- Delivered U.S. oil production growth of
79 percent year over year
- Increased operating cash flow by 47
percent year over year
- Achieved outstanding well results in
the Delaware Basin
- Completed non-core asset divestiture
program with excellent results
- Reduced debt by $3.2 billion
Devon Energy Corporation (NYSE:DVN) today reported net earnings
of $675 million or $1.65 per common share ($1.64 per diluted share)
for the quarter ended June 30, 2014. This compares with
second-quarter 2013 net earnings of $683 million or $1.69 per
common share ($1.68 per diluted share).
Adjusting for items securities analysts typically exclude from
their published estimates, the company earned $574 million or $1.40
per diluted share in the second quarter. This represents a 16
percent increase in adjusted earnings compared to the second
quarter of 2013.
“The second quarter was an outstanding one for Devon as we
continued to focus on execution in our core and emerging areas,
delivering great results,” said John Richels, president and chief
executive officer. “Our drilling programs drove impressive oil
production growth in our retained assets, and our disciplined
pursuit of high-margin production also improved pre-tax cash
margins by 40 percent year over year.”
Devon generated cash flow from operations of $2.0 billion in the
second quarter, a 47 percent increase compared to the second
quarter of 2013. Combined with $2.8 billion of pre-tax proceeds
received from the sale of the company’s Canadian conventional gas
business, Devon’s total cash inflows for the quarter reached $4.8
billion.
“With the announced sale of our U.S. non-core assets in June,
the portfolio transformation that we announced late last year is
now complete,” Richels said. “Devon emerges with a formidable, more
focused portfolio positioned in some of the most attractive North
America resource plays. We project liquids to approach 60 percent
of our production by year-end and expect to deliver attractive
high-margin production growth for many years to come.”
Retained Assets Drive Strong Production Growth
Total production of oil, natural gas and natural gas liquids
averaged 667,000 oil-equivalent barrels (Boe) per day in the second
quarter of 2014. Excluding production associated with divestiture
properties, production from Devon’s retained, go-forward asset base
increased to 620,000 Boe per day in the second quarter. This
represents a 14 percent increase compared to the second quarter of
2013. The company’s divestiture assets averaged 47,000 Boe per day
in the second quarter, of which 77 percent was natural gas.
Growth in oil production drove the increase in second-quarter
production from the company’s go-forward assets. Oil production
from these retained assets averaged 205,000 barrels per day, a 34
percent increase compared to the second quarter of 2013. The most
significant growth came from the company’s U.S. operations, where
oil production increased a substantial 79 percent year over year.
This dramatic increase in U.S. oil production is largely
attributable to growth from Devon’s Permian Basin and Eagle Ford
operations. Reconciliations of retained and non-core asset
production are provided later in this release.
Key Operating Highlights
Permian Basin – Net production averaged a record
95,000 Boe per day in the second quarter, a 25 percent increase
compared to the second quarter of 2013. Light-oil production
accounted for nearly 60 percent of Devon’s total Permian
production.
The Bone Spring play in the Delaware Basin was a significant
contributor to the company’s growth in the Permian. Devon added 22
new Bone Spring wells to production in the second quarter, with
initial 30-day rates averaging 660 Boe per day, exceeding the
company’s type-curve expectations. Devon has identified 3,500
risked, undrilled locations across its Bone Spring acreage position
and expects to generate additional inventory increases over
time.
Also in the Delaware Basin, Devon commenced production on two
high-rate oil wells targeting the Delaware Sands in Lea County, New
Mexico. Initial 30-day production from each of these two wells
averaged about 1,000 Boe per day, which was nearly 70 percent light
oil. The company has approximately 80,000 net acres prospective for
the Delaware Sands within Southeast New Mexico.
In the Southern Midland Basin, Devon delivered another quarter
of strong results from its oil development program in the Wolfcamp
Shale. During the second quarter, the company brought 30 Wolfcamp
Shale wells online, increasing average net production in this play
to 12,000 Boe per day. This represents year-over-year net
production growth of 9,000 Boe per day.
Eagle Ford – In the second quarter, Devon’s net
production averaged 65,000 Boe per day. This result was in line
with the company’s guidance range in spite of production
interruptions related to third-party gathering system downtime.
These gathering constraints reduced production by approximately
8,000 Boe per day in the quarter. With the acceleration of well
tie-ins, Devon’s net production in June increased to an average
73,000 Boe per day, representing an increase of nearly 50 percent
from the first-quarter exit rate. The company remains on track to
average 70,000 to 80,000 net Boe per day from this world-class
asset for its 10 months of ownership in 2014.
During the second quarter, the company added 60 new Eagle Ford
wells to production, with initial 30-day production rates for these
wells approaching 1,200 Boe per day. Included in Devon’s second
quarter results was the company’s first operated well in Lavaca
County, Texas. Initial 24-hour production from the Ronyn 1H was
approximately 1,600 Boe per day, which was 70 percent light
oil.
In addition to an active upstream program, the company recently
completed construction of its Victoria Express Pipeline (VEX) in
the Eagle Ford which provides marketing flexibility. VEX is a
56-mile oil pipeline that runs from Devon’s core position in DeWitt
County to Port of Victoria terminal on the Texas Gulf Coast.
Initial capacity on VEX is 50,000 barrels per day, with invested
capital to date totaling $70 million. Devon owns 100 percent of
VEX, making this strategic midstream asset a possible candidate for
drop down into EnLink Midstream.
Canadian Thermal Oil –The significant improvement
in Western Canadian Select benchmark pricing during the quarter
increased price realizations at Devon’s Jackfish thermal oil
projects to $65.88, a 22 percent increase compared to the second
quarter of 2013.
Gross production from Devon’s Jackfish 1 and Jackfish 2 thermal
oil projects averaged 60,000 barrels of oil per day in the second
quarter, a 3 percent increase compared to the year-ago period.
After accounting for royalties, net production from the company’s
Jackfish complex averaged 52,000 barrels per day. Second-quarter
results were highlighted by the excellent performance at Jackfish
1, where gross production exceeded name-plate facility capacity,
averaging 36,000 barrels per day.
Construction of the company’s Jackfish 3 thermal oil project was
completed in the second quarter, and first steam commenced in early
July. First oil will occur in the third quarter, with production
ramping throughout 2015. At peak production, Devon’s three 100
percent-owned Jackfish projects are expected to produce 105,000
barrels per day before royalties and have the potential to generate
in excess of $1 billion of free cash flow annually.
Also completed in the second quarter was the expansion of
Devon’s Access Pipeline. The Access Pipeline system services the
company’s growing thermal oil business in Canada by delivering
diluent to its production facilities and transporting blended oil
to market in Edmonton. The company owns a 50 percent interest in
this strategically located pipeline, which has a gross capacity of
340,000 barrels per day. To date, the company has invested
approximately $1 billion in this project. Devon has granted EnLink
Midstream a right of first offer for its interest in Access
Pipeline.
Anadarko Basin – Net production in the second
quarter averaged a record 93,000 Boe per day. Second-quarter
liquids production increased 26 percent compared to the prior-year
quarter. Liquids now account for 45 percent of total production in
the Anadarko Basin.
The Cana-Woodford play in the Anadarko Basin was the most
significant contributor to this strong second-quarter production
growth. Devon brought 20 Cana-Woodford wells online, with initial
30-day rates averaging 1,250 Boe per day, of which 55 percent was
liquids. Driven by an enhanced completion design, these outstanding
initial production rates exceeded the company’s Cana-Woodford type
curve by more than 35 percent.
Given the company’s recent success in the Cana-Woodford, Devon
further bolstered its leasehold position in May by acquiring an
additional 50,000 net acres in the core of the play. This
transaction closed in late June, increasing the company’s total
Cana-Woodford position to roughly 280,000 net surface acres with
stacked-pay potential. This additional acreage further bolsters the
thousands of undrilled locations the company’s has in this
high-quality, liquids-rich play.
The company also commenced production on four high-rate wells in
the Granite Wash play. Initial 30-day rates from these wells
averaged approximately 1,900 Boe per day, including 1,200 barrels
of liquids per day. These results include a Mathers Ranch 167-3H
well that achieved an outstanding 30-day rate of nearly 4,000 Boe
per day.
Barnett Shale – Continuing efforts to optimize
existing well performance sustained net production at 1.3 billion
cubic feet of natural gas equivalent per day in the second quarter
compared to the previous quarter. Liquids production increased 2
percent year over year to an average of 57,000 barrels per day,
accounting for 27 percent of total Barnett production.
Rockies – Devon’s Powder River Basin oil program
continued to deliver encouraging results in the second quarter. The
company’s drilling activity was highlighted by two wells targeting
the Parkman formation in Campbell County, Wyoming. Initial 30-day
production from these wells averaged 950 Boe per day, of which 95
percent was light oil, at an average well cost of roughly $5
million per well.
To date, the company has identified approximately 1,000 risked
oil locations across its Powder River Basin position, with the
Parkman formation accounting for nearly 75 percent of this
inventory. Devon expects this drilling inventory to increase over
time as the company continues to appraise its 150,000 net acres
across the Powder River Basin that is prospective for the Parkman,
Turner and Frontier intervals.
Mississippian-Woodford Trend – Net production from
Devon’s Mississippian-Woodford Trend averaged 18,000 Boe per day in
the second quarter, of which approximately 50 percent was light
oil. This represents a production growth rate of 13,000 Boe per day
compared to the second quarter of 2013. The company commenced
production on 55 operated wells within the Sinopec joint-venture
area during the quarter. Overall results in the emerging oil
opportunity continue to support target economics.
Upstream Revenue Increases and Margins Expand
Revenue from oil, natural gas and natural gas liquids sales
totaled $2.7 billion in the second quarter, a 21 percent increase
compared to the second quarter of 2013. This growth in revenue was
attributable to the increase in high-margin oil production combined
with improved oil price realizations. These factors resulted in
second-quarter oil sales increasing to more than 60 percent of
Devon’s total upstream revenues.
Devon’s marketing and midstream operating profit reached $224
million, which exceeded the company’s guidance and represented a 90
percent increase compared to the second quarter of 2013. The
year-over-year increase in operating profit was driven by the
consolidation of EnLink Midstream and improved marketing
margins.
Pre-tax cash expenses totaled $1.1 billion in the second
quarter, in line with previous guidance. Excluding the costs
associated with the consolidation of EnLink Midstream, pre-tax cash
costs for the company’s upstream business were 7 percent higher
than the second quarter of 2013. The increase in cash costs were
attributable to higher production taxes related to strong revenue
growth and higher operating costs associated with the company’s
rapidly growing high-margin oil production.
Overall, the benefits of higher-margin oil production, improved
price realizations, and a low cost structure resulted in expanded
cash margin for Devon. Pre-tax cash margin reached $30.47 per Boe
in the second quarter, a 40 percent increase compared to the
year-ago period.
Financial Position Remains Strong; Foreign Cash
Repatriated
With investment-grade credit ratings and cash balances of $1.7
billion at the end of the second quarter, Devon’s financial
position remains exceptionally strong. At June 30, the company’s
net debt totaled $10.7 billion, of which $1.7 billion was
attributable to the consolidation of EnLink Midstream and is
non-recourse to Devon.
In the second quarter, Devon repatriated $2.8 billion from the
sale of its Canadian conventional gas assets. The company utilized
these divestiture proceeds, cash on hand, and free cash flow
generated during the quarter to reduce debt balances by $3.2
billion. Proceeds from the company’s recently announced U.S.
non-core asset sale will be used to further reduce net debt in the
third quarter.
Divestiture Program Complete
Last November, Devon announced an initiative to monetize
non-core assets in both the U.S. and Canada, sharpening its focus
on retained, high-growth assets. Since that announcement the
company has sold or agreed to sell $5.1 billion in non-core assets.
In April, the company completed the sale of its largest divestiture
package, the Canadian conventional gas business, for $2.8 billion
(C$3.125 billion). In June, Devon announced an agreement to sell
all of its non-core U.S. oil and gas properties for $2.3 billion.
The agreement covers the company’s remaining assets targeted for
divestiture and completes the divestiture program.
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). 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 to be Webcast Today
Devon will conduct a conference call webcast (with associated
slides) today at 10 a.m. Central (11 a.m. Eastern). The webcast
will feature discussion of the company’s second-quarter results. To
listen to the webcast, including synchronized slides, visit
www.devonenergy.com. Additionally, the slides will be available via
the website for printing or download approximately 10 minutes
before the webcast. A replay of the webcast will be available on
our website.
This press release includes "forward-looking statements" as
defined by the Securities and Exchange Commission (SEC). Such
statements are those concerning strategic plans, expectations and
objectives for future operations. All statements, other than
statements of historical facts, included in this press release that
address activities, events or developments that the company
expects, believes or anticipates will or may occur in the future
are forward-looking statements. Such statements are subject to a
number of assumptions, risks and uncertainties, many of which are
beyond the control of the company. Statements regarding future
drilling and production are subject to all of the risks and
uncertainties normally incident to the exploration for and
development and production of oil and gas. These risks include, but
are not limited to, the volatility of oil, natural gas and NGL
prices; uncertainties inherent in estimating oil, natural gas and
NGL reserves; the extent to which we are successful in acquiring
and discovering additional reserves; unforeseen changes in the rate
of production from our oil and gas properties; uncertainties in
future exploration and drilling results; uncertainties inherent in
estimating the cost of drilling and completing wells; drilling
risks; competition for leases, materials, people and capital;
midstream capacity constraints and potential interruptions in
production; risk related to our hedging activities; environmental
risks; political changes; changes in laws or regulations; our
limited control over third parties who operate our oil and gas
properties; our ability to successfully complete mergers,
acquisitions and divestitures; and other risks 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. U.S. 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.
Devon Energy Corporation is an Oklahoma City-based independent
energy company engaged in oil and gas exploration and production.
Devon is a leading U.S.-based independent oil and gas producer and
is included in the S&P 500 Index. For more information about
Devon, please visit our website at www.devonenergy.com.
DEVON ENERGY CORPORATIONFINANCIAL AND
OPERATIONAL INFORMATION
PRODUCTION (net of royalties) Quarter Ended
Six Months Ended June 30, June 30,
Average Daily Production: 2014
2013 2014
2013 Natural Gas (MMcf) United States - Core 1,691
1,678 1,641 1,667 Canada - Core 23 32 23 35 Non-Core 217 730 397
730 Total Natural Gas 1,931 2,440 2,061 2,432 Oil / Bitumen (MBbls)
United States - Core 128 71 112 67 Canada - Core 77 82 78 82
Non-Core 4 16 10 17 Total Oil / Bitumen 209 169 200 166 Natural Gas
Liquids (MBbls) United States - Core 130 105 125 103 Non-Core 6 17
11 18 Total Natural Gas Liquids 136 122 136 121 Oil Equivalent
(MBoe) United States - Core 539 456 511 448 Canada - Core 81 87 81
88 Non-Core 47 155 87 156 Total Oil Equivalent 667 698 679 692
KEY OPERATING STATISTICS BY REGION
Quarter Ended June 30, 2014 Avg. Production
Gross Wells
Operated Rigs at (MBOED) Drilled June 30,
2014 Permian Basin 95 71 23 Eagle Ford 65 90
2
Canadian Heavy Oil 81 13 3 Barnett Shale 212 29 2 Anadarko Basin 93
21 2 Mississippian-Woodford Trend 18 53 8 Rockies 21 6 4 Other
Assets 35 - -
Core & Emerging Assets - Total 620 283
44
Rockies (Non-Core) 24 - - Gulf Coast (Non-Core) 16 - -
Mid-Continent (Non-Core) 7 - -
Devon - Total 667 283
44
DEVON ENERGY CORPORATIONFINANCIAL AND
OPERATIONAL INFORMATION
BENCHMARK PRICES Quarter
Ended Six Months Ended (average
prices)
June 30, June 30, 2014
2013 2014
2013 Natural Gas ($/Mcf) – Henry
Hub $ 4.68 $ 4.10 $ 4.81 $ 3.72 Oil ($/Bbl) – West Texas
Intermediate (Cushing) $ 103.09 $ 94.14 $ 100.87 $ 94.29
REALIZED PRICES Quarter Ended June 30, 2014 Oil /
Bitumen Gas NGLs Total (Per Bbl)
(Per Mcf) (Per Bbl) (Per Boe) United States $
95.71 $ 4.19 $ 25.22 $ 41.06 Canada (1) $ 69.45 $ 1.56
N/M $ 65.96 Realized price without hedges $
86.00 $ 4.15 $ 25.13 $ 44.12 Cash settlements $ (4.17 ) $ (0.16 ) $
- $ (1.78 ) Realized price, including cash settlements $ 81.83
$ 3.99 $ 25.13 $ 42.34
Quarter Ended
June 30, 2013 Oil / Bitumen Gas NGLs
Total (Per Bbl) (Per Mcf) (Per Bbl)
(Per Boe) United States $ 91.56 $ 3.49 $ 24.80 $ 32.19
Canada (1) $ 61.84 $ 3.44 $ 43.68 $ 43.02
Realized price without hedges $ 75.23 $ 3.48 $ 26.29 $ 35.00 Cash
settlements $ 1.94 $ (0.07 ) $ 0.10 $ 0.23 Realized
price, including cash settlements $ 77.17 $ 3.41 $
26.39 $ 35.23
Six Months Ended June 30, 2014
Oil / Bitumen Gas NGLs Total (Per
Bbl) (Per Mcf) (Per Bbl) (Per Boe) United
States $ 93.96 $ 4.26 $ 27.34 $ 40.30 Canada (1) $ 65.37 $
3.97 $ 50.17 $ 53.26 Realized price without hedges $
82.10 $ 4.23 $ 28.11 $ 42.61 Cash settlements $ (3.19 ) $ (0.25 ) $
- $ (1.70 ) Realized price, including cash settlements $ 78.91
$ 3.98 $ 28.11 $ 40.91
Six Months
Ended June 30, 2013 Oil / Bitumen Gas NGLs
Total (Per Bbl) (Per Mcf) (Per Bbl)
(Per Boe) United States $ 89.64 $ 3.15 $ 25.53 $ 30.29
Canada (1) $ 51.21 $ 3.24 $ 45.54 $ 37.34
Realized price without hedges $ 67.88 $ 3.17 $ 27.16 $ 32.13 Cash
settlements $ 2.06 $ 0.08 $ 0.11 $ 0.80
Realized price, including cash settlements $ 69.94 $ 3.25
$ 27.27 $ 32.93
(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.
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS (in
millions, except per share amounts)
Quarter Ended Six
Months Ended June 30, June 30, 2014
2013 2014 2013 Oil, gas and NGL
sales $ 2,679 $ 2,222 $ 5,236 $ 4,026 Oil, gas and NGL derivatives
(399 ) 366 (719 ) 46 Marketing and midstream revenues 2,230
500 3,718 987 Total
operating revenues 4,510 3,088 8,235
5,059 Lease operating expenses 582 559 1,180
1,084 Marketing and midstream operating expenses 2,006 382 3,311
745 General and administrative expenses 189 167 400 317 Production
and property taxes 150 125 287 238 Depreciation, depletion and
amortization 828 674 1,567 1,378 Asset impairments - 40 - 1,953
Restructuring costs 5 8 42 46 Gains and losses on asset sales
(1,057 ) 1 (1,072 ) - Other operating items 33
32 56 55 Total operating expenses
2,736 1,988 5,771 5,816
Operating income (loss) 1,774 1,100 2,464 (757 ) Net
financing costs 131 103 243 206 Other nonoperating items 89
- 107 2 Earnings (loss)
before income taxes 1,554 997 2,114 (965 ) Income tax expense
(benefit) 854 314 1,085
(309 ) Net earnings (loss) 700 683 1,029 (656 ) Net earnings
attributable to noncontrolling interests 25 -
30 - Net earnings (loss) attributable
to Devon $ 675 $ 683 $ 999 $ (656 ) Net
earnings (loss) per share attributable to Devon: Basic $ 1.65 $
1.69 $ 2.45 $ (1.63 ) Diluted $ 1.64 $ 1.68 $ 2.44 $ (1.63 )
Weighted average common shares outstanding: Basic 408 406 408 406
Diluted 411 407 410 406
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATING STATEMENT OF OPERATIONS (in millions)
Quarter Ended June 30, 2014 Devon
U.S. & Canada EnLink
Eliminations (1)
Total Oil, gas and NGL sales $ 2,679 $ - $ - $ 2,679 Oil,
gas and NGL derivatives (399 ) - - (399 ) Marketing and midstream
revenues 1,478 927 (175 )
2,230 Total operating revenues 3,758
927 (175 ) 4,510 Lease operating
expenses 582 - - 582 Marketing and midstream expenses 1,454 727
(175 ) 2,006 General and administrative expenses 162 27 - 189
Production and property taxes 142 8 - 150 Depreciation, depletion
and amortization 754 74 - 828 Restructuring costs 5 - - 5 Gain on
asset sales (1,057 ) - - (1,057 ) Other operating items 34
(1 ) - 33 Total operating
expenses 2,076 835 (175 )
2,736 Operating income 1,682 92 - 1,774 Net financing costs
117 14 - 131 Other nonoperating items 94 (5 )
- 89 Earnings before income taxes 1,471
83 - 1,554 Income tax expense 836 18
- 854 Net earnings 635 65 - 700 Net
earnings attributable to noncontrolling interests 1
24 - 25 Net earnings
attributable to Devon $ 634 $ 41 $ - $ 675
(1) During the second quarter of 2014, Devon had $175
million of inter-segment fee-based revenues and expenses related to
EnLink that require elimination.
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (in
millions)
Quarter Ended
Six Months Ended June 30, June 30,
2014 2013
2014
2013 Cash flows from operating activities: Net
earnings (loss) $ 700 $ 683 $ 1,029 $ (656 )
Adjustments to reconcile earnings (loss)
to net cash from operating activities:
Depreciation, depletion and amortization 828 674 1,567 1,378 Gains
and losses on asset sales (1,057 ) 1 (1,072 ) - Asset impairments -
40 - 1,953 Deferred income tax expense (benefit) 569 182 777 (441 )
Derivatives and other financial instruments 454 (408 ) 761 (103 )
Cash settlements on derivatives and financial instruments (191 ) 35
(245 ) 149 Other noncash charges 106 92
229 176 Net cash from operating
activities before balance sheet changes 1,409 1,299 3,046 2,456 Net
change in working capital 622 30 470 (128 ) Change in long-term
other assets 11 28 (77 ) 22 Change in long-term other liabilities
7 39 20 48
Net cash from operating activities 2,049 1,396
3,459 2,398 Cash flows
from investing activities:
Acquisitions of property, equipment and
businesses
(238 ) - (6,224 ) - Capital expenditures (1,758 ) (1,643 ) (3,341 )
(3,569 ) Proceeds from property and equipment divestitures 2,800 5
2,942 34 Purchases of short-term investments - (205 ) - (1,076 )
Redemptions of short-term investments - 562 - 2,550 Redemptions of
long-term investments - (1 ) 57 - Other (4 ) 85
84 82 Net cash from investing
activities 800 (1,197 ) (6,482 )
(1,979 ) Cash flows from financing activities: Proceeds from
borrowings of long-term debt, net of issuance costs 374 - 3,720 -
Net short-term debt borrowings (1,119 ) (2,003 ) (862 ) (1,495 )
Long-term debt repayments (2,413 ) - (3,990 ) - Proceeds from stock
option exercises 72 1 83 1 Proceeds from issuance of subsidiary
units 20 - 20 - Dividends paid on common stock (99 ) (89 ) (189 )
(170 ) Distributions to noncontrolling interests (41 ) - (141 ) -
Other 12 2 9 5
Net cash from financing activities (3,194 )
(2,089 ) (1,350 ) (1,659 ) Effect of exchange rate
changes on cash 24 (22 ) 13
(34 ) Net change in cash and cash equivalents (321 ) (1,912
) (4,360 ) (1,274 ) Cash and cash equivalents at beginning
of period 2,027 5,275 6,066
4,637 Cash and cash equivalents at end of
period $ 1,706 $ 3,363 $ 1,706 $ 3,363
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions)
June 30, December
31, 2014 2013 Current
assets: Cash and cash equivalents $ 1,706 $ 6,066 Accounts
receivable 2,301 1,520 Other current assets 385
419 Total current assets 4,392
8,005 Property and equipment, at cost: Oil and gas, based on
full cost accounting: Subject to amortization 75,242 73,995 Not
subject to amortization 3,984 2,791
Total oil and gas 79,226 76,786 Other 8,956
6,195 Total property and equipment, at cost 88,182 82,981
Less accumulated depreciation, depletion and amortization
(51,183 ) (54,534 ) Property and equipment, net
36,999 28,447 Goodwill 8,408 5,858 Other
long-term assets 1,316 567 Total assets
$ 51,115 $ 42,877 Current liabilities:
Accounts payable $ 1,529 $ 1,229 Revenues and royalties payable
1,581 786 Short-term debt 475 4,066 Other current liabilities
1,094 574 Total current liabilities
4,679 6,655 Long-term debt 11,880 7,956
Asset retirement obligations 1,541 2,140 Other long-term
liabilities 1,029 834 Deferred income taxes 5,927 4,793
Stockholders' equity: Common stock 41 41 Additional paid-in capital
3,943 3,780 Retained earnings 16,220 15,410 Accumulated other
comprehensive earnings 1,270 1,268
Total stockholders' equity attributable to Devon 21,474 20,499
Noncontrolling interests 4,585 - Total
stockholders' equity 26,059 20,499
Total liabilities and stockholders' equity $ 51,115 $ 42,877
Common shares outstanding 409 406
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
CAPITAL EXPENDITURES (in millions)
Quarter Ended June 30, 2014 U.S.
Canada Total Exploration
$ 65 $ - $ 65 Development 996 192 1,188
Exploration and development capital $ 1,061 $ 192 $ 1,253
Capitalized G&A 91 Capitalized interest 10 Eagle Ford and Cana
acquisitions 231 Midstream capital (1) 303 Other capital 38
Total Continuing Operations $ 1,926 (1) Includes $216
million attributable to EnLink.
Six Months Ended June 30, 2014 U.S. Canada
Total Exploration $ 138 $ 32 $ 170 Development 1,829
470 2,299 Exploration and development capital (1) $
1,967 $ 502 $ 2,469 Capitalized G&A 174 Capitalized interest 20
Eagle Ford and Cana acquisitions 6,359 Midstream capital (2) 463
Other capital 54
Total Continuing Operations $ 9,539
(1) Includes $87 million attributable to assets identified
for divestiture. (2) Includes $284 million attributable to EnLink.
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.
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. The
following table summarizes the effects of these items on
second-quarter 2014 earnings.
RECONCILIATION TO GAAP
INFORMATION
(in millions)
Quarter Ended June 30, 2014
Before-Tax After-Tax Net
earnings attributable to Devon (GAAP) $ 675 Fair value changes in
financial instruments 289 181 Gain on asset sales and related
repatriation (964 ) (286 ) Restructuring costs 5 4
Adjusted earnings attributable to Devon (Non-GAAP) $ 574
Diluted share count 411 Adjusted diluted earnings per share
attributable to Devon (Non-GAAP) $ 1.40
Devon defines net debt as debt less cash, cash equivalents and
short-term investments 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.
RECONCILIATION TO GAAP
INFORMATION
(in millions)
June 30, 2014
2013 Total debt (GAAP) $ 12,355
$ 10,150 Adjustments: Cash and short-term investments 1,706
4,232 Net debt (Non-GAAP) $ 10,649 $ 5,918
Devon defines pre-tax cash margin as revenues from commodity
sales, marketing and midstream operations, less expenses for lease
operations, marketing and midstream operations, 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 CorporationInvestor ContactsHoward Thill,
405-552-3693orScott Coody, 405-552-4735orShea Snyder,
405-552-4782orMedia ContactChip Minty, 405-228-8647
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