | 718 | $ | 3,777 | ||||||||
Capitalized G&A | 268 | |||||||||||||
Capitalized interest | 32 | |||||||||||||
Eagle Ford, Cana and other acquisitions | 6,366 | |||||||||||||
Devon midstream capital | 275 | |||||||||||||
Other capital | 85 | |||||||||||||
Total (1) | $ | 10,803 | ||||||||||||
(1) Excludes $491 million attributable to EnLink. | ||||||||||||||
NON-GAAP FINANCIAL MEASURES
ADJUSTED 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. 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 third-quarter 2014 earnings.
Quarter Ended September 30, 2014 | |||||||||||
Before-Tax | After-Tax | ||||||||||
Net earnings attributable to Devon (GAAP) | $ | 1,016 | |||||||||
Fair value changes in financial instruments and foreign currency | (733 | ) | (466 | ) | |||||||
Restructuring costs | 2 | 2 | |||||||||
Current tax on property divestiture(1) |
- |
543 |
|
||||||||
Deferred tax on property divestiture(1) |
- |
(543 |
) |
||||||||
Adjusted earnings attributable to Devon (Non-GAAP) | $ | 552 | |||||||||
Diluted share count | 411 | ||||||||||
Adjusted diluted earnings per share attributable to Devon (Non-GAAP) | $ | 1.34 |
(1) In the third quarter of 2014, Devon completed its U.S. non-core
divestiture program. In conjunction with the divestiture closing, Devon
recognized
NET DEBT
(in millions)
Devon defines net debt as debt less cash and cash equivalents as presented in the following table. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash to repay debt.
September 30, | |||||||||||
2014 | 2013 | ||||||||||
Total debt (GAAP) | $ | 12,059 | $ | 10,068 | |||||||
Adjustments: | |||||||||||
Cash and cash equivalents | 3,408 | 4,320 | |||||||||
Net debt (Non-GAAP) | $ | 8,651 | $ | 5,748 | |||||||
PRE-TAX CASH MARGIN
Devon defines pre-tax cash margin as revenues from commodity sales and marketing and midstream operations, less expenses for lease operations, marketing and midstream operations, cash-based general and administrative, production and property taxes and net financing costs, with the result divided by total production. Devon believes that pre-tax cash margin can facilitate comparisons of our performance between periods and to the performance of our peers.
DEVON ENERGY CORPORATION | ||||||||
FORWARD LOOKING GUIDANCE | ||||||||
PRODUCTION GUIDANCE | Quarter 4 | |||||||
Low | High | |||||||
Oil and bitumen (MBbls/d) | ||||||||
United States | 145 | 150 | ||||||
Canada | 83 | 88 | ||||||
Total | 228 | 238 | ||||||
Natural gas (MMcf/d) | ||||||||
United States | 1,610 | 1,660 | ||||||
Canada | 19 | 24 | ||||||
Total | 1,629 | 1,684 | ||||||
Natural gas liquids (MBbls/d) | ||||||||
United States | 131 | 136 | ||||||
Total Boe (MBoe/d) | ||||||||
United States | 544 | 563 | ||||||
Canada | 86 | 92 | ||||||
Total | 630 | 655 |
PRICE REALIZATIONS GUIDANCE | Quarter 4 | |||||||||||
Low | High | |||||||||||
Oil and bitumen - % of WTI | ||||||||||||
United States | 86 | % | 96 | % | ||||||||
Canada | 63 | % | 73 | % | ||||||||
Natural gas - % of Henry Hub | 87 | % | 93 | % | ||||||||
NGL - realized price | $ | 20 | $ | 30 |
OTHER GUIDANCE ITEMS | Quarter 4 | |||||||||||
($ millions, except Boe) | Low | High | ||||||||||
Marketing & midstream operating profit | $ | 200 | $ | 220 | ||||||||
Lease operating expenses per Boe | $ | 9.75 | $ | 9.95 | ||||||||
General & administrative expenses per Boe | $ | 3.50 | $ | 3.70 | ||||||||
Production and property taxes as % of upstream sales | 4.8 | % | 5.8 | % | ||||||||
Depreciation, depletion and amortization per Boe | $ | 13.75 | $ | 14.75 | ||||||||
Net financing costs | $ | 115 | $ | 125 | ||||||||
Current income tax rate | 5.0 | % | 8.0 | % | ||||||||
Deferred income tax rate | 24.0 | % | 30.0 | % | ||||||||
Total income tax rate | 29.0 | % | 38.0 | % | ||||||||
Net earnings attributable to noncontrolling interests | $ | 20 | $ | 30 |
CAPITAL EXPENDITURES GUIDANCE | Quarter 4 | |||||||||
(in millions) | Low | High | ||||||||
Exploration and development | $ | 1,400 | $ | 1,500 | ||||||
Capitalized G&A and interest | 100 | 120 | ||||||||
Total oil and gas | 1,500 | 1,620 | ||||||||
Midstream (1) | 50 | 80 | ||||||||
Corporate and other | 40 | 60 | ||||||||
Devon capital expenditures | $ | 1,590 | $ | 1,760 | ||||||
(1) Excludes capital expenditures related to EnLink. |
COMMODITY HEDGES | ||||||||||||||||||||||||||||||||
Oil Commodity Hedges | ||||||||||||||||||||||||||||||||
Price Swaps | Price Collars | Call Options Sold | ||||||||||||||||||||||||||||||
Period |
Volume |
Weighted |
Volume |
Weighted |
Weighted |
Volume |
Weighted |
|||||||||||||||||||||||||
Q4 2014 | 75,000 | $ | 94.14 | 64,750 | $ | 89.33 | $ | 100.00 | 42,000 | $ | 116.43 |
Oil Basis Swaps | ||||||||||||||
Period | Index | Volume (Bbls/d) |
Weighted Average Differential to |
|||||||||||
Q4 2014 | Western Canadian Select | 50,000 | $ | (17.40 | ) |
Natural Gas Commodity Hedges | |||||||||||||||||||||||||||||||
Price Swaps | Price Collars | Call Options Sold | |||||||||||||||||||||||||||||
Period |
Volume |
Weighted |
Volume |
Weighted |
Weighted |
Volume |
Weighted |
||||||||||||||||||||||||
Q4 2014 | 800,000 | $ | 4.42 | 460,000 | $ | 4.03 | $ | 4.51 | 500,000 | $ | 5.00 |
Natural Gas Basis Swaps | ||||||||||||||
Period | Index | Volume (MMBtu/d) |
Weighted Average Differential |
|||||||||||
Q4 2014 | AECO | 94,781 | $ | (0.52 | ) |
Devon’s oil derivatives that settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index.
Source:
Devon Energy Corporation
Investor Contacts:
Howard Thill,
405-552-3693
Scott Coody, 405-552-4735
Shea Snyder,
405-552-4782
Media Contact:
John Porretto, 405-228-7506