Devon Energy Corp. (NYSE: DVN) today reported operational and
financial results for the first quarter of 2017. Also included
within the release is the company’s guidance outlook for the second
quarter and full-year 2017.
Highlights
- Oil production from U.S. resource plays
exceeds expectations
- Operational momentum builds with strong
results from new well activity
- Higher-value production expands
operating cash flow by 54 percent
- Low cost structure to further improve
by year end
- Multi-year production growth and cash
flow expansion targets on track
“Devon’s development programs delivered strong growth in
high-value production, significantly enhancing profitability in the
first quarter,” said Dave Hager, president and CEO. “Driven by
outstanding well productivity from our U.S. resource plays,
light-oil production increased by 17 percent in the quarter,
exceeding guidance by a wide margin. Importantly, we were able to
deliver this outperformance with a low cost structure that is
expected to further improve as we progress through the year.”
“Looking ahead, we expect our operational momentum to build as
we continue to accelerate investment across our world-class U.S.
drilling programs and shift to full-field development,” said Hager.
“With excellent first-quarter results in hand, we are firmly on
track to achieve our multi-year growth targets and deliver
peer-leading cash flow expansion.”
U.S. Resource Plays Drive Oil and Top-Line Production
Beat
Devon’s oil-driven capital program delivered strong production
results in the first quarter. Oil production averaged 261,000
barrels per day, a 7 percent increase compared to the fourth
quarter of 2016. This result exceeded the top end of the company’s
guidance range by 5,000 barrels per day.
The strong growth in oil production was driven entirely by
Devon’s U.S. resource plays, where the company is attaining the
highest margins within its portfolio. In total, U.S. oil production
reached 123,000 barrels per day in the first quarter, a 17 percent
increase compared to the previous quarter. The robust production
growth was largely attributable to higher completion activity
across the company’s Eagle Ford and STACK operations.
In Canada, production from Devon’s heavy-oil operations averaged
138,000 barrels per day in the first quarter, a 9 percent increase
year over year. This growth was driven by the company’s Jackfish
complex, where gross production increased to a record 125,100
barrels per day in the quarter, exceeding nameplate capacity by
nearly 20 percent.
Overall, total companywide production averaged 563,000
oil-equivalent barrels (Boe) per day in the first quarter, a 5
percent increase compared to the fourth quarter of 2016. With
Devon’s strong growth in higher-value production, oil is the
largest component of Devon’s product mix at 46 percent.
Operational Momentum Builds in U.S. Resource Plays
Devon continued to accelerate investment across its asset
portfolio and exited the first quarter with 15 rigs running
(includes Eagle Ford partner activity). With these higher activity
levels, the company continued to build operational momentum across
its world-class U.S. resource plays by commencing production on
more than 70 new wells in the quarter that achieved 30-day rates
averaging 1,800 Boe per day.
For additional details regarding these prolific well results and
other information about Devon’s E&P operations, please refer to
the company’s first-quarter 2017 operations report at
www.devonenergy.com. Highlights from the report include:
- Wolfcamp program achieves record well
result
- Woodford Shale delivering strong well
productivity in Hobson Row
- STACK appraisal activity confirms
fourth landing zone
- Eagle Ford “diamond stack” pilot
successful
- Jackfish 3 exceeds nameplate capacity
by more than 30 percent
- Powder River Basin produces prolific
well results
Upstream Revenue Advances and EnLink Profitability
Expands
Revenue from oil, natural gas and natural gas liquids sales
totaled $1.3 billion in the first quarter, a 59 percent improvement
compared to the first quarter of 2016. The strong year-over-year
revenue growth was driven by higher commodity price realizations
and a shift in Devon’s product mix to higher-margin oil
production.
The company’s midstream business generated $207 million of
operating profit in the first quarter, driven entirely by Devon’s
strategic investment in EnLink Midstream. Devon has a 64 percent
ownership in EnLink’s general partner (NYSE: ENLC) and a 24 percent
interest in the limited partner (NYSE: ENLK). In aggregate, the
company’s ownership in EnLink has a market value of approximately
$4 billion and is expected to generate cash distributions of
approximately $270 million annually.
Low Cost Structure to Further Improve by Year End
Devon’s successful cost-reduction initiatives have achieved more
than a $1 billion of annualized operating and general and
administrative expenses (G&A) savings compared to peak levels
in 2014. In the first quarter, Devon continued to effectively
control costs with lease operating expenses (LOE) totaling $386
million or $7.62 per Boe. This result was in line with company
guidance and was $58 million lower than the first quarter of
2016.
G&A expenses were also in line with expectations, amounting
to $181 million in the quarter. Excluding costs associated with
EnLink, Devon’s overhead expense for the quarter was $145 million.
Devon’s first-quarter G&A expense included $27 million of
non-cash stock compensation.
Importantly, the company’s low cost structure is expected to
further improve on a per-unit basis in the second half of 2017.
This per-unit improvement is driven by the combination of higher
production rates from the company’s U.S. resource plays and
relatively flat LOE costs, resulting from efficiency gains within
its field operations.
Financial Strength Provides Significant Flexibility
Devon’s financial position remains exceptionally strong, with
investment-grade credit ratings and excellent liquidity. The
company exited the first quarter with $2.1 billion of cash on hand
and, having made $2.5 billion of debt repayments in 2016, Devon has
no significant debt maturities until mid-2021.
Further bolstering financial strength is the company’s
attractive hedge position in 2017. Devon currently has more than 50
percent of its estimated oil and gas production protected for the
remainder of 2017 and is in the process of accumulating additional
hedges in 2018. This disciplined, risk-management program consists
of systematic hedges added on a quarterly basis and discretionary
hedges that take advantage of favorable market conditions.
Operating Cash Flow Expands 54 Percent
Devon’s reported net earnings totaled $565 million or $1.07 per
diluted share in the first quarter. Adjusting for items securities
analysts typically exclude from their published estimates, the
company’s core earnings totaled $217 million or $0.41 per diluted
share in the first quarter, exceeding consensus expectations.
The company’s profitability in the first quarter was
attributable to strong production growth, higher commodity prices
and an improved cost structure. These factors also strengthened
Devon’s operating cash flow to $834 million, a 54 percent increase
from the fourth quarter of 2016.
Multi-Year Growth Targets Firmly on Track
Based on the strong first-quarter operating performance, Devon
is firmly on track to deliver on its previously announced U.S. oil
production growth targets of 13 to 17 percent in 2017 (compared to
the fourth quarter of 2016). This high-margin growth will be driven
by Devon’s STACK and Delaware Basin assets, which are projected to
deliver top-line production growth of greater than 30 percent in
2017.
To achieve these growth targets, the company expects to invest
between $2.0 billion and $2.3 billion of E&P capital in 2017
(no change from prior guidance), with nearly 90 percent of the
capital dedicated to U.S. resource plays. The company plans to
steadily increase drilling activity throughout the year to as many
as 20 operated rigs by year end.
Looking ahead to 2018, the operational momentum created by
accelerated drilling activity in the STACK and Delaware Basin is
expected to expand light-oil production in the U.S. by
approximately 20 percent compared to 2017.
Second-Quarter Production Outlook
Detailed forward-looking guidance for the second quarter and
full-year 2017 is provided later in the release. Of note, in the
second quarter, Devon expects oil production to range from 230,000
to 240,000 barrels per day due to a planned turnaround at the
company’s Jackfish 3 facility and the timing of completions and new
well tie-ins within the U.S.
The reduced completion and tie-in activity in the second quarter
within the U.S. is expected to be driven entirely by the company’s
Eagle Ford asset. In the first quarter, due to efficiency gains,
the company and its partner brought online more wells in the Eagle
Ford than planned. In spite of this timing difference, the
company’s capital and production plan is on track for both the
first half of 2017 and the full year.
Non-GAAP Reconciliations
Pursuant to regulatory disclosure requirements, Devon is
required to reconcile non-GAAP (generally accepted accounting
principles) financial measures to the related GAAP information.
Core earnings and core earnings per share referenced within the
commentary of this release are non-GAAP financial measures.
Reconciliations of these and other non-GAAP measures are provided
within the tables of this release.
Conference Call Webcast and Supplemental Earnings
Materials
Please note that as soon as practicable today, Devon will post
an operations report to its website at www.devonenergy.com. The
company’s first-quarter conference call will be held at 10 a.m.
Central (11 a.m. Eastern) on Wednesday, May 3, 2017, and will serve
primarily as a forum for analyst and investor questions and
answers.
Forward-Looking Statements
This press release includes "forward-looking statements" as
defined by the Securities and Exchange Commission (SEC). Such
statements include those concerning strategic plans, expectations
and objectives for future operations, and are often identified by
use of the words “expects,” “believes,” “will,” “would,” “could,”
“forecasts,” “projections,” “estimates,” “plans,” “expectations,”
“targets,” “opportunities,” “potential,” “anticipates,” “outlook”
and other similar terminology. All statements, other than
statements of historical facts, included in this press release that
address activities, events or developments that the company
expects, believes or anticipates will or may occur in the future
are forward-looking statements. Such statements are subject to a
number of assumptions, risks and uncertainties, many of which are
beyond the control of the company. Statements regarding our
business and operations are subject to all of the risks and
uncertainties normally incident to the exploration for and
development and production of oil and gas. These risks include, but
are not limited to: the volatility of oil, gas and NGL prices;
uncertainties inherent in estimating oil, gas and NGL reserves; the
extent to which we are successful in acquiring and discovering
additional reserves; the uncertainties, costs and risks involved in
exploration and development activities; risks related to our
hedging activities; counterparty credit risks; regulatory
restrictions, compliance costs and other risks relating to
governmental regulation, including with respect to environmental
matters; risks relating to our indebtedness; our ability to
successfully complete mergers, acquisitions and divestitures; the
extent to which insurance covers any losses we may experience; our
limited control over third parties who operate our oil and gas
properties; midstream capacity constraints and potential
interruptions in production; competition for leases, materials,
people and capital; cyberattacks targeting our systems and
infrastructure; and any of the other risks and uncertainties
identified in our Form 10-K and our other filings with the SEC.
Investors are cautioned that any such statements are not guarantees
of future performance and that actual results or developments may
differ materially from those projected in the forward-looking
statements. The forward-looking statements in this press release
are made as of the date of this press release, even if subsequently
made available by Devon on its website or otherwise. Devon does not
undertake any obligation to update the forward-looking statements
as a result of new information, future events or otherwise.
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable and possible reserves that
meet the SEC's definitions for such terms, and price and cost
sensitivities for such reserves, and prohibits disclosure of
resources that do not constitute such reserves. This release
may contain certain terms, such as resource potential, potential
locations, risked and unrisked locations, estimated ultimate
recovery (or EUR), exploration target size and other similar
terms. These estimates are by their nature more speculative
than estimates of proved, probable and possible reserves and
accordingly are subject to substantially greater risk of being
actually realized. The SEC guidelines strictly prohibit us from
including these estimates in filings with the SEC. Investors are
urged to consider closely the disclosure in our Form 10-K,
available at www.devonenergy.com. You can also obtain this form
from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at
www.sec.gov.
About Devon Energy
Devon Energy is a leading independent energy
company engaged in finding and producing oil and natural gas. Based
in Oklahoma City and included in the S&P 500, Devon operates in
several of the most prolific oil and natural gas plays in the U.S.
and Canada with an emphasis on a balanced portfolio. The company is
the second-largest oil producer among North American onshore
independents. For more information, please visit
www.devonenergy.com.
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL
INFORMATION
Quarter Ended
PRODUCTION NET OF ROYALTIES March 31, 2017
2016 Oil and bitumen (MBbls/d)
U. S. - Core 123 142 Heavy Oil 138 126 Retained assets 261 268
Divested assets — 17 Total 261 285
Natural gas liquids
(MBbls/d) U. S. - Core 98 115 Divested assets — 22 Total 98 137
Gas (MMcf/d) U. S. - Core 1,205 1,351 Heavy Oil 23 15
Retained assets 1,228 1,366 Divested assets — 215 Total 1,228 1,581
Oil equivalent (MBoe/d) U. S. - Core 422 482 Heavy Oil 141
129 Retained assets 563 611 Divested assets — 74 Total 563 685
KEY OPERATING STATISTICS BY REGION
Quarter Ended March 31, 2017 Avg.
Production Gross Wells
Operated Rigs at (MBoe/d)
Drilled March 31, 2017 STACK 95 61 7 Delaware Basin
54 12 4 Eagle Ford (1) 83 39 2 Heavy Oil 141 39 1 Barnett Shale 158
— — Rockies Oil 17 7 1 Other assets 15 3 — Total 563 161 15
1) Includes partner rig.
PRODUCTION TREND
2016 2017
Quarter 1 Quarter 2
Quarter 3 Quarter
4 Quarter 1 Oil and bitumen (MBbls/d) STACK 15 19
21 19 21 Delaware Basin 38 36 31 29 30 Eagle Ford 59 41 33 34 48
Heavy Oil 126 121 137 139 138 Barnett Shale 1 1 1 1 1 Rockies Oil
17 15 11 11 13 Other assets 12 11 11 11 10 Retained assets 268 244
245 244 261 Divested assets 17 15 6 — — Total 285 259 251 244 261
Natural gas liquids (MBbls/d) STACK 30 30 23 21 26 Delaware
Basin 12 13 12 10 10 Eagle Ford 24 17 13 11 15 Barnett Shale 46 46
44 43 43 Rockies Oil 1 1 1 1 1 Other assets 2 3 3 4 3 Retained
assets 115 110 96 90 98 Divested assets 22 21 8 — — Total 137 131
104 90 98
Gas (MMcf/d) STACK 306 289 292 284 287 Delaware
Basin 84 99 92 89 88 Eagle Ford 144 103 85 90 119 Heavy Oil 15 28
18 18 23 Barnett Shale 768 757 730 710 683 Rockies Oil 32 31 19 17
15 Other assets 17 14 13 13 13 Retained assets 1,366 1,321 1,249
1,221 1,228 Divested assets 215 206 75 — — Total 1,581 1,527 1,324
1,221 1,228
Oil equivalent (MBoe/d) STACK 96 97 92 88 95
Delaware Basin 63 65 59 54 54 Eagle Ford 107 76 61 60 83 Heavy Oil
129 126 140 141 141 Barnett Shale 175 173 166 163 158 Rockies Oil
23 21 16 15 17 Other assets 18 16 16 16 15 Retained assets 611 574
550 537 563 Divested assets 74 70 27 — — Total 685 644 577 537 563
BENCHMARK PRICES
(average prices)
Quarter 1 2017 2016 Oil ($/Bbl) - West Texas
Intermediate (Cushing) $ 52.00 $ 33.66 Natural Gas ($/Mcf) - Henry
Hub $ 3.32 $ 2.09
REALIZED PRICES Quarter Ended
March 31, 2017
Oil/Bitumen
NGL Gas Total (Per Bbl) (Per
Bbl) (Per Mcf) (Per Boe) United States $ 49.65 $
15.46 $ 2.68 $ 25.86 Canada $ 26.30 N/M N/M $ 25.73
Realized price without hedges $ 37.33 $ 15.46 $ 2.68 $ 25.82 Cash
settlements $ 0.50 $ — $ (0.03 ) $ 0.15 Realized price, including
cash settlements $ 37.83 $ 15.46 $ 2.65 $ 25.97
Quarter
Ended March 31, 2016
Oil/Bitumen
NGL Gas Total (Per Bbl) (Per
Bbl) (Per Mcf) (Per Boe) United States $ 28.74 $
6.84 $ 1.53 $ 14.22 Canada $ 9.18 N/M N/M $ 8.95
Realized price without hedges $ 20.06 $ 6.84 $ 1.53 $ 13.23 Cash
settlements $ — $ — $ 0.13 $ 0.30 Realized price, including cash
settlements $ 20.06 $ 6.84 $ 1.66 $ 13.53
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except per share amounts)
Quarter Ended March 31, 2017
2016 Oil, gas and NGL sales $ 1,309 $ 825 Oil,
gas and NGL derivatives 232 33 Marketing and midstream revenues
2,010 1,268 Asset dispositions and other (4 ) —
Total revenues and other 3,547 2,126
Lease operating expenses 386 444 Marketing and midstream
operating expenses 1,803 1,066 General and administrative expenses
181 194 Production and property taxes 85 78 Depreciation, depletion
and amortization 381 542 Asset impairments 7 3,035 Restructuring
and transaction costs — 247 Other operating items (2 )
20 Total operating expenses 2,841
5,626 Operating income (loss) 706 (3,500 ) Net
financing costs 127 164 Other nonoperating items (19 )
21 Earnings (loss) before income taxes 598 (3,685 )
Income tax expense (benefit) 19 (217 ) Net
earnings (loss) 579 (3,468 ) Net earnings (loss) attributable to
noncontrolling interests 14 (412 ) Net
earnings (loss) attributable to Devon $ 565 $ (3,056 ) Net
earnings (loss) per share attributable to Devon: Basic $ 1.08 $
(6.44 ) Diluted $ 1.07 $ (6.44 ) Weighted average common
shares outstanding: Basic 525 479 Diluted 528 479
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Quarter Ended March
31, 2017 2016 Cash
flows from operating activities: Net earnings (loss) $ 579 $ (3,468
)
Adjustments to reconcile net earnings
(loss) to net cash from operating activities:
Depreciation, depletion and amortization 381 542 Asset impairments
7 3,035 Gains and losses on asset sales 4 — Deferred income tax
benefit (1 ) (207 ) Commodity derivatives (232 ) (33 ) Cash
settlements on commodity derivatives 8 19 Other derivatives and
financial instruments (9 ) 227 Cash settlements on other
derivatives and financial instruments (2 ) (123 ) Asset retirement
obligation accretion 17 19 Amortization of stock-based compensation
46 108 Other — (194 ) Net change in working capital 15 214 Change
in long-term other assets 1 53 Change in long-term other
liabilities 20 (27 ) Net cash from operating
activities 834 165 Cash flows from
investing activities: Capital expenditures (747 ) (749 )
Acquisitions of property, equipment and businesses (20 ) (1,627 )
Proceeds from sale of investment 190 — Divestitures of property and
equipment 38 18 Other (3 ) (1 ) Net cash from
investing activities (542 ) (2,359 ) Cash flows from
financing activities: Borrowings of long-term debt, net of issuance
costs 813 396 Repayments of long-term debt (587 ) (259 ) Payment of
installment payable (250 ) — Net short-term debt repayments — (626
) Issuance of common stock — 1,469 Issuance of subsidiary units 55
727 Dividends paid on common stock (32 ) (125 ) Contributions from
noncontrolling interests 21 3 Distributions to noncontrolling
interests (81 ) (73 ) Taxes for share-based compensation (61 ) (18
) Other (2 ) (1 ) Net cash from financing activities
(124 ) 1,493 Effect of exchange rate changes
on cash (8 ) 26 Net change in cash and cash
equivalents 160 (675 ) Cash and cash equivalents at beginning of
period 1,959 2,310 Cash and cash
equivalents at end of period $ 2,119 $ 1,635
CONSOLIDATED BALANCE
SHEETS (in millions)
March 31, December 31,
2017 2016 Current assets:
Cash and cash equivalents $ 2,119 $ 1,959 Accounts receivable 1,320
1,356 Assets held for sale — 193 Other current assets 336
264 Total current assets 3,775
3,772 Property and equipment, at cost: Oil and gas,
based on full cost accounting: Subject to amortization 76,421
75,648 Not subject to amortization 3,096 3,437
Total oil and gas 79,517 79,085 Midstream and other
10,701 10,455 Total property and equipment, at
cost 90,218 89,540 Less accumulated depreciation, depletion and
amortization (73,797 ) (73,350 ) Property and
equipment, net 16,421 16,190 Goodwill
3,964 3,964 Other long-term assets 1,974 1,987
Total assets $ 26,134 $ 25,913 Current
liabilities: Accounts payable $ 638 $ 642 Revenues and royalties
payable 991 908 Other current liabilities 841
1,066 Total current liabilities 2,470
2,616 Long-term debt 10,381 10,154 Asset retirement
obligations 1,067 1,226 Other long-term liabilities 643 894
Deferred income taxes 651 648 Stockholders’ equity: Common stock 53
52 Additional paid-in capital 7,207 7,237 Accumulated deficit
(1,081 ) (1,646 ) Accumulated other comprehensive earnings
287 284 Total stockholders’ equity
attributable to Devon 6,466 5,927 Noncontrolling interests
4,456 4,448 Total stockholders’ equity
10,922 10,375 Total liabilities and
stockholders’ equity $ 26,134 $ 25,913 Common shares
outstanding 526 523
CONSOLIDATING
STATEMENTS OF OPERATIONS (in millions)
Quarter Ended March
31, 2017
Devon U.S.& Canada
EnLink Eliminations Total Oil, gas and NGL
sales $ 1,309 $ — $ — $ 1,309 Oil, gas and NGL derivatives 232 — —
232 Marketing and midstream revenues 859 1,322 (171 ) 2,010 Asset
dispositions and other 1 (5 ) —
(4 ) Total revenues and other 2,401
1,317 (171 ) 3,547 Lease operating
expenses 386 — — 386 Marketing and midstream operating expenses 879
1,095 (171 ) 1,803 General and administrative expenses 145 36 — 181
Production and property taxes 74 11 — 85 Depreciation, depletion
and amortization 253 128 — 381 Asset impairments — 7 — 7 Other
operating items 15 (17 ) —
(2 ) Total operating expenses 1,752
1,260 (171 ) 2,841 Operating income 649
57 — 706 Net financing costs 82 45 — 127 Other nonoperating items
(19 ) — — (19 ) Earnings
before income taxes 586 12 — 598 Income tax expense 16
3 — 19 Net
earnings 570 9 — 579 Net earnings attributable to noncontrolling
interests — 14 —
14 Net earnings (loss) attributable to Devon $ 570 $
(5 ) $ — $ 565
OTHER
KEY STATISTICS (in millions)
Quarter Ended March 31,
2017
Devon U.S.& Canada
EnLink
Eliminations Total Cash flow
statement related items: Operating cash flow $ 657 $ 177 $ — $
834 Proceeds from sale of investment $ — $ 190 $ — $ 190 Capital
expenditures $ (491 ) $ (256 ) $ — $ (747 ) Payment of installment
payable $ — $ (250 ) $ — $ (250 ) Debt activity, net $ — $ 226 $ —
$ 226 EnLink distributions received (paid) $ 66 $ (147 ) $ — $ (81
) Issuance of subsidiary units $ — $ 55 $
—
$ 55
Balance sheet statement items: Net debt (1) $
4,756 $ 3,506 $
—
$ 8,262 (1) Net debt is a non-GAAP measure. For a
reconciliation of the comparable GAAP measure, see "Non-GAAP
Financial Measures" later in this release.
CAPITAL EXPENDITURES (in millions)
Quarter
Ended March 31, 2017 Exploration and development capital $ 423
Land and other acquisitions 20 Exploration and production
(E&P) capital 443 Capitalized G&A and interest 76 Other
14 Devon capital expenditures (1) $ 533 (1) Excludes
$248 million attributable to EnLink for the first quarter of 2017.
NON-GAAP FINANCIAL MEASURES
This press release includes non-GAAP financial measures. These
non-GAAP measures are not alternatives to GAAP measures, and you
should not consider these non-GAAP measures in isolation or as a
substitute for analysis of our results as reported under GAAP.
Below is additional disclosure regarding each of the non-GAAP
measures used in this press release, including reconciliations to
their most directly comparable GAAP measure.
CORE EARNINGS
Devon’s reported net earnings include items of income and
expense that are typically excluded by securities analysts in their
published estimates of the company’s financial results.
Accordingly, the company also uses the measures of core earnings
and core earnings per share attributable to Devon. Devon believes
these non-GAAP measures facilitate comparisons of its performance
to earnings estimates published by securities analysts. Devon also
believes these non-GAAP measures can facilitate comparisons of its
performance between periods and to the performance of its peers.
The following table summarizes the effects of these items on
first-quarter 2017 earnings.
(in millions, except per share amounts)
Quarter Ended March 31, 2017 Before-tax
After-tax
AfterNoncontrollingInterests
Per Share Earnings attributable to
Devon (GAAP) $ 598 $ 579 $ 565 $ 1.07 Adjustments: Fair value
changes in financial instruments and foreign currency (250 ) (164 )
(161 ) (0.32 ) Deferred tax asset valuation allowance — (192 ) (192
) (0.36 ) Gains and losses on asset sales 4 4 2 0.01 Asset
impairments 7 6 3
0.01 Core earnings attributable to Devon (Non-GAAP) $ 359
$ 233 $ 217 $ 0.41
NET DEBT
Devon defines net debt as debt less cash and cash equivalents
and net debt attributable to the consolidation of EnLink Midstream
as presented in the following table. Devon believes that netting
these sources of cash against debt and adjusting for EnLink net
debt provides a clearer picture of the future demands on cash from
Devon to repay debt.
(in millions)
March 31, 2017 Devon
U.S. & Canada EnLink
Devon Consolidated Total debt (GAAP) $ 6,860 $
3,521 $ 10,381 Less cash and cash equivalents (2,104 )
(15 ) (2,119 ) Net debt (Non-GAAP) $ 4,756 $
3,506 $ 8,262
DEVON ENERGY CORPORATION
FORWARD LOOKING GUIDANCE
PRODUCTION GUIDANCE Quarter 2 Full Year
Low High Low
High Oil and bitumen (MBbls/d) U.S. 110
115 119 123 Heavy Oil 120 125 130 135 Total 230 240 249 258
Natural gas liquids (MBbls/d) Total 97 102 95 100
Gas
(MMcf/d) U.S. 1,140 1,170 1,160 1,200 Heavy Oil 14 18 14 16
Total
1,154
1,188
1,174 1,216
Oil equivalent (MBoe/d) U.S. 397 412 407 423
Heavy Oil 122 128 132 138 Total 519 540 539 561
PRICE REALIZATIONS
GUIDANCE Quarter 2 Full Year Low
High Low
High Oil and bitumen - % of WTI U.S. 88 % 98 % 88 % 98 %
Canada 57 % 67 % 50 % 60 % NGL - realized price $ 12 $ 15 $ 13 $ 16
Natural gas - % of Henry Hub 75 % 85 % 76 % 86 %
OTHER GUIDANCE ITEMS
Quarter 2 Full Year ($ millions, except %)
Low
High Low
High Marketing & midstream operating profit $ 215 $ 235
$ 900 $ 950 Lease operating expenses $ 370 $ 420 $ 1,500 $ 1,600
General & administrative expenses (1) $
185
$
205
$ 630 $ 690 Production and property taxes $ 70 $ 80 $ 275 $ 325
Depreciation, depletion and amortization $ 385 $ 435 $ 1,650 $
1,750 Other operating items $ 10 $ 20 $ 70 $ 80 Net financing costs
$ 125 $ 135 $ 485 $ 535 Current income tax rate 5.0 % 15.0 % 5.0 %
15.0 % Deferred income tax rate 20.0 % 30.0 %
20.0 % 30.0 %
Total income tax rate
25.0 % 45.0 % 25.0 % 45.0 % Net
earnings attributable to noncontrolling interests $ 10 $ 20 $ 50 $
100
(1)
Includes $20 million of non-recurring
charges primarily related to severance.
CAPITAL
EXPENDITURES GUIDANCE Quarter 2 Full Year (in
millions)
Low High Low
High Exploration and development $ 525
$ 575 $ 2,000 $ 2,300 Capitalized G&A 55 65 200 250 Capitalized
interest 15 20 60 90 Other 5 15 25 50
Devon capital expenditures (1) $ 600 $ 675 $ 2,285 $ 2,690 (1)
Excludes capital expenditures related to EnLink.
COMMODITY
HEDGES Oil Commodity Hedges Price Swaps
Price Collars Period
Volume(Bbls/d)
WeightedAverage Price($/Bbl)
Volume(Bbls/d)
WeightedAverage FloorPrice ($/Bbl)
WeightedAverage CeilingPrice ($/Bbl)
Q2-Q4 2017 74,615 $ 54.34 64,342 $ 45.63 $ 57.96 Q1-Q4 2018 6,592 $
53.40 15,921 $ 46.88 $ 56.88
Oil Basis
Swaps Period Index Volume (Bbls/d)
Weighted Average Differential toWTI
($/Bbl)
Q2-Q4 2017 Western Canadian Select 75,622 $ (14.71 ) Q2-Q4 2017
Midland Sweet 20,000 $ (0.41 )
Natural Gas Commodity Hedges Price Swaps
Price Collars Period
Volume(MMBtu/d)
WeightedAverage Price($/MMBtu)
Volume(MMBtu/d)
WeightedAverage FloorPrice ($/MMBtu)
WeightedAverage CeilingPrice ($/MMBtu)
Q2-Q4 2017 206,600 $ 3.19 424,800 $ 2.99 $ 3.39 Q1-Q4 2018 78,836 $
3.18 41,918 $ 3.31 $ 3.65
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. Commodity hedge positions are shown as of April
25, 2017.
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version on businesswire.com: http://www.businesswire.com/news/home/20170502006558/en/
Devon Energy CorporationInvestor ContactsScott Coody,
405-552-4735Chris Carr, 405-228-2496Media ContactJohn
Porretto, 405-228-7506
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