Devon Energy Reports Third-Quarter 2017 Results
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Highlights
- Production exceeds midpoint of hurricane-adjusted guidance
- 50 high-rate wells brought online with average rates exceeding 2,100 Boe per day
- Capital expenditures were 12 percent below guidance year to date
-
Divestiture program reaches
$420 million of asset sales -
Free cash flow increases cash balance to
$2.8 billion
“We continue to deliver outstanding well productivity from our U.S.
resource plays as we execute on our development plans,” said
“With these strong results, we remain on track to achieve our 2017 exit
rate production targets, and we are positioned to deliver attractive,
high rate-of-return growth in 2018,” said Hager. “A key driver of our
operational momentum is the advancement of multi-zone development
activity across our world-class STACK and
Production Exceeds Midpoint of Hurricane-Adjusted Guidance
Devon’s net production in the third quarter averaged 527,000 oil-equivalent barrels (Boe) per day. This result exceeded the midpoint of the company’s Hurricane Harvey-adjusted guidance by 6,000 Boe per day. Of this total, oil production accounted for the largest component of the company’s product mix at 44 percent of total volumes.
The majority of Devon’s production was attributable to its U.S. resource plays, which averaged 403,000 Boe per day during the third quarter. Storm-related curtailments reduced production in the U.S. by approximately 15,000 barrels per day (65 percent oil) in the quarter, with the most significant impact in the south Texas Eagle Ford play. The strongest asset-level performance in the quarter was from the company’s STACK assets, where production advanced 26 percent compared to 2016 exit rates.
In
50 High-Rate Wells Brought Online with Rates Exceeding 2,100 Boe per Day
Devon continued to advance its development programs across its U.S. resource plays and exited the third quarter with 19 development rigs running. With this increased activity, the company commenced production on 50 high-rate wells that averaged initial 30-day rates of more than 2,100 Boe per day (50 percent oil).
This strong drill-bit productivity was highlighted by 14 new Meramec
wells brought online in the STACK play that achieved average 30-day
rates of greater than 2,300 Boe per day (55 percent oil).
These high-rate development wells showcase Devon’s asset quality and
outstanding execution that has generated best-in-class well productivity
in
Strong Exit Rates Build Momentum into 2018
With operations fully restored from storm-related impacts, Devon remains on track to achieve its full-year 2017 target for U.S. oil production. Importantly, based on higher activity levels for the remainder of the year, the company forecasts its U.S. oil production from retained assets to exit the year at levels approximately 20 percent higher than the fourth quarter of 2016.
This strong production growth over the remainder of 2017 is driven by
the company’s STACK and
In
Capital Expenditures 12 Percent Below Guidance Year to Date
The company’s exploration and development capital expenditures in the
third quarter totaled
This strong capital efficiency is driven by productivity gains in the
STACK and
Due to these positive operating trends, Devon expects E&P capital
spending to range from
Third-Quarter 2017 Operations Report
For additional details on well results and other information about Devon’s E&P operations, please refer to the company’s third-quarter 2017 operations report at www.devonenergy.com. Highlights from the report include:
- STACK production advances 26 percent year to date
- Meramec pilot achieves average 30-day rates of 3,500 Boe per day
- STACK full-field development underway with spudding of Showboat project
-
Initial Delaware Basin multi-zone project delivers cost savings of$1 million per well - Jackfish complex exits quarter 24 percent above nameplate capacity
- Preliminary 2018 capital and production outlook
Midstream Profit Advances 9 Percent Year to Date
Devon’s midstream business generated operating profits of
Devon has a 64 percent ownership in
Cost Structure Continues to Improve
In addition to the shift to higher-value production, Devon plans to
further expand margins with cost-reduction initiatives that are expected
to achieve
Importantly, the company’s operating costs are expected to further improve on a per-unit basis in the fourth quarter of 2017. This improvement is driven by the combination of higher production rates and relatively flat LOE costs due to efficiency gains within field operations.
The company also effectively managed its G&A cost structure in the third
quarter. Overhead expenses totaled
Higher-Margin Production Nearly Doubles Cash Flow
Devon’s operating cash flow totaled
Devon’s reported net earnings totaled
Free Cash Flow Increases Cash Balance to
In the third quarter, the company’s upstream operations fully funded its
capital requirements and generated free cash flow, which helped increase
cash balances by
In addition to the company’s strong liquidity and investment-grade ratings, Devon’s financial position is further bolstered by its attractive hedge position. The company currently has approximately 65 percent of its estimated oil and gas production protected for the remainder of 2017 at attractive pricing points.
The company continues to accumulate hedges for 2018 and has protected the price of approximately 40 percent of estimated volumes for the first half of the year. Devon’s disciplined, risk-management program will continue to add hedges for the upcoming six quarters. This activity will consist of systematic hedges added on a quarterly basis and discretionary hedges that take advantage of favorable market conditions.
Asset Divestiture Program Reaches
The company’s financial strength will be further enhanced by proceeds
from its ongoing divestiture program. In the third quarter, the
divestiture program progressed with an additional
The most significant asset remaining within this divestiture program is
select leasehold within the
Due to the closing of the Lavaca County assets at the end of the quarter and other minor asset sales, Devon’s fourth quarter production is expected to be reduced by 5,000 Boe per day (60 percent oil).
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 third-quarter conference call will be held at
Forward-Looking Statements
This press release includes "forward-looking statements" as defined
by the
About
DEVON ENERGY CORPORATION | ||||||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||||||
PRODUCTION NET OF ROYALTIES | ||||||||||||||||
Quarter Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Oil and bitumen (MBbls/d) | ||||||||||||||||
U. S. - Core | 112 | 108 | 117 | 124 | ||||||||||||
Heavy Oil | 121 | 137 | 127 | 128 | ||||||||||||
Retained assets | 233 | 245 | 244 | 252 | ||||||||||||
Divested assets | — | 6 | — | 13 | ||||||||||||
Total | 233 | 251 | 244 | 265 | ||||||||||||
Natural gas liquids (MBbls/d) | ||||||||||||||||
U. S. - Core | 94 | 96 | 96 | 107 | ||||||||||||
Divested assets | — | 8 | — | 17 | ||||||||||||
Total | 94 | 104 | 96 | 124 | ||||||||||||
Gas (MMcf/d) | ||||||||||||||||
U. S. - Core | 1,185 | 1,231 | 1,195 | 1,292 | ||||||||||||
Heavy Oil | 16 | 18 | 17 | 20 | ||||||||||||
Retained assets | 1,201 | 1,249 | 1,212 | 1,312 | ||||||||||||
Divested assets | — | 75 | — | 165 | ||||||||||||
Total | 1,201 | 1,324 | 1,212 | 1,477 | ||||||||||||
Oil equivalent (MBoe/d) | ||||||||||||||||
U. S. - Core | 403 | 410 | 412 | 446 | ||||||||||||
Heavy Oil | 124 | 140 | 130 | 132 | ||||||||||||
Retained assets | 527 | 550 | 542 | 578 | ||||||||||||
Divested assets | — | 27 | — | 57 | ||||||||||||
Total | 527 | 577 | 542 | 635 |
DEVON ENERGY CORPORATION | ||||||||||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||||||||||
PRODUCTION TREND | ||||||||||||||||||||
2016 | 2017 | |||||||||||||||||||
Quarter 3 | Quarter 4 | Quarter 1 | Quarter 2 | Quarter 3 | ||||||||||||||||
Oil and bitumen (MBbls/d) | ||||||||||||||||||||
Barnett Shale | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
Delaware Basin | 31 | 29 | 30 | 30 | 31 | |||||||||||||||
Eagle Ford | 33 | 34 | 48 | 36 | 30 | |||||||||||||||
Heavy Oil | 137 | 139 | 138 | 122 | 121 | |||||||||||||||
Rockies Oil | 11 | 11 | 13 | 13 | 12 | |||||||||||||||
STACK | 21 | 19 | 21 | 25 | 27 | |||||||||||||||
Other assets | 11 | 11 | 10 | 11 | 11 | |||||||||||||||
Retained assets | 245 | 244 | 261 | 238 | 233 | |||||||||||||||
Divested assets | 6 | — | — | — | — | |||||||||||||||
Total | 251 | 244 | 261 | 238 | 233 | |||||||||||||||
Natural gas liquids (MBbls/d) | ||||||||||||||||||||
Barnett Shale | 44 | 43 | 43 | 42 | 36 | |||||||||||||||
Delaware Basin | 12 | 10 | 10 | 10 | 11 | |||||||||||||||
Eagle Ford | 13 | 11 | 15 | 11 | 12 | |||||||||||||||
Rockies Oil | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
STACK | 23 | 21 | 26 | 31 | 32 | |||||||||||||||
Other assets | 3 | 4 | 3 | 2 | 2 | |||||||||||||||
Retained assets | 96 | 90 | 98 | 97 | 94 | |||||||||||||||
Divested assets | 8 | — | — | — | — | |||||||||||||||
Total | 104 | 90 | 98 | 97 | 94 | |||||||||||||||
Gas (MMcf/d) | ||||||||||||||||||||
Barnett Shale | 730 | 710 | 683 | 675 | 672 | |||||||||||||||
Delaware Basin | 92 | 89 | 88 | 96 | 90 | |||||||||||||||
Eagle Ford | 85 | 90 | 119 | 96 | 88 | |||||||||||||||
Heavy Oil | 18 | 18 | 23 | 14 | 16 | |||||||||||||||
Rockies Oil | 19 | 17 | 15 | 17 | 11 | |||||||||||||||
STACK | 292 | 284 | 287 | 298 | 313 | |||||||||||||||
Other assets | 13 | 13 | 13 | 12 | 11 | |||||||||||||||
Retained assets | 1,249 | 1,221 | 1,228 | 1,208 | 1,201 | |||||||||||||||
Divested assets | 75 | — | — | — | — | |||||||||||||||
Total | 1,324 | 1,221 | 1,228 | 1,208 | 1,201 | |||||||||||||||
Oil equivalent (MBoe/d) | ||||||||||||||||||||
Barnett Shale | 166 | 163 | 158 | 155 | 148 | |||||||||||||||
Delaware Basin | 59 | 54 | 54 | 56 | 57 | |||||||||||||||
Eagle Ford | 61 | 60 | 83 | 63 | 57 | |||||||||||||||
Heavy Oil | 140 | 141 | 141 | 124 | 124 | |||||||||||||||
Rockies Oil | 16 | 15 | 17 | 18 | 16 | |||||||||||||||
STACK | 92 | 88 | 95 | 105 | 111 | |||||||||||||||
Other assets | 16 | 16 | 15 | 15 | 14 | |||||||||||||||
Retained assets | 550 | 537 | 563 | 536 | 527 | |||||||||||||||
Divested assets | 27 | — | — | — | — | |||||||||||||||
Total | 577 | 537 | 563 | 536 | 527 |
DEVON ENERGY CORPORATION | |||||||||||||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION | |||||||||||||||||||||||
BENCHMARK PRICES | |||||||||||||||||||||||
(average prices) | Quarter 3 | September YTD | |||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||
Oil ($/Bbl) - West Texas Intermediate (Cushing) | $ | 48.14 | $ | 45.02 | $ | 49.48 | $ | 41.41 | |||||||||||||||
Natural Gas ($/Mcf) - Henry Hub | $ | 2.99 | $ | 2.81 | $ | 3.17 | $ | 2.28 | |||||||||||||||
REALIZED PRICES | Quarter Ended September 30, 2017 | ||||||||||||||||||||||
Oil /Bitumen | NGL | Gas | Total | ||||||||||||||||||||
(Per Bbl) | (Per Bbl) | (Per Mcf) | (Per Boe) | ||||||||||||||||||||
United States | $ | 47.12 | $ | 15.15 | $ | 2.45 | $ | 23.85 | |||||||||||||||
Canada | $ | 32.25 | N/M | N/M | $ | 31.59 | |||||||||||||||||
Realized price without hedges | $ | 39.36 | $ | 15.15 | $ | 2.45 | $ | 25.67 | |||||||||||||||
Cash settlements | $ | 0.54 | $ | (0.03 | ) | $ | 0.12 | $ | 0.52 | ||||||||||||||
Realized price, including cash settlements | $ | 39.90 | $ | 15.12 | $ | 2.57 | $ | 26.19 | |||||||||||||||
Quarter Ended September 30, 2016 | |||||||||||||||||||||||
Oil /Bitumen | NGL | Gas | Total | ||||||||||||||||||||
(Per Bbl) | (Per Bbl) | (Per Mcf) | (Per Boe) | ||||||||||||||||||||
United States | $ | 42.51 | $ | 9.80 | $ | 2.24 | $ | 20.26 | |||||||||||||||
Canada | $ | 23.71 | N/M | N/M | $ | 23.23 | |||||||||||||||||
Realized price without hedges | $ | 32.27 | $ | 9.80 | $ | 2.24 | $ | 20.98 | |||||||||||||||
Cash settlements | $ | 0.84 | $ | 0.10 | $ | (0.04 | ) | $ | 0.32 | ||||||||||||||
Realized price, including cash settlements | $ | 33.11 | $ | 9.90 | $ | 2.20 | $ | 21.30 | |||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
Oil /Bitumen | NGL | Gas | Total | ||||||||||||||||||||
(Per Bbl) | (Per Bbl) | (Per Mcf) | (Per Boe) | ||||||||||||||||||||
United States | $ | 47.84 | $ | 14.62 | $ | 2.54 | $ | 24.44 | |||||||||||||||
Canada | $ | 29.10 | N/M | N/M | $ | 28.50 | |||||||||||||||||
Realized price without hedges | $ | 38.08 | $ | 14.62 | $ | 2.54 | $ | 25.41 | |||||||||||||||
Cash settlements | $ | 0.45 | $ | (0.02 | ) | $ | 0.05 | $ | 0.29 | ||||||||||||||
Realized price, including cash settlements | $ | 38.53 | $ | 14.60 | $ | 2.59 | $ | 25.70 | |||||||||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||||||
Oil /Bitumen | NGL | Gas | Total | ||||||||||||||||||||
(Per Bbl) | (Per Bbl) | (Per Mcf) | (Per Boe) | ||||||||||||||||||||
United States | $ | 36.89 | $ | 8.84 | $ | 1.70 | $ | 17.16 | |||||||||||||||
Canada | $ | 18.58 | N/M | N/M | $ | 18.15 | |||||||||||||||||
Realized price without hedges | $ | 28.03 | $ | 8.84 | $ | 1.70 | $ | 17.37 | |||||||||||||||
Cash settlements | $ | (0.57 | ) | $ | (0.06 | ) | $ | 0.12 | $ | 0.02 | |||||||||||||
Realized price, including cash settlements | $ | 27.46 | $ | 8.78 | $ | 1.82 | $ | 17.39 |
DEVON ENERGY CORPORATION | ||||||||||||||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | ||||||||||||||||||||||||
(in millions, except per share amounts) | Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
Oil, gas and NGL sales | $ | 1,245 | $ | 1,113 | $ | 3,760 | $ | 3,023 | ||||||||||||||||
Oil, gas and NGL derivatives | (144 | ) | 79 | 214 | (30 | ) | ||||||||||||||||||
Marketing and midstream revenues | 2,055 | 1,690 | 5,992 | 4,503 | ||||||||||||||||||||
Asset dispositions and other | — | 1,351 | 10 | 1,351 | ||||||||||||||||||||
Total revenues and other | 3,156 | 4,233 | 9,976 | 8,847 | ||||||||||||||||||||
Lease operating expenses | 391 | 355 | 1,176 | 1,215 | ||||||||||||||||||||
Marketing and midstream operating expenses | 1,813 | 1,480 | 5,319 | 3,884 | ||||||||||||||||||||
General and administrative expenses | 153 | 141 | 498 | 482 | ||||||||||||||||||||
Production and property taxes | 71 | 67 | 227 | 220 | ||||||||||||||||||||
Depreciation, depletion and amortization | 400 | 394 | 1,162 | 1,420 | ||||||||||||||||||||
Asset impairments | 2 | 319 | 9 | 4,851 | ||||||||||||||||||||
Restructuring and transaction costs | — | (5 | ) | — | 266 | |||||||||||||||||||
Other operating items | — | 17 | 11 | 41 | ||||||||||||||||||||
Total operating expenses | 2,830 | 2,768 | 8,402 | 12,379 | ||||||||||||||||||||
Operating income (loss) | 326 | 1,465 | 1,574 | (3,532 | ) | |||||||||||||||||||
Net financing costs | 127 | 243 | 370 | 570 | ||||||||||||||||||||
Other nonoperating items | (73 | ) | 44 | (124 | ) | 150 | ||||||||||||||||||
Earnings (loss) before income taxes | 272 | 1,178 | 1,328 | (4,252 | ) | |||||||||||||||||||
Income tax expense (benefit) | 25 | 171 | 51 | (228 | ) | |||||||||||||||||||
Net earnings (loss) | 247 | 1,007 | 1,277 | (4,024 | ) | |||||||||||||||||||
Net earnings (loss) attributable to noncontrolling interests | 19 | 14 | 59 | (391 | ) | |||||||||||||||||||
Net earnings (loss) attributable to Devon | $ | 228 | $ | 993 | $ | 1,218 | $ | (3,633 | ) | |||||||||||||||
Net earnings (loss) per share attributable to Devon: | ||||||||||||||||||||||||
Basic | $ | 0.43 | $ | 1.90 | $ | 2.32 | $ | (7.22 | ) | |||||||||||||||
Diluted | $ | 0.43 | $ | 1.89 | $ | 2.31 | $ | (7.22 | ) | |||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||
Basic | 526 | 524 | 525 | 509 | ||||||||||||||||||||
Diluted | 529 | 527 | 528 | 509 |
DEVON ENERGY CORPORATION | ||||||||||||||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||||||
(in millions) | Quarter Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||||||
Net earnings (loss) | $ | 247 | $ | 1,007 | $ | 1,277 | $ | (4,024 | ) | |||||||||||||||
Adjustments to reconcile net earnings (loss) to net | ||||||||||||||||||||||||
cash from operating activities: | ||||||||||||||||||||||||
Depreciation, depletion and amortization | 400 | 394 | 1,162 | 1,420 | ||||||||||||||||||||
Asset impairments | 2 | 319 | 9 | 4,851 | ||||||||||||||||||||
Gains and losses on asset sales | 1 | (1,351 | ) | (6 | ) | (1,351 | ) | |||||||||||||||||
Deferred income tax expense (benefit) | (14 | ) | 86 | (20 | ) | (300 | ) | |||||||||||||||||
Commodity derivatives | 144 | (79 | ) | (214 | ) | 30 | ||||||||||||||||||
Cash settlements on commodity derivatives | 24 | 12 | 43 | 15 | ||||||||||||||||||||
Other derivatives and financial instruments | 9 | 21 | 16 | 329 | ||||||||||||||||||||
Cash settlements on other derivatives and | ||||||||||||||||||||||||
financial instruments | — | 3 | — | (148 | ) | |||||||||||||||||||
Asset retirement obligation accretion | 16 | 19 | 47 | 58 | ||||||||||||||||||||
Share-based compensation | 33 | 23 | 122 | 163 | ||||||||||||||||||||
Other | (85 | ) | 127 | (134 | ) | (31 | ) | |||||||||||||||||
Net change in working capital | 7 | 137 | 94 | 208 | ||||||||||||||||||||
Change in long-term other assets | 2 | (3 | ) | 12 | 10 | |||||||||||||||||||
Change in long-term other liabilities | (10 | ) | 12 | 12 | 7 | |||||||||||||||||||
Net cash from operating activities | 776 | 727 | 2,420 | 1,237 | ||||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||||||
Capital expenditures | (735 | ) | (421 | ) | (2,203 | ) | (1,659 | ) | ||||||||||||||||
Acquisitions of property, equipment and businesses | (6 | ) | (3 | ) | (39 | ) | (1,641 | ) | ||||||||||||||||
Proceeds from sale of investment | — | — | 190 | — | ||||||||||||||||||||
Divestitures of property and equipment | 209 | 1,680 | 323 | 1,889 | ||||||||||||||||||||
Other | (1 | ) | 34 | (5 | ) | 7 | ||||||||||||||||||
Net cash from investing activities | (533 | ) | 1,290 | (1,734 | ) | (1,404 | ) | |||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||||||
Borrowings of long-term debt, net of issuance costs | 413 | 816 | 2,208 | 1,662 | ||||||||||||||||||||
Repayments of long-term debt | (571 | ) | (2,173 | ) | (1,950 | ) | (2,722 | ) | ||||||||||||||||
Payment of installment payable | — | — | (250 | ) | — | |||||||||||||||||||
Net short-term debt repayments | — | — | — | (626 | ) | |||||||||||||||||||
Early retirement of debt | — | (82 | ) | (6 | ) | (82 | ) | |||||||||||||||||
Issuance of common stock | — | — | — | 1,469 | ||||||||||||||||||||
Issuance of subsidiary units | 414 | 59 | 486 | 835 | ||||||||||||||||||||
Dividends paid on common stock | (30 | ) | (32 | ) | (95 | ) | (190 | ) | ||||||||||||||||
Contributions from noncontrolling interests | 18 | 146 | 47 | 152 | ||||||||||||||||||||
Distributions to noncontrolling interests | (84 | ) | (77 | ) | (247 | ) | (224 | ) | ||||||||||||||||
Shares exchanged for tax withholdings | (3 | ) | (2 | ) | (67 | ) | (30 | ) | ||||||||||||||||
Other | — | (1 | ) | (2 | ) | (7 | ) | |||||||||||||||||
Net cash from financing activities | 157 | (1,346 | ) | 124 | 237 | |||||||||||||||||||
Effect of exchange rate changes on cash | 12 | (9 | ) | 12 | 5 | |||||||||||||||||||
Net change in cash and cash equivalents | 412 | 662 | 822 | 75 | ||||||||||||||||||||
Cash and cash equivalents at beginning of period | 2,369 | 1,723 | 1,959 | 2,310 | ||||||||||||||||||||
Cash and cash equivalents at end of period | $ | 2,781 | $ | 2,385 | $ | 2,781 | $ | 2,385 |
DEVON ENERGY CORPORATION | ||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||||
(in millions) | September 30, | December 31, | ||||||||||
2017 | 2016 | |||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 2,781 | $ | 1,959 | ||||||||
Accounts receivable | 1,462 | 1,356 | ||||||||||
Assets held for sale | — | 193 | ||||||||||
Other current assets | 379 | 264 | ||||||||||
Total current assets | 4,622 | 3,772 | ||||||||||
Property and equipment, at cost: | ||||||||||||
Oil and gas, based on full cost accounting: | ||||||||||||
Subject to amortization | 78,470 | 75,648 | ||||||||||
Not subject to amortization | 2,853 | 3,437 | ||||||||||
Total oil and gas | 81,323 | 79,085 | ||||||||||
Midstream and other | 11,097 | 10,455 | ||||||||||
Total property and equipment, at cost | 92,420 | 89,540 | ||||||||||
Less accumulated depreciation, depletion and amortization | (75,338 | ) | (73,350 | ) | ||||||||
Property and equipment, net | 17,082 | 16,190 | ||||||||||
Goodwill | 3,964 | 3,964 | ||||||||||
Other long-term assets | 1,891 | 1,987 | ||||||||||
Total assets | $ | 27,559 | $ | 25,913 | ||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 797 | $ | 642 | ||||||||
Revenues and royalties payable | 1,012 | 908 | ||||||||||
Short-term debt | 20 | — | ||||||||||
Other current liabilities | 1,003 | 1,066 | ||||||||||
Total current liabilities | 2,832 | 2,616 | ||||||||||
Long-term debt | 10,383 | 10,154 | ||||||||||
Asset retirement obligations | 1,100 | 1,226 | ||||||||||
Other long-term liabilities | 645 | 894 | ||||||||||
Deferred income taxes | 665 | 648 | ||||||||||
Equity: | ||||||||||||
Common stock | 53 | 52 | ||||||||||
Additional paid-in capital | 7,207 | 7,237 | ||||||||||
Accumulated deficit | (428 | ) | (1,646 | ) | ||||||||
Accumulated other comprehensive earnings | 297 | 284 | ||||||||||
Total stockholders’ equity attributable to Devon | 7,129 | 5,927 | ||||||||||
Noncontrolling interests | 4,805 | 4,448 | ||||||||||
Total equity | 11,934 | 10,375 | ||||||||||
Total liabilities and equity | $ | 27,559 | $ | 25,913 | ||||||||
Common shares outstanding | 525 | 523 |
DEVON ENERGY CORPORATION | ||||||||||||||||||||
FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||||||||||
CONSOLIDATING STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(in millions) | Quarter Ended September 30, 2017 | |||||||||||||||||||
Devon U.S. & | ||||||||||||||||||||
Canada | EnLink | Eliminations | Total | |||||||||||||||||
Oil, gas and NGL sales | $ | 1,245 | $ | — | $ | — | $ | 1,245 | ||||||||||||
Oil, gas and NGL derivatives | (144) | — | — | (144) | ||||||||||||||||
Marketing and midstream revenues | 832 | 1,397 | (174) | 2,055 | ||||||||||||||||
Asset dispositions and other | 1 | (1) | — | — | ||||||||||||||||
Total revenues and other | 1,934 | 1,396 | (174) | 3,156 | ||||||||||||||||
Lease operating expenses | 391 | — | — | 391 | ||||||||||||||||
Marketing and midstream operating expenses | 843 | 1,144 | (174) | 1,813 | ||||||||||||||||
General and administrative expenses | 122 | 31 | — | 153 | ||||||||||||||||
Production and property taxes | 60 | 11 | — | 71 | ||||||||||||||||
Depreciation, depletion and amortization | 258 | 142 | — | 400 | ||||||||||||||||
Asset impairments | — | 2 | — | 2 | ||||||||||||||||
Total operating expenses | 1,674 | 1,330 | (174) | 2,830 | ||||||||||||||||
Operating income | 260 | 66 | — | 326 | ||||||||||||||||
Net financing costs | 77 | 50 | — | 127 | ||||||||||||||||
Other nonoperating items | (69) | (4) | — | (73) | ||||||||||||||||
Earnings before income taxes | 252 | 20 | — | 272 | ||||||||||||||||
Income tax expense | 23 | 2 | — | 25 | ||||||||||||||||
Net earnings | 229 | 18 | — | 247 | ||||||||||||||||
Net earnings attributable to noncontrolling interests | — | 19 | — | 19 | ||||||||||||||||
Net earnings (loss) attributable to Devon | $ | 229 | $ | (1) | $ | — | $ | 228 |
OTHER KEY STATISTICS | |||||||||||||||||||||||
(in millions) | Quarter Ended September 30, 2017 | ||||||||||||||||||||||
Devon U.S. & | |||||||||||||||||||||||
Canada | EnLink | Eliminations | Total | ||||||||||||||||||||
Cash flow statement related items: | |||||||||||||||||||||||
Operating cash flow | $ | 577 | $ | 199 | $ | — | $ | 776 | |||||||||||||||
Divestitures of property and equipment | $ | 208 | $ | 1 | $ | — | $ | 209 | |||||||||||||||
Capital expenditures | $ | (545 | ) | $ | (190 | ) | $ | — | $ | (735 | ) | ||||||||||||
Debt activity, net | $ | — | $ | (158 | ) | $ | — | $ | (158 | ) | |||||||||||||
EnLink distributions received (paid) | $ | 66 | $ | (150 | ) | $ | — | $ | (84 | ) | |||||||||||||
Issuance of subsidiary units | $ | — | $ | 414 | $ | — | $ | 414 | |||||||||||||||
Balance sheet statement items: | |||||||||||||||||||||||
Net debt (1) | $ | 4,223 | $ | 3,399 | $ | - | $ | 7,622 | |||||||||||||||
(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 September 30, 2017 | Nine Months Ended September 30, 2017 | ||||||||
Exploration and development capital | $ | 548 | $ | 1,401 | ||||||
Land and other acquisitions | 16 | 46 | ||||||||
Exploration and production (E&P) capital | 564 | 1,447 | ||||||||
Capitalized G&A and interest | 75 | 224 | ||||||||
Other | 24 | 64 | ||||||||
Devon capital expenditures (1) | $ | 663 | $ | 1,735 | ||||||
(1) Excludes $170 million and $636 million attributable to EnLink for the third quarter and first nine months of 2017, respectively. |
DEVON ENERGY CORPORATION |
FINANCIAL AND OPERATIONAL INFORMATION |
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 third-quarter 2017 earnings.
(in millions, except per share amounts) | Quarter Ended September 30, 2017 | ||||||||||||||||||||||
After | |||||||||||||||||||||||
Noncontrolling | Per Diluted | ||||||||||||||||||||||
Before-tax | After-tax | Interests | Share | ||||||||||||||||||||
Earnings attributable to Devon (GAAP) | $ | 272 | $ | 247 | $ | 228 | $ | 0.43 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Fair value changes in financial instruments and foreign currency | 106 | 40 | 39 | 0.08 | |||||||||||||||||||
Gains and losses on asset sales | 1 | 1 | — | — | |||||||||||||||||||
Asset impairments | 2 | 1 | 1 | — | |||||||||||||||||||
Deferred tax asset valuation allowance | — | (26 | ) | (26 | ) | (0.05 | ) | ||||||||||||||||
Core earnings attributable to Devon (Non-GAAP) | $ | 381 | $ | 263 | $ | 242 | $ | 0.46 | |||||||||||||||
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) | September 30, 2017 | |||||||||||||||||
Devon U.S. & Canada | EnLink | Devon Consolidated | ||||||||||||||||
Total debt (GAAP) | $ | 6,862 | $ | 3,541 | $ | 10,403 | ||||||||||||
Less cash and cash equivalents | (2,639 | ) | (142 | ) | (2,781 | ) | ||||||||||||
Net debt (Non-GAAP) | $ | 4,223 | $ | 3,399 | $ | 7,622 |
DEVON ENERGY CORPORATION | ||||||||
FORWARD LOOKING GUIDANCE | ||||||||
PRODUCTION GUIDANCE | ||||||||
Quarter 4 | ||||||||
Low | High | |||||||
Oil and bitumen (MBbls/d) | ||||||||
U.S.(1) | 120 | 125 | ||||||
Heavy Oil | 135 | 140 | ||||||
Total | 255 | 265 | ||||||
Natural gas liquids (MBbls/d) | 99 | 103 | ||||||
Total(1) | 99 | 103 | ||||||
Gas (MMcf/d) | ||||||||
U.S. (1) | 1,170 | 1,200 | ||||||
Heavy Oil | 14 | 16 | ||||||
Total | 1,184 | 1,216 | ||||||
Oil equivalent (MBoe/d) | ||||||||
U.S. (1) | 414 | 428 | ||||||
Heavy Oil | 137 | 143 | ||||||
Total | 551 | 571 |
(1) Q4 U.S. production guidance is reduced by ~5,000 Boe per day (60 percent oil) associated with Lavaca County and other minor asset sales.
PRICE REALIZATIONS GUIDANCE | ||||||||||||
Quarter 4 | ||||||||||||
Low | High | |||||||||||
Oil and bitumen - % of WTI | ||||||||||||
U.S. | 90 | % | 100 | % | ||||||||
Canada | 53 | % | 63 | % | ||||||||
NGL - realized price | $ | 13 | $ | 16 | ||||||||
Natural gas - % of Henry Hub | 75 | % | 85 | % |
DEVON ENERGY CORPORATION | ||||||||||||
FORWARD LOOKING GUIDANCE | ||||||||||||
OTHER GUIDANCE ITEMS | ||||||||||||
Quarter 4 | ||||||||||||
($ millions, except %) | Low | High | ||||||||||
Marketing & midstream operating profit | $ | 245 | $ | 265 | ||||||||
Lease operating expenses | $ | 360 | $ | 410 | ||||||||
General & administrative expenses | $ | 150 | $ | 170 | ||||||||
Production and property taxes | $ | 65 | $ | 75 | ||||||||
Depreciation, depletion and amortization | $ |
400 |
$ |
450 |
||||||||
Other operating items | $ | 10 | $ | 20 | ||||||||
Net financing costs | $ | 120 | $ | 130 | ||||||||
Current income tax rate | 5.0 | % | 15.0 | % | ||||||||
Deferred income tax rate | 20.0 | % | 30.0 | % | ||||||||
Total income tax rate | 25.0 | % | 45.0 | % | ||||||||
Net earnings attributable to noncontrolling interests | $ | 30 | $ | 40 | ||||||||
CAPITAL EXPENDITURES GUIDANCE | ||||||||||||
Quarter 4 | ||||||||||||
(in millions) | Low | High | ||||||||||
Exploration and production | $ | 650 | $ | 700 | ||||||||
Capitalized G&A | 55 | 65 | ||||||||||
Capitalized interest | 15 | 20 | ||||||||||
Other | 20 | 30 | ||||||||||
Devon capital expenditures (1) | $ | 740 | $ | 815 | ||||||||
(1) Excludes capital expenditures related to EnLink. |
DEVON ENERGY CORPORATION | |||||||||||||||||||||||
FORWARD LOOKING GUIDANCE | |||||||||||||||||||||||
Oil Commodity Hedges | |||||||||||||||||||||||
Price Swaps | Price Collars | ||||||||||||||||||||||
Weighted | Weighted | Weighted Average | |||||||||||||||||||||
Average Price | Average Floor | Ceiling Price | |||||||||||||||||||||
Period | Volume (Bbls/d) | ($/Bbl) | Volume (Bbls/d) | Price ($/Bbl) | ($/Bbl) | ||||||||||||||||||
Q4 2017 | 83,178 | $ | 53.83 | 79,200 | $ | 45.51 | $ | 57.41 | |||||||||||||||
Q1-Q4 2018 | 35,532 | $ | 51.65 | 45,860 | $ | 45.88 | $ | 55.88 | |||||||||||||||
Q1-Q4 2019 | 2,844 | $ | 50.87 | 4,079 | $ | 44.95 | $ | 54.95 |
Oil Basis Swaps | ||||||||||||||
Weighted Average Differential to | ||||||||||||||
Period | Index | Volume (Bbls/d) | WTI ($/Bbl) | |||||||||||
Q4 2017 | Midland Sweet | 13,261 | $ | (0.41 | ) | |||||||||
Q4 2017 | Western Canadian Select | 92,696 | $ | (14.54 | ) | |||||||||
Q1-Q4 2018 | Midland Sweet | 23,000 | $ | (1.02 | ) | |||||||||
Q1-Q4 2018 | Western Canadian Select | 69,085 | $ | (14.79 | ) | |||||||||
Q1-Q4 2019 | Midland Sweet | 14,000 | $ | (0.66 | ) |
Natural Gas Commodity Hedges | |||||||||||||||||||||||
Price Swaps | Price Collars | ||||||||||||||||||||||
Weighted Average | Weighted Average | ||||||||||||||||||||||
Volume | Weighted Average | Volume | Floor Price | Ceiling Price | |||||||||||||||||||
Period | (MMBtu/d) | Price ($/MMBtu) | (MMBtu/d) | ($/MMBtu) | ($/MMBtu) | ||||||||||||||||||
Q4 2017 | 357,717 | $ | 3.20 | 455,000 | $ | 3.03 | $ | 3.41 | |||||||||||||||
Q1-Q4 2018 | 339,422 | $ | 3.07 | 164,982 | $ | 2.98 | $ | 3.29 | |||||||||||||||
Q1-Q4 2019 | 13,603 | $ | 3.05 | 16,068 | $ | 2.91 | $ | 3.21 | |||||||||||||||
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
View source version on businesswire.com: http://www.businesswire.com/news/home/20171031006329/en/
Source:
Devon Energy Corporation
Investor Contacts
Scott Coody,
405-552-4735
Chris Carr, 405-228-2496
Media Contact
John
Porretto, 405-228-7506