Devon Energy Earns $1.0 Billion in Third-Quarter 2011; Liquids Production Increases 17 Percent
02.11.2011 | Business Wire
Earnings Increased to $1.54 per Share Excluding Items Not Estimated Strong Liquids Production Growth and Higher Prices Drive Sales Oil and Natural Gas Liquids Production Growth Leads Operating Balance Sheet and Liquidity Remain Strong; Share Repurchase Plan on Expenses in Line with Forecasts Divestitures Impact Reported Financial and Operational Results Items Typically Excluded from Analyst′s Published Earnings Estimates Continuing Operations - Third Quarter 2011 Pre-tax After-tax Cash Flow Before Conference Call to be Webcast Today This press release includes 'forward-looking statements' as defined The United States Securities and Exchange Commission permits oil and DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION NON-GAAP FINANCIAL MEASURES
Devon Energy Corporation (NYSE:DVN) today reported net earnings of $1.0
billion for the quarter ended September 30, 2011, or $2.51 per common
share ($2.50 per diluted share). This compares with third-quarter 2010
net earnings of $2.1 billion, or $4.81 per common share ($4.79 per
diluted share). The company′s third-quarter 2010 earnings were enhanced
by a one-time gain of $1.5 billion resulting from the divestiture of
assets in Azerbaijan.
by Analysts
Devon′s third-quarter 2011 financial results were impacted by certain
items securities analysts typically exclude from their published
estimates. The most significant of the adjusting items was an unrealized
gain on oil, gas and natural gas liquids derivatives of $642 million
before-tax ($415 million after-tax). Excluding these adjusting items,
the company earned $638 million or $1.54 per diluted share in the third
quarter. The adjusting items are discussed in more detail later in this
news release.
Devon continued to deliver strong oil and natural gas liquids production
growth in the third quarter of 2011. In aggregate, liquids production
averaged 226,000 barrels per day. This represents a 17 percent increase
in liquids production compared to the third quarter of 2010.
Total production of oil, natural gas and natural gas liquids averaged
661,000 oil-equivalent barrels (Boe) per day in the third quarter of
2011, an eight percent increase over the year-ago quarter.
Higher overall production and improved oil and natural gas liquids
prices drove sales of oil, natural gas and natural gas liquids to $2.1
billion in the third quarter of 2011. This represents a 25 percent
increase over the year-ago quarter.
Devon′s marketing and midstream operating profit rose 11 percent over
the third quarter of 2010, to $138 million. The increase was
attributable to higher natural gas liquids prices and production.
Highlights
In the Permian Basin, Devon increased oil and natural gas liquids
production 17 percent compared to the third quarter of 2010. Liquids
production accounted for 75 percent of the 50,000 oil-equivalent
barrels per day produced in the Permian Basin during the third quarter.
At the Bone Spring play in the Permian Basin, the company added 11 new
wells to production in the third quarter of 2011. Initial daily
production from the 11 wells averaged 540 Boe per day per well.
In Canada, average net production from Devon′s 100 percent-owned
Jackfish 1 and Jackfish 2 projects reached a record 36,000 barrels per
day during the third quarter. Devon′s net production from its Jackfish
2 oil sands project continued to ramp-up ahead of schedule.
Also in Canada, Devon completed 19 exploration wells targeting oil and
liquids-rich opportunities across its more than 4 million net acres in
the Western Canadian Sedimentary Basin. The company tied in 10 of
these wells to production in the third quarter. This activity was
highlighted by results in the Ferrier area where the company commenced
production on three Cardium wells with initial production averaging
770 Boe per day per well.
Third-quarter production from the Cana-Woodford Shale increased 71
percent compared to the year-ago quarter. Net production averaged a
record 200 million cubic feet of natural gas equivalent per day in the
quarter, including 8,100 barrels per day of liquids. The company′s
Cana-Woodford gas processing facility remains on schedule to be fully
operational in the fourth quarter.
The company′s Barnett Shale production totaled 1.3 billion cubic feet
of natural gas equivalent per day in the third quarter, an eight
percent increase over the third-quarter 2010. Liquids production in
the Barnett Shale averaged 46,000 barrels per day, a 15 percent
year-over-year increase.
Devon brought 10 operated Granite Wash wells online in the third
quarter. Initial production from these wells averaged 1,250 barrels of
oil-equivalent per day, including 180 barrels of oil and 405 barrels
of natural gas liquids per day. The company has an average working
interest of 86 percent in these wells.
Schedule
Devon generated $1.9 billion of cash flow before balance sheet changes
in the third quarter of 2011, a six percent increase over the year-ago
quarter. The company comfortably funded its total capital program during
the third quarter and returned nearly $800 million to its shareholders
in the form of stock buybacks and dividend payments.
In May 2010, Devon commenced a program to repurchase $3.5 billion of its
common stock. During the third-quarter 2011 the company repurchased $697
million of common stock. As of September 30, 2011, the company had
repurchased $3.2 billion of stock and expects to complete the stock
repurchase program during the fourth quarter of 2011.
Devon exited the third quarter of 2011 with cash and short-term
investments of $6.8 billion and a net debt to adjusted capitalization
ratio of 10 percent. Reconciliations of cash flow before balance sheet
changes, net debt and adjusted capitalization, which are non-GAAP
measures, are provided in this release.
The company′s lease operating expenses (LOE) totaled $475 million in the
third quarter. On a unit of production basis, LOE increased six percent
compared to the third quarter of 2010. The increase in LOE reflects
higher industry costs and the impact of a stronger Canadian dollar.
Taxes other than income were $108 million in the third quarter of 2011.
The year-over-year increase of 14 percent was driven by higher
production taxes resulting from the significant increase in oil and
natural gas liquids revenues.
Third-quarter 2011 general and administrative expenses (G&A) totaled
$138 million, or $2.27 per Boe. G&A per Boe declined three percent
compared to the third quarter of 2010.
Total depreciation, depletion and amortization expenses (DD&A) were $566
million in the third quarter of 2011. Compared to the year-ago quarter,
unit DD&A increased 14 percent, to $9.32 per Boe.
Interest expense for the third quarter was $104 million, a $21 million
increase over the third quarter of 2010. Higher average debt balances
drove the increase.
Third-quarter income tax expense from continuing operations totaled $498
million, or 32 percent of pre-tax earnings. After adjusting for items
generally excluded by securities analysts, Devon′s third quarter tax
rate was 35 percent of pre-tax earnings from continuing operations.
In accordance with accounting standards, Devon has classified the
assets, liabilities, and results of its international segment as
discontinued operations for all accounting periods presented in this
release. Included with this release is a table of revenues, expenses,
production by category, and the amounts classified as discontinued
operations for each period presented.
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. These items and their
effects upon reported earnings for the third-quarter 2011 are described
below:
Items affecting continuing operations:
A change in the fair value of oil, gas and NGL derivative instruments
increased third-quarter earnings by $642 million pre-tax ($415 million
after tax).
Income tax accrual adjustments increased third-quarter earnings by $42
million.
The reversal of previously accrued restructuring costs increased
third-quarter earnings by $3 million pre-tax ($2 million after tax).
A change in fair value of interest-rate and other financial
instruments decreased third-quarter earnings by $92 million pre-tax
($59 million after tax).
The following tables summarize the effects of these items on
third-quarter 2011 earnings, income taxes and cash flow.
?
?
?
?
?
?
?
?
?
?
?
?
?
(in millions)
?
Income Tax Effect
?
?
?
Earnings
Effect
?
?
?
Current
?
?
?
Deferred
?
?
?
Total
?
?
?
Earnings
Effect
?
?
?
Balance Sheet
Changes
Effect
Oil, gas and NGL derivatives
$
642
-
?
?
?
227
227
415
-
Income tax accrual adjustment
-
(128
)
86
(42
)
42
128
Restructuring costs
3
-
1
1
2
2
Interest-rate and other financial instruments
?
?
(92
)
?
?
?
-
?
?
?
?
(33
)
?
?
?
(33
)
?
?
?
(59
)
?
?
?
-
?
Totals
?
$
553
?
?
?
?
(128
)
?
?
?
281
?
?
?
?
153
?
?
?
?
400
?
?
?
?
130
In aggregate, these items increased third-quarter 2011 net earnings by
$400 million, or $0.97 per common share ($0.96 cents per diluted share).
These items and their associated tax effects increased third-quarter
2011 cash flow before balance sheet changes by $130 million.
Devon will discuss its third-quarter 2011 financial and operating
results in a conference call that will be webcast today at 10 a.m.
Central Time (11 a.m. Eastern Time). The webcast may be accessed from
Devon′s Internet home page at www.devonenergy.com.
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.
by the Securities and Exchange Commission. 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; drilling
risks; environmental risks; and political or regulatory changes.
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.
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 for the fiscal year
ended December 31, 2010, available from us at Devon Energy Corporation,
Attn. Investor Relations, 20 North Broadway, Oklahoma City, OK 73102.
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.
?
?
?
PRODUCTION (net of royalties)
?
?
?
Quarter Ended
?
?
?
Nine Months Ended
Excludes discontinued operations
September 30, September 30,
?
?
?
?
2011
?
?
?
2010
?
?
?
2011
?
?
?
2010 Total Period Production
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Natural Gas (Bcf)
?
?
?
?
?
?
U.S. Onshore
186.5
178.7
547.9
518.0
Canada
53.4
53.5
160.3
161.6
North American Onshore
239.9
232.2
708.2
679.6
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
16.8
Total Natural Gas
?
?
?
239.9
?
?
?
232.2
?
?
?
708.2
?
?
?
696.4
Oil (MMBbls)
U.S. Onshore
4.3
3.5
12.2
9.8
Canada
7.2
6.0
20.2
19.1
North American Onshore
11.5
9.5
32.4
28.9
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
1.9
Total Oil
?
?
?
11.5
?
?
?
9.5
?
?
?
32.4
?
?
?
30.8
Natural Gas Liquids (MMBbls)
U.S. Onshore
8.4
7.3
24.3
20.8
Canada
0.9
0.9
2.7
2.7
North American Onshore
9.3
8.2
27.0
23.5
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
0.3
Total Natural Gas Liquids
?
?
?
9.3
?
?
?
8.2
?
?
?
27.0
?
?
?
23.8
Oil Equivalent (MMBoe)
U.S. Onshore
43.8
40.6
127.8
117.0
Canada
17.0
15.8
49.7
48.7
North American Onshore
60.8
56.4
177.5
165.7
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
5.0
Total Oil Equivalent
?
?
?
60.8
?
?
?
56.4
?
?
?
177.5
?
?
?
170.7
Average Daily Production
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Natural Gas (MMcf)
U.S. Onshore
2,027.7
1,941.9
2,007.1
1,897.3
Canada
580.0
581.6
587.1
592.0
North American Onshore
2,607.7
2,523.5
2,594.2
2,489.3
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
61.5
Total Natural Gas
?
?
?
2,607.7
?
?
?
2,523.5
?
?
?
2,594.2
?
?
?
2,550.8
Oil (MBbls)
U.S. Onshore
46.7
38.5
44.6
36.0
Canada
78.3
65.0
74.1
69.9
North American Onshore
125.0
103.5
118.7
105.9
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
7.0
Total Oil
?
?
?
125.0
?
?
?
103.5
?
?
?
118.7
?
?
?
112.9
Natural Gas Liquids (MBbls)
U.S. Onshore
91.0
79.6
89.0
76.2
Canada
10.2
9.6
10.0
9.9
North American Onshore
101.2
89.2
99.0
86.1
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
1.2
Total Natural Gas Liquids
?
?
?
101.2
?
?
?
89.2
?
?
?
99.0
?
?
?
87.3
Oil Equivalent (MBoe)
U.S. Onshore
475.6
441.7
468.1
428.4
Canada
185.2
171.6
181.9
178.5
North American Onshore
660.8
613.3
650.0
606.9
U.S. Offshore
?
?
?
-
?
?
?
-
?
?
?
-
?
?
?
18.4
Total Oil Equivalent
?
?
?
660.8
?
?
?
613.3
?
?
?
650.0
?
?
?
625.3
?
?
DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION
?
?
?
?
?
?
BENCHMARK PRICES Quarter Ended Nine Months Ended (average prices) September 30, September 30,
?
?
?
?
2011
?
?
?
2010
?
?
?
2011
?
?
?
2010
Natural Gas ($/Mcf) ? Henry Hub
$
4.20
?
?
?
$
4.38
$
4.21
?
?
?
$
4.59
Oil ($/Bbl) ? West Texas Intermediate (Cushing)
?
?
?
$
89.55
?
?
?
$
76.08
?
?
?
$
95.42
?
?
?
$
77.59
?
?
?
?
?
?
?
?
?
?
?
?
Quarter Ended September 30, 2011 Oil Gas NGLs Total
?
?
?
?
(Per Bbl)
?
?
?
(Per Mcf)
?
?
?
(Per Bbl)
?
?
?
(Per Boe)
U.S. Onshore
$
86.30
$
3.71
$
40.95
$
32.11
Canada
?
?
?
$
61.70
?
?
?
?
$
3.93
?
?
?
$
54.85
?
?
?
$
41.42
North American Onshore
$
70.89
$
3.76
$
42.35
$
34.72
U.S. Offshore
?
?
?
$
-
?
?
?
?
$
-
?
?
?
$
-
?
?
?
$
-
Realized price without hedges
$
70.89
$
3.76
$
42.35
$
34.72
Cash settlements
?
?
?
$
(0.13
)
?
?
?
$
0.40
?
?
?
$
0.09
?
?
?
$
1.58
Realized price, including cash settlements
?
?
?
$
70.76
?
?
?
?
$
4.16
?
?
?
$
42.44
?
?
?
$
36.30
?
?
?
?
?
?
?
?
?
?
?
?
Quarter Ended September 30, 2010 Oil Gas NGLs Total
?
?
?
?
(Per Bbl)
?
?
?
(Per Mcf)
?
?
?
(Per Bbl)
?
?
?
(Per Boe)
U.S. Onshore
$
71.47
$
3.65
$
27.21
$
27.18
Canada
?
?
?
$
56.89
?
?
?
$
3.72
?
?
?
$
43.89
?
?
?
$
36.62
North American Onshore
$
62.31
$
3.67
$
29.01
$
29.82
U.S. Offshore
?
?
?
$
-
?
?
?
$
-
?
?
?
$
-
?
?
?
$
-
Realized price without hedges
$
62.31
$
3.67
$
29.01
$
29.82
Cash settlements
?
?
?
$
-
?
?
?
$
1.00
?
?
?
$
-
?
?
?
$
4.14
Realized price, including cash settlements
?
?
?
$
62.31
?
?
?
$
4.67
?
?
?
$
29.01
?
?
?
$
33.96
?
?
?
?
?
?
?
?
?
?
?
?
Nine Months Ended September 30, 2011 Oil Gas NGLs Total
?
?
?
?
(Per Bbl)
?
?
?
(Per Mcf)
?
?
?
(Per Bbl)
?
?
?
(Per Boe)
U.S. Onshore
$
91.18
$
3.64
$
39.05
$
31.73
Canada
?
?
?
$
65.30
?
?
?
?
$
4.01
?
?
?
$
55.92
?
?
?
$
42.61
North American Onshore
$
75.04
$
3.73
$
40.74
$
34.78
U.S. Offshore
?
?
?
$
-
?
?
?
?
$
-
?
?
?
$
-
?
?
?
$
-
Realized price without hedges
$
75.04
$
3.73
$
40.74
$
34.78
Cash settlements
?
?
?
$
(0.70
)
?
?
?
$
0.37
?
?
?
$
0.07
?
?
?
$
1.35
Realized price, including cash settlements
?
?
?
$
74.34
?
?
?
?
$
4.10
?
?
?
$
40.81
?
?
?
$
36.13
?
?
?
?
?
?
?
?
?
?
?
?
Nine Months Ended September 30, 2010 Oil Gas NGLs Total
?
?
?
?
(Per Bbl)
?
?
?
(Per Mcf)
?
?
?
(Per Bbl)
?
?
?
(Per Boe)
U.S. Onshore
$
73.56
$
3.91
$
29.92
$
28.83
Canada
?
?
?
$
57.90
?
?
?
$
4.24
?
?
?
$
46.34
?
?
?
$
39.33
North American Onshore
$
63.22
$
3.99
$
31.81
$
31.92
U.S. Offshore
?
?
?
$
77.81
?
?
?
$
5.12
?
?
?
$
38.22
?
?
?
$
49.06
Realized price without hedges
$
64.12
$
4.02
$
31.90
$
32.42
Cash settlements
?
?
?
$
-
?
?
?
$
0.83
?
?
?
$
-
?
?
?
$
3.40
Realized price, including cash settlements
?
?
?
$
64.12
?
?
?
$
4.85
?
?
?
$
31.90
?
?
?
$
35.82
?
?
?
?
?
?
?
DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION
?
CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended Nine Months Ended (in millions, except per share amounts) September 30, September 30,
?
?
?
?
2011
?
?
?
2010
?
?
?
2011
?
?
?
2010 Revenues
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Oil, gas and NGL sales
$
2,111
?
?
?
$
1,683
$
6,171
?
?
?
$
5,535
Oil, gas and NGL derivatives
738
209
986
874
Marketing and midstream revenues
?
?
?
?
653
?
?
?
?
?
461
?
?
?
?
?
1,712
?
?
?
?
?
1,396
?
Total revenues
?
?
?
?
3,502
?
?
?
?
?
2,353
?
?
?
?
?
8,869
?
?
?
?
?
7,805
?
Expenses and other, net
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Lease operating expenses
475
415
1,352
1,271
Taxes other than income taxes
108
95
336
288
Marketing and midstream operating costs and expenses
515
336
1,304
1,013
Depreciation, depletion and amortization of oil and gas properties
504
397
1,431
1,249
Depreciation and amortization of non-oil and gas properties
62
66
191
192
Accretion of asset retirement obligation
23
21
69
71
General and administrative expenses
138
131
403
399
Restructuring costs
(3
)
63
(2
)
55
Interest expense
104
83
270
280
Interest-rate and other financial instruments
40
56
33
121
Other, net
?
?
?
?
(2
)
?
?
?
?
(9
)
?
?
?
?
(14
)
?
?
?
?
(34
)
Total expenses and other, net
?
?
?
?
1,964
?
?
?
?
?
1,654
?
?
?
?
?
5,373
?
?
?
?
?
4,905
?
Earnings from continuing operations before income taxes
?
?
?
?
1,538
?
?
?
?
?
699
?
?
?
?
?
3,496
?
?
?
?
?
2,900
?
Income tax expense (benefit)
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Current
(248
)
(310
)
(301
)
696
Deferred
?
?
?
?
746
?
?
?
?
?
580
?
?
?
?
?
2,184
?
?
?
?
?
349
?
Total income tax expense
?
?
?
?
498
?
?
?
?
?
270
?
?
?
?
?
1,883
?
?
?
?
?
1,045
?
Earnings from continuing operations
?
?
?
?
1,040
?
?
?
?
?
429
?
?
?
?
?
1,613
?
?
?
?
?
1,855
?
Discontinued operations
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Earnings from discontinued operations before income taxes
(4
)
1,710
2,584
2,320
Discontinued operations income tax expense (benefit)
?
?
?
?
(2
)
?
?
?
?
49
?
?
?
?
?
-
?
?
?
?
?
187
?
Earnings (loss) from discontinued operations
?
?
?
?
(2 )
?
?
?
?
1,661
?
?
?
?
?
2,584
?
?
?
?
?
2,133
?
Net earnings
?
?
?
$ 1,038
?
?
?
?
$ 2,090
?
?
?
?
$ 4,197
?
?
?
?
$ 3,988
?
?
Basic earnings from continuing operations per share
$
2.51
$
0.99
$
3.83
$
4.20
Basic earnings from discontinued operations per share
?
?
?
?
-
?
?
?
?
?
3.82
?
?
?
?
?
6.14
?
?
?
?
?
4.82
?
Basic net earnings per share
?
?
?
$
2.51
?
?
?
?
$
4.81
?
?
?
?
$
9.97
?
?
?
?
$
9.02
?
?
Diluted earnings from continuing operations per share
$
2.50
$
0.98
$
3.82
$
4.18
Diluted earnings from discontinued operations per share
?
?
?
?
-
?
?
?
?
?
3.81
?
?
?
?
?
6.11
?
?
?
?
?
4.81
?
Diluted net earnings per share
?
?
?
$
2.50
?
?
?
?
$
4.79
?
?
?
?
$
9.93
?
?
?
?
$
8.99
?
?
Weighted average common shares outstanding
Basic
414
435
421
442
Diluted
415
436
423
444
?
?
?
?
?
?
?
DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION
?
CONSOLIDATED BALANCE SHEETS (in millions) September 30, December 31,
?
?
?
?
2011
?
?
?
2010 Assets
?
?
?
?
?
?
?
?
Current assets:
Cash and cash equivalents
$
5,618
$
2,866
Short-term investments
1,231
145
Accounts receivable
1,430
1,202
Current assets held for sale
26
563
Other current assets
?
?
?
?
1,302
?
?
?
?
?
779
?
Total current assets
?
?
?
?
9,607
?
?
?
?
?
5,555
?
Property and equipment, at cost:
Oil and gas, based on full cost accounting:
Subject to amortization
59,331
56,012
Not subject to amortization
?
?
?
?
4,061
?
?
?
?
?
3,434
?
Total oil and gas
63,392
59,446
Other
?
?
?
?
4,778
?
?
?
?
?
4,429
?
Total property and equipment, at cost
68,170
63,875
Less accumulated depreciation, depletion and amortization
?
?
?
?
(45,000
)
?
?
?
?
(44,223
)
Property and equipment, net
?
?
?
?
23,170
?
?
?
?
?
19,652
?
Goodwill
5,951
6,080
Long-term assets held for sale
111
859
Other long-term assets
?
?
?
?
1,027
?
?
?
?
?
781
?
Total Assets
?
?
?
$ 39,866
?
?
?
?
$ 32,927
?
Liabilities and Stockholders' Equity
?
?
?
?
?
?
?
?
Current liabilities:
Accounts payable - trade
$
1,512
$
1,411
Revenues and royalties due to others
659
538
Short-term debt
3,288
1,811
Current liabilities associated with assets held for sale
50
305
Other current liabilities
?
?
?
?
522
?
?
?
?
?
518
?
Total current liabilities
?
?
?
?
6,031
?
?
?
?
?
4,583
?
Long-term debt
5,969
3,819
Asset retirement obligations
1,460
1,423
Liabilities associated with assets held for sale
2
26
Other long-term liabilities
493
1,067
Deferred income taxes
?
?
?
?
4,809
?
?
?
?
?
2,756
?
Stockholders' equity:
?
?
?
?
?
?
?
?
Common stock
41
43
Additional paid-in capital
3,827
5,601
Retained earnings
15,870
11,882
Accumulated other comprehensive earnings
1,412
1,760
Treasury stock, at cost
?
?
?
?
(48
)
?
?
?
?
(33
)
Total Stockholders' Equity
?
?
?
?
21,102
?
?
?
?
?
19,253
?
Total Liabilities and Stockholders' Equity
?
?
?
$ 39,866
?
?
?
?
$ 32,927
?
Common Shares Outstanding
?
?
?
?
407
?
?
?
?
?
432
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Quarter Ended Nine Months Ended September 30, September 30,
?
?
?
?
2011
?
?
?
2010
?
?
?
2011
?
?
?
2010 Cash Flows From Operating Activities
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Net earnings
$
1,038
$
2,090
$
4,197
$
3,988
Loss (earnings) from discontinued operations, net of tax
2
(1,661
)
(2,584
)
(2,133
)
Adjustments to reconcile earnings from continuing
operations to net cash provided by operating activities:
Depreciation, depletion and amortization
566
463
1,622
1,441
Deferred income tax expense
746
580
2,184
349
Unrealized change in fair value of financial instruments
(587
)
95
(661
)
(136
)
Other noncash charges
?
?
?
?
103
?
?
?
?
?
73
?
?
?
?
?
185
?
?
?
?
?
154
?
Net cash from operating activities before balance sheet changes
1,868
1,640
4,943
3,663
Net (decrease) increase in working capital
(219
)
(417
)
(308
)
164
Decrease in long-term other assets
6
14
51
28
(Decrease) increase in long-term other liabilities
?
?
?
?
(258
)
?
?
?
?
56
?
?
?
?
?
(459
)
?
?
?
?
57
?
Cash from operating activities - continuing operations
1,397
1,293
4,227
3,912
Cash from operating activities - discontinued operations
?
?
?
?
7
?
?
?
?
?
51
?
?
?
?
?
(13
)
?
?
?
?
324
?
Net cash from operating activities
?
?
?
?
1,404
?
?
?
?
?
1,344
?
?
?
?
?
4,214
?
?
?
?
?
4,236
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Cash Flows From Investing Activities
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Capital expenditures
(1,795
)
(1,572
)
(5,515
)
(4,793
)
Proceeds from property and equipment divestitures
8
2
13
4,131
Purchases of short-term investments
(1,231
)
-
(5,751
)
-
Redemptions of short-term investments
3,367
-
4,665
-
Redemptions of long-term investments
9
2
10
20
Other
?
?
?
?
-
?
?
?
?
?
(13
)
?
?
?
?
(33
)
?
?
?
?
(13
)
Cash from investing activities - continuing operations
358
(1,581
)
(6,611
)
(655
)
Cash from investing activities - discontinued operations
?
?
?
?
(8
)
?
?
?
?
1,869
?
?
?
?
?
3,162
?
?
?
?
?
2,298
?
Net cash from investing activities
?
?
?
?
350
?
?
?
?
?
288
?
?
?
?
?
(3,449 )
?
?
?
?
1,643
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Cash Flows From Financing Activities
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Net commercial paper borrowings (repayments)
856
-
3,196
(1,432
)
Proceeds from borrowing of long-term debt, net of issuance costs
2,221
-
2,221
-
Debt repayments
(1,760
)
-
(1,760
)
(350
)
Proceeds from stock option exercises
5
3
101
18
Repurchases of common stock
(697
)
(499
)
(1,987
)
(929
)
Dividends paid on common stock
(69
)
(69
)
(209
)
(211
)
Excess tax benefits related to share-based compensation
?
?
?
?
(1
)
?
?
?
?
1
?
?
?
?
?
11
?
?
?
?
?
7
?
Net cash from financing activities
?
?
?
?
555
?
?
?
?
?
(564 )
?
?
?
?
1,573
?
?
?
?
?
(2,897 )
?
Effect of exchange rate changes on cash
?
?
?
?
(42
)
?
?
?
?
14
?
?
?
?
?
(10
)
?
?
?
?
5
?
Net increase in cash and cash equivalents
2,267
1,082
2,328
2,987
Cash and cash equivalents at beginning of period
?
?
?
?
3,351
?
?
?
?
?
2,916
?
?
?
?
?
3,290
?
?
?
?
?
1,011
?
Cash and cash equivalents at end of period
?
?
?
$
5,618
?
?
?
?
$
3,998
?
?
?
?
$
5,618
?
?
?
?
$
3,998
?
?
?
?
?
?
?
?
DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION
?
COMPANY OPERATED RIGS As of September 30,
?
?
?
?
2011
?
?
?
2010 Number of Company Operated Rigs Running
?
?
?
?
?
?
?
?
U.S. Onshore
59
59
Canada
?
?
?
11
?
?
?
8
Total
?
?
?
70
?
?
?
67
?
?
?
?
?
?
?
?
?
KEY OPERATING STATISTICS BY REGION Quarter Ended September 30, 2011 Avg. Production Operated Rigs at Gross Wells
?
?
?
?
(MBOED)
?
?
?
September 30, 2011
?
?
?
Drilled
Barnett Shale
216.3
12
78
Canadian Oilsands - Jackfish / Pike
35.6
1
7
Cana-Woodford Shale
33.3
17
58
Granite Wash
16.4
4
18
Gulf Coast / East Texas
69.5
5
19
Lloydminster
40.0
4
79
Permian Basin
49.9
19
65
Rocky Mountains
64.5
1
26
Other
?
?
?
135.3
?
?
?
7
?
?
?
27
Total
?
?
?
660.8
?
?
?
70
?
?
?
377
?
?
?
?
?
?
?
?
?
CAPITAL EXPENDITURES (in millions) Quarter Ended September 30, 2011
?
?
?
?
U.S. Onshore
?
?
?
Canada
?
?
?
Total Capital Expenditures
?
?
?
?
?
?
?
?
?
?
?
?
Exploration
$
252
67
$
319
Development
?
?
?
?
1,024
?
?
?
284
?
?
?
?
1,308
Exploration and development capital
$
1,276
351
$
1,627
Capitalized G&A
85
Capitalized interest
13
Midstream capital
87
Other capital
?
?
?
?
?
?
?
?
?
?
?
?
139
Total Continuing Operations
?
?
?
?
?
?
?
?
?
?
?
$
1,951
Discontinued operations
?
?
?
?
?
?
?
?
?
?
?
?
12
Total Operations
?
?
?
?
?
?
?
?
?
?
?
$
1,963
?
?
?
?
?
?
?
?
?
CAPITAL EXPENDITURES (in millions) Nine Months Ended September 30, 2011
?
?
?
?
U.S. Onshore
?
?
?
Canada
?
?
?
Total Capital Expenditures
?
?
?
?
?
?
?
?
?
?
?
?
Exploration
$
593
243
$
836
Development
?
?
?
?
2,935
?
?
?
908
?
?
?
?
3,843
Exploration and development capital
$
3,528
1,151
$
4,679
Capitalized G&A
247
Capitalized interest
35
Midstream capital
241
Other capital
?
?
?
?
?
?
?
?
?
?
?
?
364
Total Continuing Operations
?
?
?
?
?
?
?
?
?
?
?
$
5,566
Discontinued operations
?
?
?
?
?
?
?
?
?
?
?
?
46
Total Operations
?
?
?
?
?
?
?
?
?
?
?
$
5,612
?
?
?
?
?
?
?
DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION
?
PRODUCTION FROM DISCONTINUED OPERATIONS Quarter Ended Nine Months Ended September 30, September 30,
?
?
?
?
2011
?
?
?
2010
?
?
?
2011
?
?
?
2010 Production from Discontinued Operations
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Oil (MMBbls)
-
?
?
?
2.0
0.5
?
?
?
7.8
Natural Gas (Bcf)
?
?
?
-
?
?
?
0.4
?
?
?
-
?
?
?
1.3
Total Oil Equivalent (MMBoe)
?
?
?
-
?
?
?
2.1
?
?
?
0.5
?
?
?
8.0
?
?
?
?
?
?
?
?
?
?
?
?
STATEMENTS OF DISCONTINUED OPERATIONS Quarter Ended Nine Months Ended (in millions) September 30, September 30,
?
?
?
?
2011
?
?
?
2010
?
?
?
2011
?
?
?
2010
Operating revenues
?
?
?
$
-
?
?
?
?
$
139
?
?
?
?
$
43
?
?
?
?
$
573
?
Expenses and other, net
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Operating expenses
-
42
33
176
Gain on sale of oil and gas properties
-
(1,535
)
(2,546
)
(1,843
)
Other, net
?
?
?
?
4
?
?
?
?
?
(78
)
?
?
?
?
(28
)
?
?
?
?
(80
)
Total expenses and other, net
?
?
?
?
4
?
?
?
?
?
(1,571
)
?
?
?
?
(2,541
)
?
?
?
?
(1,747
)
Earnings before income taxes
(4
)
1,710
2,584
2,320
Income tax (benefit) expense
?
?
?
?
(2
)
?
?
?
?
49
?
?
?
?
?
-
?
?
?
?
?
187
?
Earnings from discontinued operations
?
?
?
$ (2 )
?
?
?
$ 1,661
?
?
?
?
$ 2,584
?
?
?
?
$ 2,133
?
?
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. Cash flow before balance
sheet changes is a Non-GAAP financial measure. Devon believes cash flow
before balance sheet changes is relevant because it is a measure of cash
available to fund the company′s capital expenditures, dividends and to
service its debt. Cash flow before balance sheet changes is also used by
certain securities analysts as a measure of Devon′s financial results.
?
?
?
RECONCILIATION TO GAAP INFORMATION Quarter Ended (in millions) September 30,
?
?
?
?
2011
?
?
?
2010 Net Cash Provided By Operating Activities (GAAP)
?
?
?
$ 1,404
?
?
?
$ 1,344
Changes in assets and liabilities - continuing operations
471
?
?
?
347
Changes in assets and liabilities - discontinued operations
?
?
?
?
1
?
?
?
?
76
Cash flow before balance sheet changes (Non-GAAP)
?
?
?
$
1,876
?
?
?
$
1,767
?
Devon believes that using net debt for the calculation of 'net debt to
adjusted capitalization? provides a better measure than using debt.
Devon defines net debt as debt less cash and short-term investments.
Devon believes that because cash and short-term investments can be used
to repay indebtedness, netting cash and short-term investments against
debt provides a clearer picture of the future demands on cash to repay
debt.
RECONCILIATION TO GAAP INFORMATION
?
?
?
?
?
?
(in millions) September 30,
?
?
?
?
2011
?
?
?
2010
Total debt (GAAP)
$
9,257
$
5,629
Adjustments:
Cash and short-term investments
?
?
?
?
6,849
?
?
?
?
3,998
Net debt (Non-GAAP)
?
?
?
$
2,408
?
?
?
$
1,631
?
?
?
?
?
?
?
?
?
Total debt
$
9,257
$
5,629
Stockholders' equity
?
?
?
?
21,102
?
?
?
?
18,652
Total capitalization (GAAP)
?
?
?
$
30,359
?
?
?
$
24,281
?
?
?
?
?
?
?
?
?
Net debt
$
2,408
$
1,631
Stockholders' equity
?
?
?
?
21,102
?
?
?
?
18,652
Adjusted capitalization (Non-GAAP)
?
?
?
$
23,510
?
?
?
$
20,283
Devon Energy Corporation
Investor Contact
Shea Snyder,
405-552-4782
or
Media Contact
Chip Minty, 405-228-8647