Devon Energy Reports First-Quarter 2015 Results

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OKLAHOMA CITY--(BUSINESS WIRE)-- Devon Energy Corp. (NYSE:DVN) today announced core earnings of $89 million, or $0.22 per diluted share, for the first quarter of 2015. The Company’s total cash inflows for the quarter reached $2.2 billion, consisting of $1.6 billion of operating cash flow and $569 million of proceeds received from the sale of EnLink common units.

“Devon delivered outstanding operational results in the first quarter as we continued to deliver superior execution across our repositioned asset portfolio,” said John Richels , president and CEO. “Our focused drilling activity has generated production growth that exceeded our guidance for the third consecutive quarter, our capital programs benefited from substantial service cost savings and we did an exceptional job controlling operating expenses.

“Additionally, the proceeds from the sale of EnLink units allow us to further strengthen our investment-grade balance sheet and enhance our liquidity position,” Richels said. “Combined with our recent sale of the Victoria Express Pipeline to EnLink, which closed early in the second quarter, we generated approximately $870 million of value for our shareholders at a substantial premium to Devon’s current trading multiple.”

On a reported basis, due to a non-cash, full-cost ceiling charge, Devon had a net loss of $3.6 billion for the first-quarter 2015. This compares with first-quarter 2014 reported net earnings of $324 million.

Production Exceeds Guidance for Third Consecutive Quarter

Total production from Devon’s retained asset base averaged 685,000 oil-equivalent barrels (Boe) per day during the first quarter of 2015. This result exceeded the top end of the Company’s guidance range by 12,000 Boe per day and represents a 22 percent increase compared to the first quarter of 2014. Liquids accounted for 60 percent of the Company’s production mix.

Devon delivered record oil production of 272,000 barrels per day in the first quarter. This result also exceeded the top end of the Company’s guidance range by 12,000 barrels per day and represents a 55 percent increase compared to the first quarter of 2014. The most significant growth came from the Company’s U.S. operations, where oil production increased a substantial 72 percent for the quarter year over year.

The strong growth in U.S. production was largely attributable to prolific well results from the Company’s world-class Eagle Ford assets. Net production in the Eagle Ford averaged 122,000 Boe per day in the first quarter, a 23 percent increase compared to the fourth quarter of 2014 and nearly a 140% increase in production compared to Devon’s first month of ownership in March 2014. In addition, the Company achieved another quarter of strong production growth in the Delaware Basin, where net production averaged 53,000 Boe per day, an increase of 15 percent compared to the fourth quarter of 2014.

Devon’s heavy-oil operations in Canada also delivered impressive production growth. In aggregate, net oil production from the Company’s heavy-oil projects increased to a record 104,000 barrels per day in the first quarter. Driven by the continued ramp-up of the Jackfish 3 facility, net oil production in Canada increased 33 percent compared to the first quarter of 2014.

Devon Raises 2015 Production Outlook; Lowering E&P Capital Budget

Detailed forward-looking guidance for the second quarter and full-year 2015 is provided later in the release. A notable update from this revised outlook is Devon raising its total oil production growth to a range of 25 to 35 percent, a substantial increase from the Company’s previous full-year growth guidance of 20 to 25 percent. Due to the improving outlook for oil production, the Company has also raised its top-line production growth guidance in 2015 to a range of 5 to 10 percent.

In addition to higher production, Devon is also benefiting from lower capital requirements. The Company’s 2015 E&P capital program is now expected to range from $3.9 to $4.1 billion. This represents a $250 million reduction in capital spending compared to the Company’s previous guidance.

Operations Report

For additional details on Devon’s E&P operations, please refer to the Company’s first-quarter 2015 Operations Report at www.devonenergy.com. Highlights from the report include:

Hedges Increase Upstream Revenue; Midstream Profit Rises

Revenue from oil, natural gas and natural gas liquids sales totaled $1.3 billion in the first quarter of 2015, with oil revenue increasing to 64 percent of total upstream revenues. This increased oil sales weighting was attributable to the Company’s substantial growth in both U.S. and Canadian oil production during the quarter.

Cash settlements related to the Company’s oil and natural gas hedges increased revenue by nearly $600 million, or approximately $10 per Boe, in the first quarter. At the end of March, Devon’s commodity hedges had a fair-market value of $1.6 billion.

The Company’s midstream operating profit reached $193 million in the first quarter. This result represents a 6 percent increase compared to the first quarter of 2014 and was right in line with guidance. The year-over-year increase in midstream operating profit was driven by continued growth from EnLink Midstream.

Cost Reduction Initiatives Delivering Strong Results

The Company has several cost reduction initiatives underway that positively impacted first-quarter results. Field-level operating costs, which includes both lease operating expenses (LOE) and production taxes, declined 9 percent to $10.73 per Boe compared to the first quarter of 2014.

The most significant operating cost savings came from LOE, which is the Company’s largest field-level cost. LOE declined 7 percent compared to the year-ago period to $8.97 per Boe and was 7 percent below the low end of Devon’s guidance range. These LOE cost savings were realized across all regions of the Company’s portfolio.

Based on year-to-date cost savings, Devon now expects the midpoint of its full-year 2015 LOE to decline to around $9.30 per Boe. Compared to previous guidance, this implies a full-year cash cost savings of around $170 million.

Production and property taxes were $108 million in the first quarter of 2015, a 21 percent decline year over year. The decline was driven by lower production taxes resulting from lower upstream revenue.

General and administrative expenses (G&A) totaled $251 million in the first quarter of 2015, essentially flat compared to the fourth quarter of 2014. Of this first-quarter G&A expense, $41 million was attributable to non-cash related items. Excluding non-cash items, G&A declined 7 percent sequentially.

Excluding non-recurring items, Devon’s income tax rate was 36 percent of pre-tax earnings for the first quarter of 2015. Of this adjusted rate, the Company incurred a current tax rate of 8 percent, with a deferred tax rate of 28 percent for the quarter.

Accretive Midstream Transactions Strengthen Balance Sheet

Devon recently utilized its strategic investment in EnLink to further strengthen its financial position through a series of highly accretive transactions. In aggregate, the total value of these transactions for Devon was approximately $870 million.

The first of these transactions occurred on March 23, with the announced sale of its Victoria Express Pipeline in the Eagle Ford to EnLink Midstream Partners (NYSE: ENLK). Total consideration for this highly accretive transaction was approximately $215 million or about 10 times 2015 estimated EBITDA. This asset transaction closed on April 1, 2015, with cash proceeds received in the second quarter.

On March 24, Devon commenced a secondary offering of 22.8 million ENLK partnership units. This offering settled in late March, with the Company realizing total cash proceeds of $569 million. Subsequent to quarter end, underwriters fully exercised their option to purchase an additional 3.4 million ENLK partnership units from Devon. This resulted in an incremental $85 million of proceeds received in the second-quarter.

With investment-grade credit ratings and cash balances of $1.9 billion at the end of the first quarter, Devon’s financial position remains exceptionally strong. At March 31, the Company’s net debt, excluding non-recourse EnLink obligations, totaled $7.5 billion.

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). 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 first-quarter 2015 conference call will be held at 10 a.m. Central (11 a.m. Eastern) on Wednesday, May 6, 2015, 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 “forecasts”, “projections”, “estimates”, “plans”, “expectations”, “targets”, “opportunities”, “potential”, “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 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.

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,
2015       2014
 
Oil and bitumen (MBbls/d)
United States 168 98
Canada 104 78
Retained assets 272 176
Divested assets - 14
Total 272 190
Natural gas liquids (MBbls/d)
United States 139 119
Divested assets - 16
Total 139 135
Gas (MMcf/d)
United States 1,617 1,587
Canada 28 20

Retained assets

1,645 1,607
Divested assets - 585
Total 1,645 2,192
Oil equivalent (MBoe/d)
United States 576 482
Canada 109 81
Retained assets 685 563
Divested assets - 128
Total 685 691
 
                 
KEY OPERATING STATISTICS BY REGION
Quarter Ended March 31, 2015

Avg. Production
(MBoe/d)

Gross Wells Drilled

Operated Rigs at
March 31, 2015

Eagle Ford 122 87 1
Permian Basin 102 67 15
Canadian Heavy Oil 109 21 2
Anadarko Basin 88 24 8
Barnett Shale 191 - -
Rockies 22 13 2
Other assets 51 16 2
Total 685 228 30
 
                             
PRODUCTION TREND 2014 2014 2014 2014 2015
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Quarter 1
 
Oil (MBbls/d)
Eagle Ford 11 40 47 60 75
Permian Basin 55 55 56 55 60
Canadian Heavy Oil 78 77 80 93 104
Anadarko Basin 9 11 10 10 9
Barnett Shale 2 2 2 2 1
Rockies 8 8 10 9 12
Other assets 13 12 11 10 11
Retained assets 176 205 216 239 272
Divested assets 14 4 3 - -
Total 190 209 219 239 272
Natural gas liquids (MBbls/d)
Eagle Ford 3 11 14 18 23
Permian Basin 16 18 19 20 19
Anadarko Basin 29 31 34 34 30
Barnett Shale 55 55 54 53 51
Rockies 1 1 1 1 1
Other assets 15 14 16 15 15
Retained assets 119 130 138 141 139
Divested assets 16 6 5 - -
Total 135 136 143 141 139
Gas (MMcf/d)
Eagle Ford 24 88 109 127 143
Permian Basin 121 134 136 137 137
Canadian Heavy Oil 20 23 26 23 28
Anadarko Basin 281 309 323 329 297
Barnett Shale 931 932 896 878 827
Rockies 65 67 66 58 53
Other assets 165 159 160 155 160
Retained assets 1,607 1,712 1,716 1,707 1,645
Divested assets 585 219 138 3 -
Total 2,192 1,931 1,854 1,710 1,645
Oil equivalent (MBoe/d)
Eagle Ford 18 65 79 99 122
Permian Basin 91 95 98 98 102
Canadian Heavy Oil 81 81 84 97 109
Anadarko Basin 85 93 98 100 88
Barnett Shale 213 212 205 201 191
Rockies 20 21 22 19 22
Other assets 55 53 54 50 51
Retained assets 563 620 640 664 685
Divested assets 128 47 31 1 -
Total 691 667 671 665 685
 
                       
BENCHMARK PRICES
(average prices) Quarter Ended March 31,
2015 2014
Natural Gas ($/Mcf) - Henry Hub $ 2.99 $ 4.95
Oil ($/Bbl) - West Texas Intermediate (Cushing) $ 48.87 $ 98.66
 
REALIZED PRICES Quarter Ended March 31, 2015
Oil /Bitumen NGL Gas Total
(Per Bbl) (Per Bbl) (Per Mcf) (Per Boe)
United States $ 42.80 $ 9.40 $ 2.47 $ 21.66
Canada (1) $ 22.87  

$

N/M

$ 1.12   $ 22.16  
Realized price without hedges $ 35.17 $ 9.40 $ 2.45 $ 21.74
Cash settlements $ 21.12   $ -   $ 0.51   $ 9.62  
Realized price, including cash settlements $ 56.29   $ 9.40   $ 2.96   $ 31.36  
 
Quarter Ended March 31, 2014
Oil /Bitumen NGL Gas Total
(Per Bbl) (Per Bbl) (Per Mcf) (Per Boe)
United States $ 91.66 $ 29.66 $ 4.33 $ 39.44
Canada (1) $ 61.76   $ 51.80   $ 4.14   $ 46.71  
Realized price without hedges $ 77.75 $ 31.15 $ 4.30 $ 41.13
Cash settlements $ (2.10 ) $ (0.02 ) $ (0.33 ) $ (1.61 )
Realized price, including cash settlements $ 75.65   $ 31.13   $ 3.97   $ 39.52  
 

(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 EARNINGS
(in millions, except per share amounts) Quarter Ended
March 31,
2015 2014
Oil, gas and NGL sales $ 1,339 $ 2,557
Oil, gas and NGL derivatives 294 (320 )
Marketing and midstream revenues   1,632     1,488  
Total operating revenues   3,265     3,725  
Lease operating expenses 553 598
Marketing and midstream operating expenses 1,439 1,305
General and administrative expenses 251 211
Production and property taxes 108 137
Depreciation, depletion and amortization 930 739
Asset impairments 5,460 -
Restructuring costs - 37
Gains and losses on asset sales - (15 )
Other operating items   19     23  
Total operating expenses   8,760     3,035  
Operating income (loss) (5,495 ) 690
Net financing costs 117 112
Other nonoperating items   12     18  
Earnings (loss) before income taxes (5,624 ) 560
Income tax expense (benefit)   (2,035 )   231  
Net earnings (loss) (3,589 ) 329
Net earnings attributable to noncontrolling interests   10     5  
Net earnings (loss) attributable to Devon $ (3,599 ) $ 324  
 
Net earnings (loss) per share attributable to Devon:
Basic $ (8.88 ) $ 0.80
Diluted $ (8.88 ) $ 0.79
 
Weighted average common shares outstanding:
Basic 410 407
Diluted 410 408
 
                       
CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
Quarter Ended March 31, 2015

Devon U.S.
& Canada

EnLink Eliminations Total
Oil, gas and NGL sales $ 1,339 $ - $ - $ 1,339
Oil, gas and NGL derivatives 294 - - 294
Marketing and midstream revenues   852     936     (156 )   1,632  
Total operating revenues   2,485     936     (156 )   3,265  
Lease operating expenses 553 - - 553
Marketing and midstream operating expenses 852 743 (156 ) 1,439
General and administrative expenses 209 42 - 251
Production and property taxes 97 11 - 108
Depreciation, depletion and amortization 840 90 - 930
Asset impairments 5,460 - - 5,460
Other operating items   19     -     -     19  
Total operating expenses   8,030     886     (156 )   8,760  
Operating income (loss) (5,545 ) 50 - (5,495 )
Net financing costs 98 19 - 117
Other nonoperating items   16     (4 )   -     12  
Earnings (loss) before income taxes (5,659 ) 35 - (5,624 )
Income tax expense (benefit)   (2,046 )   11     -     (2,035 )
Net earnings (loss) (3,613 ) 24 - (3,589 )
Net earnings attributable to noncontrolling interests   -     10     -     10  
Net earnings (loss) attributable to Devon $ (3,613 ) $ 14   $ -   $ (3,599 )
 
           
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) Quarter
Ended March 31,
2015 2014
Cash flows from operating activities:
Net earnings (loss) $ (3,589 ) $ 329
Adjustments to reconcile net earnings (loss)
to net cash from operating activities:
Depreciation, depletion and amortization 930 739
Asset impairments 5,460 -
Gains and losses on asset sales - (15 )
Deferred income tax expense (benefit) (2,047 ) 208
Derivatives and other financial instruments (430 ) 307
Cash settlements on derivatives and financial instruments 719 (54 )
Other noncash charges 225 123
Net change in working capital 215 (152 )
Change in long-term other assets 141 (88 )
Change in long-term other liabilities   24     13  
Net cash from operating activities   1,648     1,410  
 
Cash flows from investing activities:
Capital expenditures (1,717 ) (1,583 )
Acquisitions of property, equipment and businesses (404 ) (5,935 )
Divestitures of property and equipment 2 142
Redemptions of long-term investments - 57
Other   3     37  
Net cash from investing activities   (2,116 )   (7,282 )
 
Cash flows from financing activities:
Borrowings of long-term debt, net of issuance costs 957 3,346
Net borrowings of short-term debt 15 257
Repayments of long-term debt (487 ) (1,577 )
Stock option exercises - 11
Sale of subsidiary units 569 -
Issuance of subsidiary units 2 -
Dividends paid on common stock (99 ) (90 )
Distributions to noncontrolling interests (53 ) (100 )
Other   (12 )   (3 )
Net cash from financing activities   892     1,844  
Effect of exchange rate changes on cash   (46 )   (11 )
Net change in cash and cash equivalents 378 (4,039 )
 
Cash and cash equivalents at beginning of period   1,480     6,066  
 
Cash and cash equivalents at end of period $ 1,858   $ 2,027  
 
           
CONSOLIDATED BALANCE SHEETS
(in millions)
March 31, December 31,
Current assets: 2015 2014
Cash and cash equivalents $ 1,858 $ 1,480
Accounts receivable 1,663 1,959
Derivatives, at fair value 1,706 1,993
Income taxes receivable - 522
Other current assets   579     544  
Total current assets   5,806     6,498  
Property and equipment, at cost:
Oil and gas, based on full cost accounting:
Subject to amortization 75,952 75,738
Not subject to amortization   2,656     2,752  
Total oil and gas 78,608 78,490
Midstream and other   10,109     9,695  
Total property and equipment, at cost 88,717 88,185
Less accumulated depreciation, depletion and amortization   (57,262 )   (51,889 )
Property and equipment, net   31,455     36,296  
Goodwill 6,328 6,303
Other long-term assets   1,753     1,540  
Total assets $ 45,342   $ 50,637  
 
Current liabilities:
Accounts payable $ 1,335 $ 1,400
Revenues and royalties payable 1,054 1,193
Short-term debt 1,448 1,432
Deferred income taxes 638 730
Other current liabilities   1,085     1,180  
Total current liabilities   5,560     5,935  
Long-term debt 10,301 9,830
Asset retirement obligations 1,373 1,339
Other long-term liabilities 922 948
Deferred income taxes 4,167 6,244
Stockholders' equity:
Common stock 41 41
Additional paid-in capital 4,542 4,088
Retained earnings 12,933 16,631
Accumulated other comprehensive earnings   481     779  
Total stockholders' equity attributable to Devon 17,997 21,539
Noncontrolling interests   5,022     4,802  
Total stockholders' equity   23,019     26,341  
Total liabilities and stockholders' equity $ 45,342   $ 50,637  
Common shares outstanding 411 409
 
                 
CAPITAL EXPENDITURES
(in millions) Quarter Ended March 31, 2015
U.S. Canada Total
Exploration / Appraisal $ 128 $ 53 $ 181
Development   1,008   137   1,145
Exploration and development capital $ 1,136 $ 190 $ 1,326
Capitalized G&A 94
Capitalized interest 13
Acquisitions 92
Devon midstream capital 41
Other capital   27
Total (1) $ 1,593
 
(1) Excludes $489 million attributable to EnLink.
 

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.

CORE EARNINGS
(in millions)

Devon’s reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the Company’s financial results. Accordingly, the company also uses the measures of core earnings and core earnings per diluted share. 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 2015 earnings.

           
Quarter Ended March 31, 2015
Before-Tax After-Tax
 
Net loss attributable to Devon (GAAP) $ (3,599 )
Asset impairments 5,460 3,467
Fair value changes in financial instruments and foreign currency 319   221  
Core earnings attributable to Devon (Non-GAAP) $ 89  
Diluted share count 413
Core diluted earnings per share attributable to Devon (Non-GAAP) $ 0.22  
 

NET DEBT
(in millions)

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.

             
March 31,
2015 2014
 
Total debt (GAAP) $ 11,749 $ 15,512
Cash and cash equivalents   (1,858 )   (2,027 )
Consolidated net debt (Non-GAAP) 9,891 13,485
Non-recourse EnLink obligations (2,494 ) (1,732 )
EnLink cash and cash equivalents   110     221  
Net debt (Non-GAAP) $ 7,507   $ 11,974  
 

DEVON ENERGY CORPORATION
FORWARD LOOKING GUIDANCE

                       
PRODUCTION GUIDANCE Quarter 2 Full Year
Low High Low High
 
Oil and bitumen (MBbls/d)
United States 165 170 160 170
Canada 95 100 100 110
Total 260 270 260 280
Natural gas liquids (MBbls/d)
United States 130 140 128 134
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
Oil equivalent (MBoe/d)
United States 562 585 546 571
Canada 98 103 103 113
Total 660 688 649 684
 
                       
PRICE REALIZATIONS GUIDANCE Quarter 2 Full Year
Low High Low High
 
Oil and bitumen - % of WTI
United States 84 % 94 % 85 % 95 %
Canada 52 % 62 % 49 % 59 %
NGL - realized price $ 7 $ 12 $ 6 $ 16
Natural gas - % of Henry Hub 78 % 88 % 79 % 89 %
 
                       
OTHER GUIDANCE ITEMS Quarter 2 Full Year
($ millions, except Boe) Low High Low High
 
Marketing & midstream operating profit $ 185 $ 215 $

860

$

920

Lease operating expenses per Boe $ 9.00 $ 9.60 $ 9.00 $ 9.60
General & administrative expenses per Boe $ 3.60 $ 3.90 $ 3.75 $ 4.25
Production and property taxes as % of upstream sales 7.9 % 8.9 % 7.4 % 8.4 %
Depreciation, depletion and amortization per Boe $ 13.50 $ 14.50 $ 13.75 $ 14.75
Other operating items $ 15 $ 20 $ 60 $ 80
Net financing costs $ 110 $ 130 $ 460 $ 520
Current income tax rate 4.0 % 9.0 % 4.0 % 9.0 %
Deferred income tax rate   26.0 %   31.0 %   26.0 %   31.0 %
Total income tax rate   30.0 %   40.0 %   30.0 %   40.0 %
 
Net earnings attributable to noncontrolling interests $ 5 $ 25 $ 50 $ 100
 
                       
CAPITAL EXPENDITURES GUIDANCE Quarter 2 Full Year
(in millions) Low High Low High
 
Exploration and development $ 950 $ 1,050 $ 3,900 $ 4,100
Capitalized G&A and interest 100 120 400 500
Midstream (1) 20 40 110 160
Corporate and other   30   40   100   150
Devon capital expenditures $ 1,100 $ 1,250 $ 4,510 $ 4,910
 
(1) Excludes capital expenditures related to EnLink.
 
                                         
COMMODITY HEDGES
Oil Commodity Hedges
Price Swaps Price Collars Call Options Sold
Period

Volume
(Bbls/d)

Weighted
Average
Price ($/Bbl)

Volume
(Bbls/d)

Weighted
Average Floor
Price ($/Bbl)

Weighted
Average
Ceiling Price
($/Bbl)

Volume
(Bbls/d)

Weighted
Average Price
($/Bbl)

Q2-Q4 2015 106,442 $   91.07 31,500 $   89.67 $   97.84 28,000 $   116.43
 
                 
 
Oil Basis Swaps
Period Index Volume (Bbls/d)

Weighted Average Differential to
WTI ($/Bbl)

Q2-Q4 2015 Western Canadian Select 36,320 $(16.35)
 
                                         
Natural Gas Commodity Hedges
Price Swaps Price Collars Call Options Sold
Period

Volume
(MMBtu/d)

Weighted
Average Price
($/MMBtu)

Volume
(MMBtu/d)

Weighted
Average Floor
Price
($/MMBtu)

Weighted
Average
Ceiling Price
($/MMBtu)

Volume
(MMBtu/d)

Weighted
Average Price
($/MMBtu)

Q2-Q4 2015 250,000 $ 4.32 391,964 $ 3.74 $ 4.04 550,000 $ 5.09
 

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

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