Devon Energy Reports Fourth-Quarter and Full-Year 2014 Results; Provides 2015 Capital and Production Outlook
Download- Achieved record Q4 oil production exceeding company guidance
- Generated U.S. oil production growth of 82 percent in Q4 year over year
- Increased proved oil reserves to highest level in company history
- Maintained excellent financial strength and liquidity
- Reiterated 2015 oil production growth outlook of 20 to 25 percent
- Decreased 2015 E&P capital budget by 20 percent
Devon generated cash flow from operations of
For the fourth quarter of 2014, Devon’s core earnings totaled
“Devon delivered another exceptional performance in the fourth quarter,
rounding out an outstanding year for the company, including a
significant repositioning of the portfolio,” said
“We expect to sustain operational momentum in 2015 with the significant improvements we have seen in our completion designs and a capital program focused on development drilling,” said Richels. “With strong results from our enhanced completions and a focus on core development areas, we expect growth in oil production to be between 20 and 25 percent in 2015, even with a projected reduction of approximately 20 percent in E&P capital spending compared to 2014.”
Repositioned Portfolio Exceeds Production Expectations
Total production from Devon’s retained assets averaged 664,000 oil-equivalent barrels (Boe) per day during the fourth quarter of 2014. This result exceeded the company’s guidance range by 9,000 Boe per day and represents a 20 percent increase compared to the fourth quarter of 2013. This high-margin growth increased liquids production to 57 percent of the company’s retained asset mix in the fourth quarter.
Devon also delivered record oil production of 239,000 barrels per day in the fourth quarter. This result exceeded the top end of the company’s guidance range and represents a 48 percent increase compared to the fourth quarter of 2013. The most significant growth came from the company’s U.S. operations, where oil production increased a substantial 82 percent for the quarter year over year.
The strong growth in U.S. oil production during the quarter was largely
attributable to prolific well results from the company’s world-class
Eagle Ford assets. Net production in the Eagle Ford averaged 98,000 Boe
per day in the fourth quarter, a 100 percent increase compared to
Devon’s first month of ownership in
In
Reserves from Retained Assets Grow; Oil Reserves Climb to Record Levels
Devon’s estimated proved reserves totaled 2.8 billion oil-equivalent
barrels on
The most significant reserve growth came from Devon’s U.S. operations,
where oil reserves from retained properties increased 65 percent year
over year to 351 million barrels. The substantial growth in U.S. oil
reserves is largely attributable to the company’s Eagle Ford acquisition
and its
Overall, the company’s reserve life index (proved reserves divided by annual production from retained properties) remained at approximately 12 years, and its proved undeveloped reserves accounted for only 25 percent of proved reserves.
Operations Report
For additional details on Devon’s core and emerging assets, please refer to the company’s fourth-quarter 2014 Operations Report at www.devonenergy.com. Highlights from the operations report include:
- Prolific Q4 results, increasing type curve for Eagle Ford
-
Improved completion design delivers excellent results in
Delaware Basin - Ramp-up exceeds expectations at Jackfish 3
-
High-rate development wells from Cana-
Woodford
Upstream Revenue Increases 16 Percent; Midstream Profit Rises
Revenue from oil, natural gas and natural gas liquids sales totaled
In the fourth quarter, upstream revenue was
The company’s marketing and midstream business also delivered excellent
results in 2014, with operating profits reaching an all-time high of
Cash Operating Costs Decline
The company’s successful cost containment efforts resulted in lease
operating expenses (LOE), the largest cash cost, of
Production and property taxes were
Net financing costs totaled
General and administrative expenses totaled
Depreciation, depletion and amortization expense (DD&A) amounted to
Devon incurred a
Full-year 2014 income tax expense was
Balance Sheet and Liquidity Remain Strong
Devon’s financial position remains exceptionally strong with
investment-grade credit ratings and cash balances of
2015 Outlook: Production Guidance Unchanged; E&P Capital Reduced 20 Percent
Detailed forward-looking guidance for the first quarter and full year of
2015 is provided later in the release. A notable component of this
outlook is Devon’s 2015 E&P capital budget of
Even with reduced E&P capital investment in 2015, the company’s
production growth outlook remains unchanged. With significant
improvements in completion design and a capital program focused on
development drilling, Devon expects to deliver oil production growth of
20 to 25 percent year over year on a retained property basis. This
production outlook is driven by balanced oil growth in both the U.S. and
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). 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
additional information, consisting of an operations report and
management commentary with associated slides, to its website at www.devonenergy.com.
The company’s fourth-quarter 2014 conference call will be held at
Forward-Looking Statements
This press release includes "forward-looking statements" as defined
by the
The
About
FINANCIAL AND OPERATIONAL INFORMATION
Quarter Ended | Year Ended | |||||||||||||||
PRODUCTION NET OF ROYALTIES | December 31, | December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Oil / Bitumen (MBbls/d) | ||||||||||||||||
United States | 146 | 80 | 127 | 73 | ||||||||||||
Canada | 93 | 81 | 82 | 79 | ||||||||||||
Retained assets | 239 | 161 | 209 | 152 | ||||||||||||
Divested assets | - | 16 | 5 | 16 | ||||||||||||
Total Oil / Bitumen | 239 | 177 | 214 | 168 | ||||||||||||
Natural Gas (MMcf/d) | ||||||||||||||||
United States | 1,684 | 1,639 | 1,662 | 1,658 | ||||||||||||
Canada | 23 | 28 | 23 | 28 | ||||||||||||
Retained assets | 1,707 | 1,667 | 1,685 | 1,686 | ||||||||||||
Divested assets | 3 | 661 | 235 | 707 | ||||||||||||
Total Natural Gas | 1,710 | 2,328 | 1,920 | 2,393 | ||||||||||||
Natural Gas Liquids (MBbls/d) | ||||||||||||||||
United States | 141 | 114 | 132 | 107 | ||||||||||||
Divested assets | - | 18 | 7 | 19 | ||||||||||||
Total Natural Gas Liquids | 141 | 132 | 139 | 126 | ||||||||||||
Oil Equivalent (Mboe/d) | ||||||||||||||||
United States | 567 | 467 | 536 | 456 | ||||||||||||
Canada | 97 | 86 | 86 | 85 | ||||||||||||
Retained assets | 664 | 553 | 622 | 541 | ||||||||||||
Divested assets | 1 | 143 | 51 | 152 | ||||||||||||
Total Oil Equivalent | 665 | 696 | 673 | 693 |
KEY OPERATING STATISTICS BY REGION | ||||||||||||
Quarter Ended December 31, 2014 | ||||||||||||
Avg. Production | Gross Wells | Operated Rigs at | ||||||||||
(MBoe/d) | Drilled | December 31, 2014 | ||||||||||
Permian Basin | 98 | 80 | 18 | |||||||||
Eagle Ford | 98 | 78 | 3 | |||||||||
Canadian Heavy Oil | 97 | 78 | 11 | |||||||||
Barnett Shale | 201 | 14 | - | |||||||||
Anadarko Basin | 100 | 30 | 5 | |||||||||
Mississippian-Woodford Trend | 20 | 53 | 2 | |||||||||
Rockies | 19 | 9 | 4 | |||||||||
Other Assets | 31 | 4 | - | |||||||||
Retained Assets - Total | 664 | 346 | 43 | |||||||||
Divested assets | 1 | - | - | |||||||||
Devon - Total | 665 | 346 | 43 | |||||||||
Year Ended December 31, 2014 | ||||||||||||
Avg. Production | Gross Wells | |||||||||||
(MBoe/d) | Drilled | |||||||||||
Permian Basin | 96 | 324 | ||||||||||
Eagle Ford | 65 | 242 | ||||||||||
Canadian Heavy Oil | 86 | 205 | ||||||||||
Barnett Shale | 208 | 84 | ||||||||||
Anadarko Basin | 94 | 130 | ||||||||||
Mississippian-Woodford Trend | 20 | 236 | ||||||||||
Rockies | 20 | 40 | ||||||||||
Other Assets | 33 | 5 | ||||||||||
Retained Assets - Total | 622 | 1,266 | ||||||||||
Divested assets | 51 | - | ||||||||||
Devon - Total | 673 | 1,266 |
PRODUCTION TREND | 2013 | 2014 | ||||||||||||||||||
Quarter 4 | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | ||||||||||||||||
Oil (MBbls/d) | ||||||||||||||||||||
Permian Basin | 50 | 55 | 55 | 56 | 55 | |||||||||||||||
Eagle Ford | - | 11 | 40 | 46 | 60 | |||||||||||||||
Canadian Heavy Oil | 81 | 78 | 77 | 80 | 93 | |||||||||||||||
Barnett Shale | 2 | 2 | 2 | 2 | 2 | |||||||||||||||
Anadarko Basin | 9 | 9 | 11 | 10 | 10 | |||||||||||||||
Mississippian-Woodford Trend | 8 | 10 | 9 | 10 | 9 | |||||||||||||||
Rockies | 8 | 8 | 8 | 10 | 9 | |||||||||||||||
Other assets | 3 | 2 | 3 | 2 | 1 | |||||||||||||||
Retained assets | 161 | 175 | 205 | 216 | 239 | |||||||||||||||
Divested assets | 16 | 15 | 4 | 3 | - | |||||||||||||||
Total | 177 | 190 | 209 | 219 | 239 | |||||||||||||||
Gas (MMcf/d) | ||||||||||||||||||||
Permian Basin | 116 | 121 | 134 | 136 | 137 | |||||||||||||||
Eagle Ford | - | 22 | 86 | 107 | 126 | |||||||||||||||
Canadian Heavy Oil | 28 | 19 | 23 | 26 | 23 | |||||||||||||||
Barnett Shale | 995 | 931 | 932 | 896 | 878 | |||||||||||||||
Anadarko Basin | 294 | 281 | 309 | 323 | 329 | |||||||||||||||
Mississippian-Woodford Trend | 19 | 28 | 28 | 32 | 31 | |||||||||||||||
Rockies | 75 | 65 | 67 | 66 | 58 | |||||||||||||||
Other assets | 140 | 140 | 135 | 130 | 125 | |||||||||||||||
Retained assets | 1,667 | 1,607 | 1,714 | 1,716 | 1,707 | |||||||||||||||
Divested assets | 661 | 585 | 217 | 138 | 3 | |||||||||||||||
Total | 2,328 | 2,192 | 1,931 | 1,854 | 1,710 | |||||||||||||||
NGL (MBbls/d) | ||||||||||||||||||||
Permian Basin | 16 | 16 | 18 | 19 | 20 | |||||||||||||||
Eagle Ford | - | 3 | 10 | 14 | 18 | |||||||||||||||
Canadian Heavy Oil | - | - | - | - | - | |||||||||||||||
Barnett Shale | 56 | 55 | 55 | 54 | 53 | |||||||||||||||
Anadarko Basin | 27 | 29 | 31 | 34 | 34 | |||||||||||||||
Mississippian-Woodford Trend | 3 | 5 | 5 | 6 | 6 | |||||||||||||||
Rockies | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
Other assets | 11 | 10 | 10 | 10 | 9 | |||||||||||||||
Retained assets | 114 | 119 | 130 | 138 | 141 | |||||||||||||||
Divested assets | 18 | 16 | 6 | 5 | - | |||||||||||||||
Total | 132 | 135 | 136 | 143 | 141 | |||||||||||||||
Combined (MBoe/d) | ||||||||||||||||||||
Permian Basin | 86 | 91 | 95 | 98 | 98 | |||||||||||||||
Eagle Ford | - | 17 | 65 | 78 | 98 | |||||||||||||||
Canadian Heavy Oil | 86 | 81 | 81 | 84 | 97 | |||||||||||||||
Barnett Shale | 224 | 213 | 212 | 205 | 201 | |||||||||||||||
Anadarko Basin | 85 | 85 | 93 | 98 | 100 | |||||||||||||||
Mississippian-Woodford Trend | 14 | 19 | 18 | 21 | 20 | |||||||||||||||
Rockies | 21 | 20 | 21 | 22 | 19 | |||||||||||||||
Other assets | 37 | 37 | 35 | 34 | 31 | |||||||||||||||
Retained assets | 553 | 563 | 620 | 640 | 664 | |||||||||||||||
Divested assets | 143 | 128 | 47 | 31 | 1 | |||||||||||||||
Total | 696 | 691 | 667 | 671 | 665 |
BENCHMARK PRICES | ||||||||||||||||||||||
(average prices) | Quarter 4 | December YTD | ||||||||||||||||||||
FY2014 | FY2013 | FY2014 | FY2013 | |||||||||||||||||||
Natural Gas ($/Mcf) - Henry Hub | $ | 4.04 | $ | 3.60 | $ | 4.43 | $ | 3.65 | ||||||||||||||
Oil ($/Bbl) - West Texas Intermediate (Cushing) | $ | 73.05 | $ | 97.53 | $ | 93.01 | $ | 98.02 | ||||||||||||||
REALIZED PRICES | Quarter Ended December 31, 2014 | |||||||||||||||||||||
Oil /Bitumen | Gas | NGL | Total | |||||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||||||||
United States | $ | 68.19 | $ | 3.53 | $ | 17.79 | $ | 32.45 | ||||||||||||||
Canada (1) | $ | 45.71 | $ | 0.87 | $ | 54.32 | $ | 44.01 | ||||||||||||||
Realized price without hedges | $ | 59.46 | $ | 3.49 | $ | 17.75 | $ | 34.14 | ||||||||||||||
Cash settlements | $ | 10.34 | $ | 0.20 | $ | 0.04 | $ | 4.23 | ||||||||||||||
Realized price, including cash settlements | $ | 69.80 | $ | 3.69 | $ | 17.79 | $ | 38.37 | ||||||||||||||
Quarter Ended December 31, 2013 | ||||||||||||||||||||||
Oil /Bitumen | Gas | NGL | Total | |||||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||||||||
United States | $ | 96.04 | $ | 3.01 | $ | 27.51 | $ | 32.96 | ||||||||||||||
Canada (1) | $ | 48.50 | $ | 3.07 | $ | 45.00 | $ | 35.74 | ||||||||||||||
Realized price without hedges | $ | 71.45 | $ | 3.02 | $ | 28.73 | $ | 33.65 | ||||||||||||||
Cash settlements | $ | 3.33 | $ | 0.23 | $ | (0.19 | ) | $ | 1.59 | |||||||||||||
Realized price, including cash settlements | $ | 74.78 | $ | 3.25 | $ | 28.54 | $ | 35.24 | ||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||
Oil | Gas | NGL | Total | |||||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||||||||
United States | $ | 85.64 | $ | 3.92 | $ | 24.46 | $ | 37.96 | ||||||||||||||
Canada (1) | $ | 60.05 | $ | 3.64 | $ | 50.52 | $ | 53.11 | ||||||||||||||
Realized price without hedges | $ | 75.55 | $ | 3.90 | $ | 24.89 | $ | 40.33 | ||||||||||||||
Cash settlements | $ | 1.16 | $ | (0.05 | ) | $ | 0.02 | $ | 0.22 | |||||||||||||
Realized price, including cash settlements | $ | 76.71 | $ | 3.85 | $ | 24.91 | $ | 40.55 | ||||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||||
Oil | Gas | NGL | Total | |||||||||||||||||||
(Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||||||||
United States | $ | 94.52 | $ | 3.10 | $ | 25.75 | $ | 31.59 | ||||||||||||||
Canada (1) | $ | 57.18 | $ | 3.05 | $ | 46.17 | $ | 39.91 | ||||||||||||||
Realized price without hedges | $ | 74.41 | $ | 3.09 | $ | 27.33 | $ | 33.70 | ||||||||||||||
Cash settlements | $ | 0.90 | $ | 0.16 | $ | 0.01 | $ | 0.77 | ||||||||||||||
Realized price, including cash settlements | $ | 75.31 | $ | 3.25 | $ | 27.34 | $ | 34.47 |
(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 | Year Ended | ||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Oil, gas and NGL sales | $ | 2,086 | $ | 2,155 | $ | 9,910 | $ | 8,522 | ||||||||||||||||
Oil, gas and NGL derivatives | 1,960 | (96 | ) | 1,989 | (191 | ) | ||||||||||||||||||
Marketing and midstream revenues | 1,949 | 565 | 7,667 | 2,066 | ||||||||||||||||||||
Total operating revenues | 5,995 | 2,624 | 19,566 | 10,397 | ||||||||||||||||||||
Lease operating expenses | 568 | 584 | 2,332 | 2,268 | ||||||||||||||||||||
Marketing and midstream operating expenses | 1,723 | 425 | 6,815 | 1,553 | ||||||||||||||||||||
General and administrative expenses | 252 | 157 | 847 | 617 | ||||||||||||||||||||
Production and property taxes | 108 | 108 | 535 | 461 | ||||||||||||||||||||
Depreciation, depletion and amortization | 910 | 711 | 3,319 | 2,780 | ||||||||||||||||||||
Asset impairments | 1,953 | 16 | 1,953 | 1,976 | ||||||||||||||||||||
Restructuring costs | 2 | 4 | 46 | 54 | ||||||||||||||||||||
Gains and losses on asset sales | - | (2 | ) | (1,072 | ) | 9 | ||||||||||||||||||
Other operating items | 19 | 30 | 93 | 112 | ||||||||||||||||||||
Total operating expenses | 5,535 | 2,033 | 14,868 | 9,830 | ||||||||||||||||||||
Operating income | 460 | 591 | 4,698 | 567 | ||||||||||||||||||||
Net financing costs | 167 | 111 | 526 | 417 | ||||||||||||||||||||
Other nonoperating items | 2 | 5 | 113 | 1 | ||||||||||||||||||||
Earnings from continuing operations before income taxes | 291 | 475 | 4,059 | 149 | ||||||||||||||||||||
Income tax expense | 670 | 268 | 2,368 | 169 | ||||||||||||||||||||
Net earnings (loss) | (379 | ) | 207 | 1,691 | (20 | ) | ||||||||||||||||||
Net earnings attributable to noncontrolling interests | 29 | - | 84 | - | ||||||||||||||||||||
Net earnings (loss) attributable to Devon | $ | (408 | ) | $ | 207 | $ | 1,607 | $ | (20 | ) | ||||||||||||||
Net earnings (loss) per share attributable to Devon: | ||||||||||||||||||||||||
Basic earnings (loss) from discontinued operations per share | $ | (1.01 | ) | $ | 0.51 | $ | 3.93 | $ | (0.06 | ) | ||||||||||||||
Diluted earnings (loss) from continuing operations per share | $ | (1.01 | ) | $ | 0.51 | $ | 3.91 | $ | (0.06 | ) | ||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||
Basic | 409 | 406 | 409 | 406 | ||||||||||||||||||||
Diluted | 409 | 407 | 411 | 406 |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Quarter Ended December 31, 2014 |
||||||||||||||||||||||||
Devon U.S. & | ||||||||||||||||||||||||
Canada | EnLink | Eliminations | Total | |||||||||||||||||||||
Oil, gas and NGL sales | $ | 2,086 | $ | - | $ | - | $ | 2,086 | ||||||||||||||||
Oil, gas and NGL derivatives | 1,960 | - | - | 1,960 | ||||||||||||||||||||
Marketing and midstream revenues | 1,141 | 995 | (187 | ) | 1,949 | |||||||||||||||||||
Total operating revenues | 5,187 | 995 | (187 | ) | 5,995 | |||||||||||||||||||
Lease operating expenses | 568 | - | - | 568 | ||||||||||||||||||||
Marketing and midstream expenses | 1,139 | 771 | (187 | ) | 1,723 | |||||||||||||||||||
General and administrative expenses | 222 | 30 | - | 252 | ||||||||||||||||||||
Production and property taxes | 100 | 8 | - | 108 | ||||||||||||||||||||
Depreciation, depletion and amortization | 826 | 84 | - | 910 | ||||||||||||||||||||
Asset impairments | 1,953 | - | - | 1,953 | ||||||||||||||||||||
Restructuring costs | 2 | - | - | 2 | ||||||||||||||||||||
Other operating items | 19 | - | - | 19 | ||||||||||||||||||||
Total operating expenses | 4,829 | 893 | (187 | ) | 5,535 | |||||||||||||||||||
Operating income | 358 | 102 | - | 460 | ||||||||||||||||||||
Net financing costs | 147 | 20 | - | 167 | ||||||||||||||||||||
Other nonoperating items | 9 | (7 | ) | - | 2 | |||||||||||||||||||
Earnings before income taxes | 202 | 89 | - | 291 | ||||||||||||||||||||
Income tax expense | 654 | 16 | - | 670 | ||||||||||||||||||||
Net earnings (loss) | (452 | ) | 73 | - | (379 | ) | ||||||||||||||||||
Net earnings attributable to noncontrolling interests | - | 29 | - | 29 | ||||||||||||||||||||
Net earnings (loss) attributable to Devon | $ | (452 | ) | $ | 44 | $ | - | $ | (408 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||||||
(in millions) | Quarter Ended | Year Ended | ||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net earnings (loss) | $ | (379 | ) | $ | 207 | $ | 1,691 | $ | (20 | ) | ||||||||||||||
Adjustments to reconcile earnings (loss) from continuing operations | ||||||||||||||||||||||||
to net cash from operating activities: | ||||||||||||||||||||||||
Depreciation, depletion and amortization | 910 | 711 | 3,319 | 2,780 | ||||||||||||||||||||
Asset impairments | 1,953 | 16 | 1,953 | 1,976 | ||||||||||||||||||||
Gains and losses on asset sales | - | (2 | ) | (1,072 | ) | 9 | ||||||||||||||||||
Deferred income tax expense |
1,091 |
278 | 1,891 | 97 | ||||||||||||||||||||
Derivatives and other financial instruments | (2,027 | ) | 70 | (2,070 | ) | 135 | ||||||||||||||||||
Cash settlements on derivatives and financial instruments | 305 | 130 | 104 | 277 | ||||||||||||||||||||
Other noncash charges | 100 | 114 | 457 | 309 | ||||||||||||||||||||
Net change in working capital | (716 | ) | (194 | ) | 50 | (298 | ) | |||||||||||||||||
Change in long-term other assets | (306 | ) | 38 | (421 | ) | 10 | ||||||||||||||||||
Change in long-term other liabilities | 32 | 69 | 79 | 161 | ||||||||||||||||||||
Net cash from operating activities |
963 |
1,437 | 5,981 | 5,436 | ||||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Capital expenditures | (1,975 | ) | (1,539 | ) | (6,988 | ) | (6,758 | ) | ||||||||||||||||
Acquisitions of property, equipment and businesses | (207 | ) | - | (6,462 | ) | - | ||||||||||||||||||
Proceeds from property and equipment divestitures | (82 | ) | 103 | 5,120 | 419 | |||||||||||||||||||
Purchases of short-term investments | - | - | - | (1,076 | ) | |||||||||||||||||||
Redemptions of short-term investments | - | - | - | 3,419 | ||||||||||||||||||||
Redemptions of long-term investments | - | - | 57 | - | ||||||||||||||||||||
Other | 2 | (86 | ) | 89 | (3 | ) | ||||||||||||||||||
Net cash from investing activities | (2,262 | ) | (1,522 | ) | (8,184 | ) | (3,999 | ) | ||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Proceeds from borrowings of long-term debt, net of issuance costs | 1,182 | 2,233 | 5,340 | 2,233 | ||||||||||||||||||||
Net short-term debt borrowings (repayments) |
933 | (295 | ) | (385 | ) | (1,872 | ) | |||||||||||||||||
Long-term debt repayments | (2,924 | ) | - | (7,189 | ) | - | ||||||||||||||||||
Proceeds from stock option exercises | 1 | 2 | 93 | 3 | ||||||||||||||||||||
Proceeds from issuance of subsidiary units | 338 | - | 410 | - | ||||||||||||||||||||
Dividends paid on common stock | (99 | ) | (89 | ) | (386 | ) | (348 | ) | ||||||||||||||||
Distributions to noncontrolling interests | (48 | ) | - | (235 | ) | - | ||||||||||||||||||
Other |
2 |
(1 | ) | (2 | ) | 4 | ||||||||||||||||||
Net cash from financing activities |
(615 |
) | 1,850 | (2,354 | ) | 20 | ||||||||||||||||||
Effect of exchange rate changes on cash | (14 | ) | (19 | ) | (29 | ) | (28 | ) | ||||||||||||||||
Net change in cash and cash equivalents | (1,928 | ) | 1,746 | (4,586 | ) | 1,429 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 3,408 | 4,320 | 6,066 | 4,637 | ||||||||||||||||||||
Cash and cash equivalents at end of period | $ | 1,480 | $ | 6,066 | $ | 1,480 | $ | 6,066 |
CONSOLIDATED BALANCE SHEETS | ||||||||||||
(in millions) | ||||||||||||
December 31, | December 31, | |||||||||||
Current assets: | 2014 | 2013 | ||||||||||
Cash and cash equivalents | $ | 1,480 | $ | 6,066 | ||||||||
Accounts receivable | 1,959 | 1,520 | ||||||||||
Derivatives, at fair value | 1,993 | 75 | ||||||||||
Income taxes receivable | 522 | 89 | ||||||||||
Other current assets | 544 | 255 | ||||||||||
Total current assets | 6,498 | 8,005 | ||||||||||
Property and equipment, at cost: | ||||||||||||
Oil and gas, based on full cost accounting: | ||||||||||||
Subject to amortization | 75,738 | 73,995 | ||||||||||
Not subject to amortization | 2,752 | 2,791 | ||||||||||
Total oil and gas | 78,490 | 76,786 | ||||||||||
Midstream and other | 9,695 | 6,195 | ||||||||||
Total property and equipment, at cost | 88,185 | 82,981 | ||||||||||
Less accumulated depreciation, depletion and amortization | (51,889 | ) | (54,534 | ) | ||||||||
Property and equipment, net | 36,296 | 28,447 | ||||||||||
Goodwill | 6,303 | 5,858 | ||||||||||
Other long-term assets | 1,540 | 567 | ||||||||||
Total assets | $ | 50,637 | $ | 42,877 | ||||||||
Current liabilities: | ||||||||||||
Accounts payable | 1,400 | 1,229 | ||||||||||
Revenues and royalties payable | 1,193 | 786 | ||||||||||
Short-term debt | 1,432 | 4,066 | ||||||||||
Deferred income taxes | 730 | 19 | ||||||||||
Other current liabilities | 1,180 | 555 | ||||||||||
Total current liabilities | 5,935 | 6,655 | ||||||||||
Long-term debt | 9,830 | 7,956 | ||||||||||
Asset retirement obligations | 1,339 | 2,140 | ||||||||||
Other long-term liabilities | 948 | 834 | ||||||||||
Deferred income taxes | 6,244 | 4,793 | ||||||||||
Stockholders' equity: | ||||||||||||
Common Stock | 41 | 41 | ||||||||||
Additional paid-in capital | 4,088 | 3,780 | ||||||||||
Retained earnings | 16,631 | 15,410 | ||||||||||
Accumulated other comprehensive earnings | 779 | 1,268 | ||||||||||
Total stockholders' equity attributable to Devon | 21,539 | 20,499 | ||||||||||
Noncontrolling interests | 4,802 | - | ||||||||||
Total stockholders' equity | 26,341 | 20,499 | ||||||||||
Total liabilities and stockholders' equity | $ | 50,637 | $ | 42,877 | ||||||||
Common shares outstanding | 409 | 406 |
CAPITAL EXPENDITURES | |||||||||||||||
(in millions) | Quarter Ended December 31, 2014 | ||||||||||||||
U.S. | Canada | Total | |||||||||||||
Exploration | $ | 105 | $ | 6 | $ | 111 | |||||||||
Development | 1,243 | 224 | 1,467 | ||||||||||||
Exploration and development capital | $ | 1,348 | $ | 230 | $ | 1,578 | |||||||||
Capitalized G&A | 108 | ||||||||||||||
Capitalized interest | 13 | ||||||||||||||
Acquisitions | 10 | ||||||||||||||
Devon midstream capital | 37 | ||||||||||||||
Other capital | 40 | ||||||||||||||
Total (1) | $ | 1,786 | |||||||||||||
(1) Excludes $479 million attributable to EnLink. | |||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||
U.S. | Canada | Total | |||||||||||||
Exploration | $ | 292 | $ | 40 | $ | 332 | |||||||||
Development | 4,115 | 908 | 5,023 | ||||||||||||
Exploration and development capital | $ | 4,407 | $ | 948 | $ | 5,355 | |||||||||
Capitalized G&A | 376 | ||||||||||||||
Capitalized interest | 45 | ||||||||||||||
Eagle Ford, Cana and other acquisitions | 6,376 | ||||||||||||||
Devon midstream capital | 312 | ||||||||||||||
Other capital | 125 | ||||||||||||||
Total (1) | $ | 12,589 | |||||||||||||
(1) Excludes $970 million attributable to EnLink. |
COSTS INCURRED | Total | |||||||||
(in millions) | Year Ended December 31, | |||||||||
2014 | 2013 | |||||||||
Property acquisition costs: | ||||||||||
Proved properties | $ | 5,210 | $ | 22 | ||||||
Unproved properties | 1,177 | 216 | ||||||||
Exploration costs | 322 | 595 | ||||||||
Development costs | 5,463 | 5,089 | ||||||||
Costs Incurred | $ | 12,172 | $ | 5,922 | ||||||
United States | ||||||||||
Year Ended December 31, | ||||||||||
2014 | 2013 | |||||||||
Property acquisition costs: | ||||||||||
Proved properties | $ | 5,210 | $ | 19 | ||||||
Unproved properties | 1,176 | 213 | ||||||||
Exploration costs | 270 | 443 | ||||||||
Development costs | 4,400 | 3,838 | ||||||||
Costs Incurred | $ | 11,056 | $ | 4,513 | ||||||
Canada | ||||||||||
Year Ended December 31, | ||||||||||
2014 | 2013 | |||||||||
Property acquisition costs: | ||||||||||
Proved properties | $ | — | $ | 3 | ||||||
Unproved properties | 1 | 3 | ||||||||
Exploration costs | 52 | 152 | ||||||||
Development costs | 1,063 | 1,251 | ||||||||
Costs Incurred | $ | 1,116 | $ | 1,409 |
RESERVES RECONCILIATION | ||||||||||||||||
Total | ||||||||||||||||
Oil / Bitumen | Gas | NGL | Total | |||||||||||||
(MMBbls) | (Bcf) | (MMBbls) | (MMBoe) | |||||||||||||
As of December 31, 2013: | ||||||||||||||||
Proved developed | 361 | 8,459 | 491 | 2,262 | ||||||||||||
Proved undeveloped | 476 | 849 | 84 | 701 | ||||||||||||
Total Proved | 837 | 9,308 | 575 | 2,963 | ||||||||||||
Revisions due to prices | (38) | 236 | 8 | 9 | ||||||||||||
Revisions other than price | (19) | (295) | 2 | (65) | ||||||||||||
Extensions and discoveries | 107 | 343 | 47 | 211 | ||||||||||||
Purchase of reserves | 132 | 457 | 57 | 265 | ||||||||||||
Production | (78) | (701) | (51) | (246) | ||||||||||||
Sale of reserves | (46) | (1,661) | (60) | (383) | ||||||||||||
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 | ||||||||||||
United States | ||||||||||||||||
Oil / Bitumen | Gas | NGL | Total | |||||||||||||
(MMBbls) | (Bcf) | (MMBbls) | (MMBoe) | |||||||||||||
As of December 31, 2013: | ||||||||||||||||
Proved developed | 194 | 7,707 | 468 | 1,947 | ||||||||||||
Proved undeveloped | 35 | 843 | 84 | 258 | ||||||||||||
Total Proved | 229 | 8,550 | 552 | 2,205 | ||||||||||||
Revisions due to prices | (1) | 191 | 7 | 38 | ||||||||||||
Revisions other than price | (38) | (299) | 2 | (86) | ||||||||||||
Extensions and discoveries | 94 | 335 | 47 | 197 | ||||||||||||
Purchase of reserves | 132 | 457 | 57 | 265 | ||||||||||||
Production | (48) | (660) | (50) | (207) | ||||||||||||
Sale of reserves | (17) | (923) | (37) | (207) | ||||||||||||
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 | ||||||||||||
Canada | ||||||||||||||||
Oil / Bitumen | Gas | NGL | Total | |||||||||||||
(MMBbls) | (Bcf) | (MMBbls) | (MMBoe) | |||||||||||||
As of December 31, 2013: | ||||||||||||||||
Proved developed | 167 | 752 | 23 | 315 | ||||||||||||
Proved undeveloped | 441 | 6 | — | 443 | ||||||||||||
Total Proved | 608 | 758 | 23 | 758 | ||||||||||||
Revisions due to prices | (37) | 45 | 1 | (29) | ||||||||||||
Revisions other than price | 19 | 4 | — | 21 | ||||||||||||
Extensions and discoveries | 13 | 8 | — | 14 | ||||||||||||
Purchase of reserves | — | — | — | — | ||||||||||||
Production | (30) | (41) | (1) | (39) | ||||||||||||
Sale of reserves | (29) | (738) | (23) | (176) | ||||||||||||
As of December 31, 2014: | ||||||||||||||||
Proved developed | 160 | 36 | — | 165 | ||||||||||||
Proved undeveloped | 384 | — | — | 384 | ||||||||||||
Total Proved | 544 | 36 | — | 549 | ||||||||||||
NON-GAAP FINANCIAL MEASURES
CORE EARNINGS
(in millions)
Devon’s reported net earnings include items of income and expense that are typically excluded by securities analyst 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 tables summarize the effects of these items on fourth-quarter and total-year 2014 earnings.
Quarter Ended December 31, 2014 | |||||||||||
Before-Tax | After-Tax | ||||||||||
Net loss attributable to Devon (GAAP) | $ | (408 | ) | ||||||||
Asset impairments | 1,953 | 1,948 | |||||||||
Fair value changes in financial instruments and foreign currency | (1,721 | ) | (1,086 | ) | |||||||
Gain on asset sales and related repatriation | - | (143 | ) | ||||||||
Early retirement of debt | 48 | 31 | |||||||||
Restructuring costs | 2 | 1 | |||||||||
Core earnings attributable to Devon (Non-GAAP) | $ | 343 | |||||||||
Diluted share count | 411 | ||||||||||
Core diluted earnings per share attributable to Devon (Non-GAAP) | $ | 0.83 | |||||||||
Year Ended December 31, 2014 | |||||||||||
Before-Tax | After-Tax | ||||||||||
Net earnings attributable to Devon (GAAP) | $ | 1,607 | |||||||||
Asset impairments | 1,953 | 1,948 | |||||||||
Fair value changes in financial instruments and foreign currency | (1,945 | ) | (1,231 | ) | |||||||
Gain on asset sales and related repatriation | (955 | ) | (421 | ) | |||||||
Investment in EnLink deferred income tax | - | 48 | |||||||||
Restructuring costs | 46 | 35 | |||||||||
Early retirement of debt | 48 | 31 | |||||||||
Core earnings attributable to Devon (Non-GAAP) | $ | 2,017 | |||||||||
Diluted share count | 411 | ||||||||||
Core diluted earnings per share attributable to Devon (Non-GAAP) | $ | 4.91 | |||||||||
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.
December 31, | ||||||||||
2014 | 2013 | |||||||||
Total debt (GAAP) | $ | 11,262 | $ | 12,022 | ||||||
Adjustments: | ||||||||||
Cash and cash equivalents | 1,480 | 6,066 | ||||||||
Net debt (Non-GAAP) | $ | 9,782 | $ | 5,956 |
PRODUCTION GUIDANCE | Quarter 1 | Full Year | ||||||||||||||
Low | High | Low | High | |||||||||||||
Oil and bitumen (MBbls/d) | ||||||||||||||||
United States | 150 | 155 | 150 | 155 | ||||||||||||
Canada | 100 | 105 | 100 | 105 | ||||||||||||
Total | 250 | 260 | 250 | 260 | ||||||||||||
Natural gas (MMcf/d) | ||||||||||||||||
United States | 1,600 | 1,650 | 1,550 | 1,600 | ||||||||||||
Canada | 20 | 20 | 20 | 20 | ||||||||||||
Total | 1,620 | 1,670 | 1,570 | 1,620 | ||||||||||||
Natural gas liquids (MBbls/d) | ||||||||||||||||
United States | 130 | 135 | 126 | 132 | ||||||||||||
Total Boe (MBoe/d) | ||||||||||||||||
United States | 547 | 565 | 534 | 554 | ||||||||||||
Canada | 103 | 108 | 103 | 108 | ||||||||||||
Total | 650 | 673 | 637 | 662 |
PRICE REALIZATIONS GUIDANCE | Quarter 1 | Full Year | ||||||||||||||||||||||
Low | High | Low | High | |||||||||||||||||||||
Oil and bitumen - % of WTI | ||||||||||||||||||||||||
United States | 83 | % | 93 | % | 85 | % | 95 | % | ||||||||||||||||
Canada | 46 | % | 56 | % | 55 | % | 65 | % | ||||||||||||||||
Natural gas - % of Henry Hub | 83 | % | 93 | % | 83 | % | 93 | % | ||||||||||||||||
NGL - realized price | $ | 9 | $ | 14 | $ | 8 | $ | 18 |
OTHER GUIDANCE ITEMS | Quarter 1 | Full Year | ||||||||||||||||||||||
($ millions, except Boe) | Low | High | Low | High | ||||||||||||||||||||
Marketing & midstream operating profit | $ | 180 | $ | 210 | $ | 860 | $ | 920 | ||||||||||||||||
Lease operating expenses per Boe | $ | 9.60 | $ | 10.20 | $ | 9.70 | $ | 10.30 | ||||||||||||||||
General & administrative expenses per Boe | $ | 4.00 | $ | 4.30 | $ | 3.75 | $ | 4.25 | ||||||||||||||||
Production and property taxes as % of upstream sales | 7.1 | % | 8.1 | % | 6.7 | % | 7.7 | % | ||||||||||||||||
Depreciation, depletion and amortization per Boe | $ | 14.75 | $ | 15.75 | $ | 15.25 | $ | 16.25 | ||||||||||||||||
Other operating items |
$ |
20 |
$ |
25 |
$ |
80 |
$ |
100 |
||||||||||||||||
Net financing costs | $ | 110 | $ | 130 | $ | 440 | $ | 500 | ||||||||||||||||
Current income tax rate |
5.0 |
% | 10.0 | % |
5.0 |
% | 10.0 | % | ||||||||||||||||
Deferred income tax rate |
25.0 |
% |
30.0 |
% |
25.0 |
% |
30.0 |
% | ||||||||||||||||
Total income tax rate |
30.0 |
% |
40.0 |
% |
30.0 |
% |
40.0 |
% | ||||||||||||||||
Net earnings attributable to noncontrolling interests | $ | — | $ | 20 | $ | 50 | $ | 100 |
CAPITAL EXPENDITURES GUIDANCE | Quarter 1 | Full Year | ||||||||||||||||||
(in millions) | Low | High | Low | High | ||||||||||||||||
Exploration and development | $ |
1,300 |
$ |
1,400 |
$ | 4,100 | $ | 4,400 | ||||||||||||
Capitalized G&A and interest | 100 | 120 | 400 | 500 | ||||||||||||||||
Total oil and gas |
1,400 |
1,520 |
4,500 | 4,900 | ||||||||||||||||
Midstream (1) | 50 | 70 | 110 | 160 | ||||||||||||||||
Corporate and other | 30 | 40 | 100 | 150 | ||||||||||||||||
Devon capital expenditures | $ |
1,480 |
$ |
1,630 |
$ | 4,710 | $ | 5,210 | ||||||||||||
(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 |
||||||||||||||||||||||||||
Q1-Q4 2015 | 107,203 | $ | 91.07 | 31,500 | $ | 89.67 | $ | 97.84 | 28,000 | $ | 116.43 | ||||||||||||||||||||||
Q1-Q4 2016 | - | $ | - | - | $ | - | $ | - | 18,500 |
$ |
103.11 | ||||||||||||||||||||||
Oil Basis Swaps | |||||||||||||||||||||||||||||||||
Period | Index | Volume (Bbls/d) |
Weighted Average Differential to |
||||||||||||||||||||||||||||||
Q1-Q4 2015 | Western Canadian Select | 31,682 | $(17.42) | ||||||||||||||||||||||||||||||
Natural Gas Commodity Hedges | |||||||||||||||||||||||||||||||||
Price Swaps | Price Collars | Call Options Sold | |||||||||||||||||||||||||||||||
Period |
Volume |
Weighted |
Volume |
Weighted |
Weighted |
Volume |
Weighted |
||||||||||||||||||||||||||
Q1-Q4 2015 | 250,000 | $ | 4.32 | 328,452 | $ | 4.05 | $ | 4.36 | 550,000 | $ | 5.09 | ||||||||||||||||||||||
Q1-Q4 2016 | - | $ | - | - | $ | - | $ | - | 400,000 | $ | 5.00 | ||||||||||||||||||||||
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.
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