UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02 | Results of Operations and Financial Condition. |
On May 4, 2021, Devon Energy Corporation (the “Company”) announced its financial and operational results for the quarter ended March 31, 2021. In connection with this announcement, the Company provided an earnings release and certain supplemental financial information (including guidance and hedging information). Copies of these documents are furnished as Exhibits 99.1 and 99.2, respectively, to this report and, along with certain other materials, will be available on the Company’s website at www.devonenergy.com.
The information contained in this report and the exhibits hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be incorporated by reference into any filings made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit |
Description of Exhibits | |
99.1 | Earnings release, dated May 4, 2021. | |
99.2 | Supplemental financial information (including guidance and hedging information). | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
DEVON ENERGY CORPORATION | ||
By: | /s/ Jeffrey L. Ritenour | |
Jeffrey L. Ritenour | ||
Executive Vice President and Chief Financial Officer |
Date: May 4, 2021
Exhibit 99.1
|
Devon Energy Corporation 333 West Sheridan Avenue Oklahoma City, OK 73102-5015 |
Devon Energy Reports First-Quarter 2021 Financial and Operational Results
OKLAHOMA CITY May 4, 2021 Devon Energy Corp. (NYSE: DVN) today reported financial and operational results for the first-quarter 2021. The companys first quarter performance includes results from the merger with WPX Energy that was successfully completed on Jan. 7, 2021. Supplemental financial tables and forward-looking guidance are available on the companys website at www.devonenergy.com.
KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
| Board increases fixed-plus-variable dividend payout by 13 percent to $0.34 per share |
| Investment-grade financial strength enhanced with redemption of $743 million of debt year-to-date |
| Devon reiterates its commitment to a disciplined maintenance capital program in 2021 |
| First-quarter oil production totaled 268,000 barrels per day, exceeding guidance by 5,000 barrels per day |
| Delaware Basin efficiency gains drove upstream capital expenditures 5 percent below guidance in the quarter |
| Operating cash flow in the first quarter reached $592 million |
| Free cash flow generation, after adjusting for cash restructuring costs, expanded to $260 million in the first quarter |
CEO PERSPECTIVE
Devon is a premier energy company that possesses a powerful suite of assets and a disciplined strategy to maximize value for our shareholders, said Rick Muncrief, president and CEO. With this advantaged platform, we delivered on exactly what we promised to do in the first quarter by moderating capital investment, capturing cost synergies and returning significant value to shareholders through higher dividends and the aggressive reduction of debt.
With our business scaled to generate free cash flow, a clear differentiator for Devon is the ability to accelerate cash returns to shareholders through our innovative fixed-plus-variable dividend framework, said Muncrief. And based on the strength of our first-quarter results, I am proud to announce a 13 percent increase in our total dividend payout to $0.34 per share.
Looking ahead to the remainder of the year, we are unwavering in our commitment to capital discipline and will remain focused on the strategic objectives that underpin our cash-return business model, Muncrief added. Devon has no intention of allocating capital to growth projects until demand-side fundamentals recover and it becomes evident that OPEC+s spare oil capacity is effectively absorbed by the world markets.
OPERATING RESULTS
First-quarter oil production averaged 268,000 barrels per day, exceeding guidance by 5,000 barrels per day. This performance was driven by the companys Delaware Basin asset that accounted for 62 percent of total production. Devon estimates that production in the quarter was reduced by 8 percent due to severe winter weather. Production totals also exclude WPX results prior to the merger close date of Jan. 7, 2021, limiting first-quarter production by an incremental 3 percent.
Upstream capital spending was 5 percent below guidance, totaling $447 million in the first quarter. This positive variance was attributable to efficiency gains and the benefits of enhanced operating scale in the Delaware Basin. Devons capital activity averaged 18 operated drilling rigs and six completion crews in the quarter, with approximately 80 percent of this investment allocated to the Delaware Basin.
With capital programs focused on developing higher-margin production opportunities, oil and natural gas liquids volumes reached 74 percent of Devons product mix in the quarter. This exposure to higher value production expanded the companys field-level cash margin to $28.95 per Boe, an 88 percent increase year over year.
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Corporate costs also declined during the quarter, driven by general and administrative expenses, which declined 30 percent year over year on a pro forma basis.
ASSET-LEVEL HIGHLIGHTS
Delaware Basin: Oil production averaged 172,000 barrels per day, a 19 percent increase year-over-year on a pro forma basis. The growth in oil production was driven by 52 wells that commenced first production in the quarter across the companys acreage position. The completed well costs associated with this development activity improved to a record low of $534 per lateral foot in the quarter, representing a 43 percent reduction compared to 2018.
The top operating highlight from the first quarter was Devons Danger Noodle project in Lea County, New Mexico. This development project, targeting multiple intervals in the upper Wolfcamp, achieved average 30-day production rates of 5,100 Boe per day per well (66 percent oil). In addition to strong well productivity, returns at Danger Noodle were enhanced by completed well costs that were more than 20 percent below pre-drill expectations.
Another noteworthy event for Devon was the resumption of approvals for federal drilling permits. Since the Department of Interiors order to temporarily suspend permitting on federal lands lapsed in late March, the company has secured more than 50 approvals for new drilling permits in Southeast New Mexico. In aggregate, Devon possesses approximately 500 federal drilling permits, representing an inventory of 4 years at the current drilling pace. Overall, only 35 percent of Devons 400,000 net acres in the Delaware Basin resides on federal lands.
Anadarko Basin: Production averaged 68,000 Boe per day in the quarter. Devons operations were headlined by the commencement of a two-rig drilling program funded by a $100 million drilling carry with Dow. With this drilling joint venture, the company spud 8 wells in the liquids-rich core of the play during the quarter and plans to drill up to 30 wells for the full-year 2021.
Williston Basin: Production averaged 61,000 Boe per day, with oil accounting for 72 percent of the product mix. Devons operational focus in the quarter was optimizing base production and harvesting free cash flow from this high-margin oil asset. To stabilize production, the company plans to bring online 15 to 20 new wells over the remainder of 2021.
Eagle Ford: Production averaged 30,000 Boe per day. Devon and its partner resumed capital activity in the quarter by running a two-rig drilling program and a completion crew. With this level of activity, the partnership has reestablished operational continuity and plans to bring online approximately 40 wells throughout the remainder of the year.
Powder River Basin: Production averaged 23,000 Boe per day, of which 74 percent was oil. Oil production increased by 6 percent versus the fourth quarter of 2020, resulting from 10 new wells that targeted the Parkman and Turner formations. While capital activity will be limited for the remainder of 2021, Devons technical teams will focus on advancing their understanding of the emerging Niobrara oil resource opportunity across the companys 300,000 net acre position in the oil fairway.
FINANCIAL SUMMARY
Devon reported net earnings of $213 million, or $0.32 per diluted share, in the first quarter of 2021. Adjusting for items analysts typically exclude from estimates, Devons core earnings were $298 million or $0.45 per diluted share.
The companys operating cash flow totaled $592 million in the first quarter, with EBITDAX reaching $959 million. This level of cash flow funded all capital requirements and generated $260 million of free cash flow after adjusting for cash restructuring charges.
Devon exited the first quarter with $1.9 billion of cash and an undrawn credit facility of $3 billion. Year-to-date, the company has made significant progress on its $1.5 billion debt reduction plan by redeeming $743 million of outstanding debt. The next step in the companys debt reduction plan is to fully retire its callable $500 million 2026 notes in June.
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FIRST-QUARTER DIVIDEND DECLARED
In a separate release issued today, Devon announced that its board of directors has declared a fixed-plus-variable dividend of $0.34 per share based on the companys first quarter financial performance. This represents a 13 percent increase in payout compared to the dividend declared for the fourth quarter of 2020. Both the fixed quarterly dividend of $0.11 per share and the variable dividend of $0.23 per share are payable on Jun. 30, 2021 to shareholders of record at the close of business on Jun. 14, 2021.
2021 OUTLOOK
Devon remains firmly on track to achieve its full-year 2021 capital objectives. The company is committed to its maintenance capital program and has made no modifications to its full-year capital budget or production outlook. Additional details of Devons forward-looking guidance for the second-quarter and full-year 2021 are available on the companys website at www.devonenergy.com.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Devon strives to deliver results that balance economic growth, environmental stewardship, strong governance and social responsibility. For access to Devons sustainability report, please visit www.devonenergy.com/sustainability. This report highlights the companys commitment to operating a responsible, safe and ethical business while providing transparent reporting to all stakeholders.
CONFERENCE CALL WEBCAST AND SUPPLEMENTAL EARNINGS MATERIALS
Also provided with todays release is the companys detailed earnings presentation that is available on the companys website at www.devonenergy.com. The companys first-quarter conference call will be held at 10:00 a.m. Central (11:00 a.m. Eastern) on Wednesday, May 5, 2021, and will serve primarily as a forum for analyst and investor questions and answers.
ABOUT DEVON ENERGY
Devon Energy is a leading oil and gas producer in the U.S. with a premier multi-basin portfolio headlined by a world-class acreage position in the Delaware Basin. Devons disciplined cash-return business model is designed to achieve strong returns, generate free cash flow and return capital to shareholders, while focusing on safe and sustainable operations. For more information, please visit www.devonenergy.com.
Investor Contacts | Media Contact | |
Scott Coody, 405-552-4735 | Lisa Adams, 405-228-1732 | |
Chris Carr, 405-228-2496 |
NON-GAAP DISCLOSURES
This press release includes non-GAAP (generally accepted accounting principles) financial measures. Such 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 results as reported under GAAP. Reconciliations of these non-GAAP measures and other disclosures are provided within the supplemental financial tables that are available on the companys website and in the related Form 10-Q filed with the SEC.
FORWARD LOOKING STATEMENTS
This communication includes forward-looking statements within the meaning of the federal securities laws. Such statements include those concerning strategic plans, our expectations and objectives for future operations, as well as other future events or conditions, and are often identified by use of the words and phrases expects, believes, will, would, could, continue, may, aims, likely to be, intends, forecasts, projections, estimates, plans, expectations, targets, opportunities, potential, anticipates, outlook and other similar terminology. All statements, other than statements of historical facts, included in this communication that address activities, events or developments that Devon 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 our control. Consequently, actual future results could differ materially and adversely from our expectations due to a number of factors, including, but not limited to: the volatility of oil, gas and NGL prices; risks relating to the COVID-19 pandemic or other future pandemics; uncertainties inherent in estimating oil, gas and NGL reserves; the extent to which we are successful in acquiring and discovering additional reserves; the uncertainties, costs and risks involved in our operations, including as a result of employee misconduct; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks related to regulatory, social and market efforts to address climate change; risks related to our hedging activities; counterparty credit risks; risks relating to our indebtedness; cyberattack risks; our limited control over third parties who operate some of our oil and gas properties; midstream capacity constraints and
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potential interruptions in production; the extent to which insurance covers any losses we may experience; competition for assets, materials, people and capital; risks related to investors attempting to effect change; our ability to successfully complete mergers, acquisitions and divestitures; risks related to the recent merger with WPX, including the risk that we may not realize the anticipated benefits of the merger or successfully integrate the two legacy businesses; and any of the other risks and uncertainties discussed in Devons 2020 Annual Report on Form 10-K (the 2020 Form 10-K) or other SEC filings.
The forward-looking statements included in this communication speak only as of the date of this communication, represent current reasonable managements expectations as of the date of this communication and are subject to the risks and uncertainties identified above as well as those described in the 2020 Form 10-K and in other documents we file from time to time with the SEC. We cannot guarantee the accuracy of our forward-looking statements, and readers are urged to carefully review and consider the various disclosures made in the 2020 Form 10-K and in other documents we file from time to time with the SEC. All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. We do not undertake, and expressly disclaim, any duty to update or revise our forward-looking statements based on new information, future events or otherwise.
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Exhibit 99.2
Devon Energy First-Quarter 2021
Supplemental Tables
TABLE OF CONTENTS: | PAGE: | |||
Income Statement |
2 | |||
Supplemental Information for Income Statement |
3 | |||
Cash Flow Statement |
4 | |||
Balance Sheet |
5 | |||
Production by Asset |
6 | |||
Capital and Well Activity by Asset |
7 | |||
Realized Price by Asset |
8 | |||
Per-Unit Cash Margin by Asset |
9 | |||
Non-GAAP Core Earnings (Loss), Non-GAAP EBITDAX |
10 | |||
Net Debt, Net Debt-to-EBITDAX, Free Cash Flow and Adjusted Free Cash Flow |
11 | |||
Reinvestment Rate and Variable Dividend |
12 |
1
CONSOLIDATED STATEMENTS OF EARNINGS |
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(in millions, except per share amounts) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Oil, gas and NGL sales |
$ | 1,788 | $ | 786 | $ | 678 | $ | 424 | $ | 807 | ||||||||||
Oil, gas and NGL derivatives (1) |
(528 | ) | (117 | ) | (87 | ) | (361 | ) | 720 | |||||||||||
Marketing and midstream revenues |
502 | 611 | 476 | 331 | 560 | |||||||||||||||
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Total revenues |
1,762 | 1,280 | 1,067 | 394 | 2,087 | |||||||||||||||
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Production expenses (2) |
489 | 271 | 271 | 263 | 318 | |||||||||||||||
Exploration expenses |
3 | 4 | 39 | 12 | 112 | |||||||||||||||
Marketing and midstream expenses |
523 | 618 | 478 | 339 | 578 | |||||||||||||||
Depreciation, depletion and amortization |
467 | 301 | 299 | 299 | 401 | |||||||||||||||
Asset impairments |
| 27 | | | 2,666 | |||||||||||||||
Asset dispositions |
(32 | ) | (1 | ) | | | | |||||||||||||
General and administrative expenses |
107 | 82 | 75 | 79 | 102 | |||||||||||||||
Financing costs, net (3) |
77 | 70 | 66 | 69 | 65 | |||||||||||||||
Restructuring and transaction costs |
189 | 17 | 32 | | | |||||||||||||||
Other, net |
(29 | ) | 1 | | 13 | (48 | ) | |||||||||||||
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Total expenses |
1,794 | 1,390 | 1,260 | 1,074 | 4,194 | |||||||||||||||
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Loss from continuing operations before income taxes |
(32 | ) | (110 | ) | (193 | ) | (680 | ) | (2,107 | ) | ||||||||||
Income tax benefit |
(248 | ) | (37 | ) | (90 | ) | (3 | ) | (417 | ) | ||||||||||
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Net earnings (loss) from continuing operations |
216 | (73 | ) | (103 | ) | (677 | ) | (1,690 | ) | |||||||||||
Net earnings (loss) from discontinued operations, net of taxes |
| (25 | ) | 13 | 9 | (125 | ) | |||||||||||||
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Net earnings (loss) |
216 | (98 | ) | (90 | ) | (668 | ) | (1,815 | ) | |||||||||||
Net earnings attributable to noncontrolling interests |
3 | 4 | 2 | 2 | 1 | |||||||||||||||
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Net earnings (loss) attributable to Devon |
$ | 213 | $ | (102 | ) | $ | (92 | ) | $ | (670 | ) | $ | (1,816 | ) | ||||||
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Basic earnings (loss) per share: |
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Continuing operations |
$ | 0.33 | $ | (0.20 | ) | $ | (0.29 | ) | $ | (1.80 | ) | $ | (4.48 | ) | ||||||
Discontinued operations |
| (0.07 | ) | 0.04 | 0.02 | (0.34 | ) | |||||||||||||
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Basic net earnings (loss) per share |
$ | 0.33 | $ | (0.27 | ) | $ | (0.25 | ) | $ | (1.78 | ) | $ | (4.82 | ) | ||||||
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Diluted earnings (loss) per share: |
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Continuing operations |
$ | 0.32 | $ | (0.20 | ) | $ | (0.29 | ) | $ | (1.80 | ) | $ | (4.48 | ) | ||||||
Discontinued operations |
| (0.07 | ) | 0.04 | 0.02 | (0.34 | ) | |||||||||||||
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Diluted net earnings (loss) per share |
$ | 0.32 | $ | (0.27 | ) | $ | (0.25 | ) | $ | (1.78 | ) | $ | (4.82 | ) | ||||||
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Weighted average common shares outstanding: |
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Basic |
654 | 383 | 383 | 383 | 383 | |||||||||||||||
Diluted |
656 | 383 | 383 | 383 | 383 |
2
SUPPLEMENTAL INFORMATION FOR CONSLIDATED STATEMENTS OF EARNINGS |
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(1) OIL, GAS AND NGL DERIVATIVES | ||||||||||||||||||||
(in millions) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Derivative cash settlements |
$ | (232 | ) | $ | (27 | ) | $ | 10 | $ | 232 | $ | 101 | ||||||||
Derivative valuation changes |
(296 | ) | (90 | ) | (97 | ) | (593 | ) | 619 | |||||||||||
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Oil, gas and NGL derivatives |
$ | (528 | ) | $ | (117 | ) | $ | (87 | ) | $ | (361 | ) | $ | 720 | ||||||
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(2) PRODUCTION EXPENSES | ||||||||||||||||||||
(in millions) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Lease operating expense |
$ | 199 | $ | 91 | $ | 100 | $ | 108 | $ | 126 | ||||||||||
Gathering, processing & transportation |
160 | 130 | 125 | 123 | 130 | |||||||||||||||
Production taxes |
117 | 47 | 42 | 25 | 56 | |||||||||||||||
Property taxes |
13 | 3 | 4 | 7 | 6 | |||||||||||||||
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Production expenses |
$ | 489 | $ | 271 | $ | 271 | $ | 263 | $ | 318 | ||||||||||
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(3) FINANCING COSTS, NET | ||||||||||||||||||||
(in millions) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Interest on outstanding debt |
$ | 105 | $ | 65 | $ | 65 | $ | 65 | $ | 65 | ||||||||||
Gain on early retirement of debt |
(20 | ) | | | | | ||||||||||||||
Interest income |
(1 | ) | | (5 | ) | (2 | ) | (5 | ) | |||||||||||
Other |
(7 | ) | 5 | 6 | 6 | 5 | ||||||||||||||
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Financing costs, net |
$ | 77 | $ | 70 | $ | 66 | $ | 69 | $ | 65 | ||||||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in millions) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Cash flows from operating activities: |
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Net earnings (loss) |
$ | 216 | $ | (98 | ) | $ | (90 | ) | $ | (668 | ) | $ | (1,815 | ) | ||||||
Adjustments to reconcile net loss to net cash from operating activities: |
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Net (earnings) loss from discontinued operations, net of income taxes |
| 25 | (13 | ) | (9 | ) | 125 | |||||||||||||
Depreciation, depletion and amortization |
467 | 301 | 299 | 299 | 401 | |||||||||||||||
Asset impairments |
| 27 | | | 2,666 | |||||||||||||||
Leasehold impairments |
1 | 3 | 36 | 3 | 110 | |||||||||||||||
(Amortization) accretion of liabilities |
(54 | ) | 8 | 8 | 8 | 8 | ||||||||||||||
Total (gains) losses on commodity derivatives |
528 | 117 | 87 | 361 | (720 | ) | ||||||||||||||
Cash settlements on commodity derivatives |
(232 | ) | (27 | ) | 10 | 232 | 101 | |||||||||||||
Gains on asset dispositions |
(32 | ) | (1 | ) | | | | |||||||||||||
Deferred income tax benefit |
(243 | ) | (17 | ) | | | (311 | ) | ||||||||||||
Share-based compensation |
41 | 18 | 31 | 19 | 20 | |||||||||||||||
Early retirement of debt |
27 | | | | | |||||||||||||||
Other |
| | 1 | 4 | | |||||||||||||||
Changes in assets and liabilities, net |
(127 | ) | 2 | 58 | (99 | ) | (56 | ) | ||||||||||||
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Net cash from operating activities - continuing operations |
592 | 358 | 427 | 150 | 529 | |||||||||||||||
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Cash flows from investing activities: |
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Capital expenditures |
(499 | ) | (217 | ) | (204 | ) | (307 | ) | (425 | ) | ||||||||||
Acquisitions of property and equipment |
| (3 | ) | | (1 | ) | (4 | ) | ||||||||||||
Divestitures of property and equipment |
15 | 5 | 1 | 3 | 25 | |||||||||||||||
WPX acquired cash |
344 | | | | | |||||||||||||||
Distributions from equity method investments |
10 | | | | | |||||||||||||||
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Net cash from investing activities - continuing operations |
(130 | ) | (215 | ) | (203 | ) | (305 | ) | (404 | ) | ||||||||||
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Cash flows from financing activities: |
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Repayments of long-term debt |
(533 | ) | | | | | ||||||||||||||
Early retirement of debt |
(27 | ) | | | | | ||||||||||||||
Repurchases of common stock |
| | | | (38 | ) | ||||||||||||||
Dividends paid on common stock |
(203 | ) | (138 | ) | (43 | ) | (42 | ) | (34 | ) | ||||||||||
Contributions from noncontrolling interests |
| 9 | 1 | 6 | 5 | |||||||||||||||
Distributions to noncontrolling interests |
(4 | ) | (4 | ) | (4 | ) | (3 | ) | (3 | ) | ||||||||||
Acquisition of noncontrolling interests |
(24 | ) | | | | | ||||||||||||||
Shares exchanged for tax withholdings and other |
(33 | ) | (1 | ) | | | (17 | ) | ||||||||||||
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Net cash from financing activities - continuing operations |
(824 | ) | (134 | ) | (46 | ) | (39 | ) | (87 | ) | ||||||||||
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Effect of exchange rate changes on cash - continuing |
3 | | | | | |||||||||||||||
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Net change in cash, cash equivalents and restricted cash of continuing operations |
(359 | ) | 9 | 178 | (194 | ) | 38 | |||||||||||||
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Cash flows from discontinued operations: |
||||||||||||||||||||
Operating activities |
| 19 | 45 | (43 | ) | (131 | ) | |||||||||||||
Investing activities |
| 310 | 1 | 171 | (1 | ) | ||||||||||||||
Financing activities |
| | | | | |||||||||||||||
Effect of exchange rate changes on cash |
| 2 | 4 | 8 | (23 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net change in cash, cash equivalents and restricted cash of discontinued operations |
| 331 | 50 | 136 | (155 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net change in cash, cash equivalents and restricted cash |
(359 | ) | 340 | 228 | (58 | ) | (117 | ) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period |
2,237 | 1,897 | 1,669 | 1,727 | 1,844 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash, cash equivalents and restricted cash at end of period |
$ | 1,878 | $ | 2,237 | $ | 1,897 | $ | 1,669 | $ | 1,727 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reconciliation of cash, cash equivalents and restricted cash: |
||||||||||||||||||||
Cash and cash equivalents |
$ | 1,683 | $ | 2,047 | $ | 1,707 | $ | 1,474 | $ | 1,527 | ||||||||||
Restricted cash |
195 | 190 | 190 | 195 | 200 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total cash, cash equivalents and restricted cash |
$ | 1,878 | $ | 2,237 | $ | 1,897 | $ | 1,669 | $ | 1,727 | ||||||||||
|
|
|
|
|
|
|
|
|
|
4
CONSOLIDATED BALANCE SHEETS |
|
|
| |
|
(in millions) | March 31, | December 31, | ||||||
2021 | 2020 | |||||||
Current assets: |
||||||||
Cash, cash equivalents and restricted cash |
$ | 1,878 | $ | 2,237 | ||||
Accounts receivable |
1,089 | 601 | ||||||
Income tax receivable |
166 | 174 | ||||||
Other current assets |
334 | 248 | ||||||
|
|
|
|
|||||
Total current assets |
3,467 | 3,260 | ||||||
Oil and gas property and equipment, based on successful efforts accounting, net |
13,826 | 4,436 | ||||||
Other property and equipment, net |
1,448 | 957 | ||||||
|
|
|
|
|||||
Total property and equipment, net |
15,274 | 5,393 | ||||||
Goodwill |
753 | 753 | ||||||
Right-of-use assets |
255 | 223 | ||||||
Investments |
402 | 12 | ||||||
Other long-term assets |
306 | 271 | ||||||
|
|
|
|
|||||
Total assets |
$ | 20,457 | $ | 9,912 | ||||
|
|
|
|
|||||
Current liabilities: |
||||||||
Accounts payable |
$ | 564 | $ | 242 | ||||
Revenues and royalties payable |
909 | 662 | ||||||
Short-term debt |
226 | | ||||||
Other current liabilities |
1,246 | 536 | ||||||
|
|
|
|
|||||
Total current liabilities |
2,945 | 1,440 | ||||||
|
|
|
|
|||||
Long-term debt |
7,042 | 4,298 | ||||||
Lease liabilities |
260 | 246 | ||||||
Asset retirement obligations |
455 | 358 | ||||||
Other long-term liabilities |
1,269 | 551 | ||||||
Stockholders equity: |
||||||||
Common stock |
67 | 38 | ||||||
Additional paid-in capital |
8,172 | 2,766 | ||||||
Retained earnings |
218 | 208 | ||||||
Accumulated other comprehensive loss |
(104 | ) | (127 | ) | ||||
|
|
|
|
|||||
Total stockholders equity attributable to Devon |
8,353 | 2,885 | ||||||
Noncontrolling interests |
133 | 134 | ||||||
|
|
|
|
|||||
Total equity |
8,486 | 3,019 | ||||||
|
|
|
|
|||||
Total liabilities and equity |
$ | 20,457 | $ | 9,912 | ||||
|
|
|
|
|||||
Common shares outstanding |
675 | 382 |
5
PRODUCTION TREND (1) |
|
|
| |
|
2021 | 2020 | |||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Oil (MBbls/d) |
||||||||||||||||||||
Delaware Basin |
172 | 99 | 77 | 79 | 84 | |||||||||||||||
Anadarko Basin |
13 | 16 | 19 | 21 | 24 | |||||||||||||||
Williston Basin |
44 | | | | | |||||||||||||||
Eagle Ford |
16 | 18 | 22 | 27 | 26 | |||||||||||||||
Powder River Basin |
17 | 16 | 21 | 18 | 21 | |||||||||||||||
Other |
6 | 7 | 7 | 8 | 8 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
268 | 156 | 146 | 153 | 163 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Natural gas liquids (MBbls/d) |
||||||||||||||||||||
Delaware Basin |
60 | 43 | 38 | 29 | 37 | |||||||||||||||
Anadarko Basin |
21 | 25 | 30 | 25 | 30 | |||||||||||||||
Williston Basin |
8 | | | | | |||||||||||||||
Eagle Ford |
6 | 9 | 11 | 12 | 9 | |||||||||||||||
Powder River Basin |
3 | 3 | 3 | 2 | 3 | |||||||||||||||
Other |
1 | | 1 | 1 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
99 | 80 | 83 | 69 | 80 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gas (MMcf/d) |
||||||||||||||||||||
Delaware Basin |
471 | 267 | 239 | 241 | 244 | |||||||||||||||
Anadarko Basin |
200 | 233 | 242 | 262 | 272 | |||||||||||||||
Williston Basin |
49 | | | | | |||||||||||||||
Eagle Ford |
47 | 60 | 73 | 87 | 86 | |||||||||||||||
Powder River Basin |
21 | 22 | 23 | 20 | 29 | |||||||||||||||
Other |
3 | 2 | 3 | 4 | 3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
791 | 584 | 580 | 614 | 634 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total oil equivalent (MBoe/d) |
||||||||||||||||||||
Delaware Basin |
310 | 186 | 155 | 149 | 162 | |||||||||||||||
Anadarko Basin |
68 | 81 | 89 | 90 | 98 | |||||||||||||||
Williston Basin |
61 | | | | | |||||||||||||||
Eagle Ford |
30 | 37 | 46 | 53 | 50 | |||||||||||||||
Powder River Basin |
23 | 22 | 28 | 24 | 29 | |||||||||||||||
Other |
7 | 7 | 8 | 9 | 9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
499 | 333 | 326 | 325 | 348 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Q1 2021 daily production rates exclude WPX results prior to the merger close date of January 7, 2021. |
6
CAPITAL EXPENDITURES |
|
|
| |
|
(in millions) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Delaware Basin |
$ | 355 | $ | 153 | $ | 179 | $ | 148 | $ | 220 | ||||||||||
Anadarko Basin |
13 | 3 | 1 | 3 | 4 | |||||||||||||||
Williston Basin |
20 | | | | | |||||||||||||||
Eagle Ford |
29 | 2 | 1 | 10 | 70 | |||||||||||||||
Powder River Basin |
27 | 22 | 11 | 39 | 90 | |||||||||||||||
Other |
3 | 3 | 3 | 3 | 7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total upstream capital |
$ | 447 | $ | 183 | $ | 195 | $ | 203 | $ | 391 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Midstream |
24 | 3 | 7 | 8 | 7 | |||||||||||||||
Other |
16 | 3 | 5 | 3 | 9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total capital |
$ | 487 | $ | 189 | $ | 207 | $ | 214 | $ | 407 | ||||||||||
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION FOR UPSTREAM CAPITAL EXPENDITURES
GROSS OPERATED SPUDS
2021 | 2020 | |||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Delaware Basin |
60 | 21 | 35 | 27 | 38 | |||||||||||||||
Anadarko Basin |
8 | | | | | |||||||||||||||
Williston Basin |
7 | | | | | |||||||||||||||
Eagle Ford |
14 | | | | 10 | |||||||||||||||
Powder River Basin |
| 2 | | | 12 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
89 | 23 | 35 | 27 | 60 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
GROSS OPERATED WELLS TIED-IN
2021 | 2020 | |||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Delaware Basin |
52 | 23 | 32 | 22 | 32 | |||||||||||||||
Anadarko Basin |
| | | | 4 | |||||||||||||||
Williston Basin |
| | | | | |||||||||||||||
Eagle Ford |
12 | | | 13 | 30 | |||||||||||||||
Powder River Basin |
10 | 2 | 9 | 4 | 14 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
74 | 25 | 41 | 39 | 80 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
AVERAGE LATERAL LENGTH
(based on wells tied-in) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Delaware Basin |
10,000 | 9,800 | 9,900 | 9,100 | 8,000 | |||||||||||||||
Anadarko Basin |
| | | | 9,800 | |||||||||||||||
Williston Basin |
| | | | | |||||||||||||||
Eagle Ford |
4,400 | | | 5,900 | 5,400 | |||||||||||||||
Powder River Basin |
9,800 | 13,600 | 9,800 | 8,100 | 9,100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
9,100 | 10,100 | 9,900 | 7,900 | 7,300 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
7
REALIZED PRICING |
|
|
| |
|
BENCHMARK PRICES
(average prices) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Oil ($/Bbl) - West Texas Intermediate (Cushing) |
$ | 57.87 | $ | 42.65 | $ | 40.86 | $ | 28.42 | $ | 46.44 | ||||||||||
Natural Gas ($/Mcf) - Henry Hub |
$ | 2.71 | $ | 2.67 | $ | 1.98 | $ | 1.71 | $ | 1.95 | ||||||||||
NGL ($/Bbl) - Mont Belvieu Blended |
$ | 25.81 | $ | 20.01 | $ | 16.69 | $ | 12.57 | $ | 14.39 | ||||||||||
REALIZED PRICES |
||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Oil (Per Bbl) |
||||||||||||||||||||
Delaware Basin |
$ | 57.30 | $ | 40.67 | $ | 39.19 | $ | 22.70 | $ | 45.18 | ||||||||||
Anadarko Basin |
55.86 | 40.34 | 37.88 | 19.52 | 45.32 | |||||||||||||||
Williston Basin |
54.45 | | | | | |||||||||||||||
Eagle Ford |
54.90 | 37.83 | 33.68 | 15.30 | 44.90 | |||||||||||||||
Powder River Basin |
53.77 | 36.42 | 35.39 | 24.03 | 41.14 | |||||||||||||||
Other |
55.65 | 39.93 | 37.33 | 25.45 | 44.53 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price without hedges |
56.36 | 39.84 | 37.56 | 21.25 | 44.59 | |||||||||||||||
Cash settlements |
(9.13 | ) | (1.83 | ) | 0.65 | 15.25 | 5.14 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price, including cash settlements |
$ | 47.23 | $ | 38.01 | $ | 38.21 | $ | 36.50 | $ | 49.73 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Natural gas liquids (Per Bbl) |
||||||||||||||||||||
Delaware Basin |
$ | 26.25 | $ | 13.67 | $ | 11.49 | $ | 7.94 | $ | 8.36 | ||||||||||
Anadarko Basin |
23.14 | 15.65 | 12.68 | 9.31 | 10.90 | |||||||||||||||
Williston Basin |
18.54 | | | | | |||||||||||||||
Eagle Ford |
24.44 | 15.66 | 13.74 | 10.02 | 14.77 | |||||||||||||||
Powder River Basin |
30.19 | 19.39 | 13.10 | 10.07 | 15.86 | |||||||||||||||
Other |
31.86 | 24.24 | 21.74 | 10.19 | 15.82 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price without hedges |
25.01 | 14.77 | 12.36 | 8.89 | 10.40 | |||||||||||||||
Cash settlements |
(0.20 | ) | (0.01 | ) | (0.30 | ) | 0.51 | 0.61 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price, including cash settlements |
$ | 24.81 | $ | 14.76 | $ | 12.06 | $ | 9.40 | $ | 11.01 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gas (Per Mcf) |
||||||||||||||||||||
Delaware Basin |
$ | 3.31 | $ | 1.51 | $ | 1.11 | $ | 1.05 | $ | 0.58 | ||||||||||
Anadarko Basin |
2.49 | 2.29 | 1.66 | 1.31 | 1.45 | |||||||||||||||
Williston Basin |
(0.48 | ) | | | | | ||||||||||||||
Eagle Ford |
3.15 | 2.38 | 1.95 | 1.79 | 2.05 | |||||||||||||||
Powder River Basin |
5.27 | 2.70 | 1.94 | 1.80 | 1.71 | |||||||||||||||
Other |
2.57 | 2.87 | 1.52 | 1.32 | 1.69 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price without hedges |
2.91 | 1.96 | 1.48 | 1.29 | 1.21 | |||||||||||||||
Cash settlements |
(0.15 | ) | 0.00 | 0.06 | 0.28 | 0.36 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price, including cash settlements |
$ | 2.76 | $ | 1.96 | $ | 1.54 | $ | 1.57 | $ | 1.57 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total oil equivalent (Per Boe) |
||||||||||||||||||||
Delaware Basin |
$ | 41.82 | $ | 26.94 | $ | 24.00 | $ | 15.39 | $ | 26.19 | ||||||||||
Anadarko Basin |
25.35 | 19.79 | 16.81 | 10.98 | 18.14 | |||||||||||||||
Williston Basin |
42.04 | | | | | |||||||||||||||
Eagle Ford |
38.90 | 25.97 | 22.78 | 12.90 | 29.94 | |||||||||||||||
Powder River Basin |
47.58 | 31.08 | 29.83 | 20.80 | 33.65 | |||||||||||||||
Other |
50.58 | 37.67 | 34.15 | 22.95 | 39.15 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price without hedges |
39.84 | 25.63 | 22.60 | 14.37 | 25.43 | |||||||||||||||
Cash settlements |
(5.17 | ) | (0.86 | ) | 0.33 | 7.83 | 3.20 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Realized price, including cash settlements |
$ | 34.67 | $ | 24.77 | $ | 22.93 | $ | 22.20 | $ | 28.63 | ||||||||||
|
|
|
|
|
|
|
|
|
|
8
ASSET MARGINS |
|
|
| |
|
BENCHMARK PRICES
(average prices) | 2021 | 2020 | ||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Oil ($/Bbl) - West Texas Intermediate (Cushing) |
$ | 57.87 | $ | 42.65 | $ | 40.86 | $ | 28.42 | $ | 46.44 | ||||||||||
Natural Gas ($/Mcf) - Henry Hub |
$ | 2.71 | $ | 2.67 | $ | 1.98 | $ | 1.71 | $ | 1.95 | ||||||||||
NGL ($/Bbl) - Mont Belvieu Blended |
$ | 25.81 | $ | 20.01 | $ | 16.69 | $ | 12.57 | $ | 14.39 | ||||||||||
PER-UNIT CASH MARGIN BY ASSET (per Boe) |
||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||||||||||||||||
Delaware Basin |
||||||||||||||||||||
Realized price |
$ | 41.82 | $ | 26.94 | $ | 24.00 | $ | 15.39 | $ | 26.19 | ||||||||||
Lease operating expenses |
(3.97 | ) | (2.38 | ) | (3.00 | ) | (3.56 | ) | (3.61 | ) | ||||||||||
Gathering, processing & transportation |
(2.83 | ) | (2.40 | ) | (2.68 | ) | (2.88 | ) | (2.71 | ) | ||||||||||
Production & property taxes |
(2.95 | ) | (2.08 | ) | (1.80 | ) | (1.14 | ) | (2.15 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Field-level cash margin |
$ | 32.07 | $ | 20.08 | $ | 16.52 | $ | 7.81 | $ | 17.72 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Anadarko Basin |
||||||||||||||||||||
Realized price |
$ | 25.35 | $ | 19.79 | $ | 16.81 | $ | 10.98 | $ | 18.14 | ||||||||||
Lease operating expenses |
(3.82 | ) | (2.57 | ) | (2.16 | ) | (2.42 | ) | (2.79 | ) | ||||||||||
Gathering, processing & transportation |
(6.31 | ) | (8.39 | ) | (7.39 | ) | (6.57 | ) | (6.36 | ) | ||||||||||
Production & property taxes |
(1.21 | ) | (0.55 | ) | (0.54 | ) | (0.32 | ) | (0.77 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Field-level cash margin |
$ | 14.01 | $ | 8.28 | $ | 6.72 | $ | 1.67 | $ | 8.22 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Williston Basin |
||||||||||||||||||||
Realized price |
$ | 42.04 | $ | | $ | | $ | | $ | | ||||||||||
Lease operating expenses |
(5.13 | ) | | | | | ||||||||||||||
Gathering, processing & transportation |
(3.39 | ) | | | | | ||||||||||||||
Production & property taxes |
(3.82 | ) | | | | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Field-level cash margin |
$ | 29.70 | $ | | $ | | $ | | $ | | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Eagle Ford |
||||||||||||||||||||
Realized price |
$ | 38.90 | $ | 25.97 | $ | 22.78 | $ | 12.90 | $ | 29.94 | ||||||||||
Lease operating expenses |
(3.89 | ) | (2.79 | ) | (2.47 | ) | (2.59 | ) | (2.93 | ) | ||||||||||
Gathering, processing & transportation |
(6.73 | ) | (5.89 | ) | (4.73 | ) | (4.96 | ) | (5.96 | ) | ||||||||||
Production & property taxes |
(1.71 | ) | (0.16 | ) | (0.92 | ) | (0.85 | ) | (1.85 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Field-level cash margin |
$ | 26.57 | $ | 17.13 | $ | 14.66 | $ | 4.50 | $ | 19.20 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Powder River Basin |
||||||||||||||||||||
Realized price |
$ | 47.58 | $ | 31.08 | $ | 29.83 | $ | 20.80 | $ | 33.65 | ||||||||||
Lease operating expenses |
(7.45 | ) | (5.47 | ) | (5.41 | ) | (6.60 | ) | (6.65 | ) | ||||||||||
Gathering, processing & transportation |
(2.66 | ) | (3.01 | ) | (2.30 | ) | (2.71 | ) | (2.32 | ) | ||||||||||
Production & property taxes |
(5.48 | ) | (3.91 | ) | (3.49 | ) | (2.40 | ) | (4.20 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Field-level cash margin |
$ | 31.99 | $ | 18.69 | $ | 18.63 | $ | 9.09 | $ | 20.48 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other |
||||||||||||||||||||
Realized price |
$ | 50.58 | $ | 37.67 | $ | 34.15 | $ | 22.95 | $ | 39.15 | ||||||||||
Lease operating expenses |
(17.15 | ) | (15.35 | ) | (19.92 | ) | (17.40 | ) | (18.95 | ) | ||||||||||
Gathering, processing & transportation |
(0.62 | ) | (0.59 | ) | (0.51 | ) | (0.34 | ) | (0.31 | ) | ||||||||||
Production & property taxes |
(4.60 | ) | (3.38 | ) | (3.62 | ) | (5.11 | ) | (4.34 | ) | ||||||||||
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Field-level cash margin |
$ | 28.21 | $ | 18.35 | $ | 10.10 | $ | 0.10 | $ | 15.55 | ||||||||||
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Devon - Total |
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Realized price |
$ | 39.84 | $ | 25.63 | $ | 22.60 | $ | 14.37 | $ | 25.43 | ||||||||||
Lease operating expenses |
(4.44 | ) | (2.97 | ) | (3.32 | ) | (3.69 | ) | (3.96 | ) | ||||||||||
Gathering, processing & transportation |
(3.57 | ) | (4.23 | ) | (4.17 | ) | (4.16 | ) | (4.11 | ) | ||||||||||
Production & property taxes |
(2.88 | ) | (1.66 | ) | (1.52 | ) | (1.07 | ) | (1.95 | ) | ||||||||||
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Field-level cash margin |
$ | 28.95 | $ | 16.77 | $ | 13.59 | $ | 5.45 | $ | 15.41 | ||||||||||
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9
NON-GAAP MEASURES |
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(all monetary values in millions, except per share amounts)
This press release and other earnings materials include 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 such non-GAAP measures, including reconciliations to their most directly comparable GAAP measure.
CORE EARNINGS (LOSS)
Devons reported net earnings (loss) include items of income and expense that are typically excluded by securities analysts in their published estimates of the companys financial results. Accordingly, the company also uses the measures of core earnings (loss) and core earnings (loss) per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on first-quarter 2021 earnings.
Quarter Ended March 31, 2021 | ||||||||||||||||
Before-tax | After-tax | After Noncontrolling Interests |
Per Diluted Share |
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Total |
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Earnings (loss) (GAAP) |
$ | (32 | ) | $ | 216 | $ | 213 | $ | 0.32 | |||||||
Adjustments: |
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Asset dispositions |
(32 | ) | (24 | ) | (24 | ) | (0.04 | ) | ||||||||
Asset and exploration impairments |
1 | | | 0.00 | ||||||||||||
Deferred tax asset valuation allowance |
| (263 | ) | (263 | ) | (0.40 | ) | |||||||||
Fair value changes in financial instruments and foreign currency |
294 | 225 | 225 | 0.34 | ||||||||||||
Restructuring and transaction costs(1) |
189 | 162 | 162 | 0.25 | ||||||||||||
Early retirement of debt |
(20 | ) | (15 | ) | (15 | ) | (0.02 | ) | ||||||||
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Core earnings (Non-GAAP) |
$ | 400 | $ | 301 | $ | 298 | $ | 0.45 | ||||||||
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(1) | Approximately $167 million of restructuring and transaction costs are cash and are excluded from the adjusted free cash flow reconciliation at the bottom of page 11. |
EBITDAX
Devon believes EBITDAX provides information useful in assessing operating and financial performance across periods. Devon computes EBITDAX as net earnings from continuing operations before income tax expense; financing costs, net; exploration expenses; depreciation, depletion and amortization; asset impairments; asset disposition gains and losses; non-cash share-based compensation; non-cash valuation changes for derivatives and financial instruments; restructuring and transaction costs; accretion on discounted liabilities; and other items not related to normal operations. EBITDAX as defined by Devon may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net earnings from continuing operations.
Q1 21 | ||||
Net earnings (loss) (GAAP) |
$ | 216 | ||
Net (earnings) loss from discontinued operations, net of tax |
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Financing costs, net |
77 | |||
Income tax benefit |
(248 | ) | ||
Exploration expenses |
3 | |||
Depreciation, depletion and amortization |
467 | |||
Asset impairments |
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Asset dispositions |
(32 | ) | ||
Share-based compensation |
20 | |||
Derivative and financial instrument non-cash valuation changes |
296 | |||
Restructuring and transaction costs |
189 | |||
Accretion on discounted liabilities and other |
(29 | ) | ||
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EBITDAX (Non-GAAP) |
$ | 959 | ||
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Annualized EBITDAX (Non-GAAP) |
$ | 3,836 |
10
NET DEBT |
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Devon defines net debt as debt less cash, cash equivalents and cash restricted for discontinued operations. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash from Devon to repay debt.
Quarter Ended March 31, 2021 |
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Total debt (GAAP) |
$ | 7,268 | ||
Less: |
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Cash, cash equivalents and restricted cash |
(1,878 | ) | ||
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Net debt (Non-GAAP) |
$ | 5,390 | ||
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NET DEBT-TO-EBITDAX
Devon defines net debt-to-EBITDAX as net debt divided by an annualized EBITDAX measure. Due to the merger with WPX closing in the first quarter of 2021, Devon has shown Q1 2021 EBITDAX annualized divided by net debt to show a more meaningful net debt-to-EBITDAX measure. Devon believes this ratio provides information useful to investors in assessing the companys credit position and debt leverage.
Quarter Ended March 31, 2021 |
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Net debt (Non-GAAP) |
$ | 5,390 | ||
EBITDAX (annualized Q1 21) (Non-GAAP) |
$ | 3,836 | ||
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Net debt-to-EBITDAX (Non-GAAP) |
1.4 | |||
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FREE CASH FLOW
Devon defines free cash flow as total operating cash flow less capital expenditures. Devon believes that free cash flow provides a useful measure of available cash generated by operating activities for other investing and financing activities.
Quarter Ended March 31, 2021 |
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Total operating cash flow (GAAP) |
$ | 592 | ||
Less capital expenditures: |
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Capital expenditures |
(499 | ) | ||
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Free cash flow (Non-GAAP) |
$ | 93 | ||
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ADJUSTED FREE CASH FLOW
Devon defines adjusted free cash flow as total operating cash flow less capital expenditures less cash restructuring and transaction costs. Devon believes that adjusted free cash flow provides a useful measure of available cash generated by operating activities for other investing and financing activities, excluding cash restructuring and transaction costs.
Quarter Ended March 31, 2021 |
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Total operating cash flow (GAAP) |
$ | 592 | ||
Less capital expenditures: |
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Capital expenditures |
(499 | ) | ||
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Free cash flow (Non-GAAP) |
93 | |||
Cash restructuring and transaction costs (Non-GAAP) |
167 | |||
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Adjusted free cash flow (Non-GAAP) |
$ | 260 | ||
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11
REINVESTMENT RATE |
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Devon defines reinvestment rate as accrued capital expenditures divided by adjusted operating cash flow. Devon believes this measure provides useful information to our investors as an indicator of the capital demands of our business relative to the cash flow generated from normal business operations.
Quarter Ended March 31, 2021 |
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Capital expenditures (accrued) |
$ | 487 | ||
Operating cash flow |
592 | |||
Cash restructuring and transaction costs (Non-GAAP) |
167 | |||
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Adjusted operating cash flow (Non-GAAP) |
$ | 759 | ||
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Reinvestment rate (Non-GAAP) |
64 | % | ||
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VARIABLE DIVIDEND CALCULATION
Devon may pay a variable dividend up to 50 percent of its excess cash flow. Each quarters excess cash flow is computed as adjusted cash flow less capital expenditures and the fixed dividend.
Quarter Ended March 31, 2021 |
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Operating cash flow (GAAP) |
$ | 592 | ||
Changes in assets and liabilities, net |
127 | |||
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Cash from operations before balance sheet changes (Non-GAAP) |
719 | |||
Cash restructuring and transaction costs (Non-GAAP) |
167 | |||
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Adjusted cash flow (Non-GAAP) |
886 | |||
Capital expenditures (Accrued) |
(487 | ) | ||
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Adjusted free cash flow (Non-GAAP) |
399 | |||
Fixed quarterly dividend ($0.11/share) |
(76 | ) | ||
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Excess free cash flow (Non-GAAP) |
323 | |||
48% Pay out (Board Discretion: Up to 50%) |
48 | % | ||
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Total variable dividend |
$ | 155 | ||
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12
SECOND-QUARTER AND FULL-YEAR 2021 GUIDANCE |
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PRODUCTION GUIDANCE
Quarter 2 | Full Year | |||||||||||||||
Low | High | Low | High | |||||||||||||
Oil (MBbls/d) |
283 | 293 | 280 | 290 | ||||||||||||
Natural gas liquids (MBbls/d) |
117 | 122 | 110 | 120 | ||||||||||||
Gas (MMcf/d) |
825 | 875 | 835 | 895 | ||||||||||||
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Total oil equivalent (MBoe/d) |
538 | 561 | 529 | 559 | ||||||||||||
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CAPITAL EXPENDITURES GUIDANCE
Quarter 2 | Full Year | |||||||||||||||
(in millions) | Low | High | Low | High | ||||||||||||
Upstream capital |
$ | 480 | $ | 520 | $ | 1,600 | $ | 1,800 | ||||||||
Midstream capital |
35 | 45 | 80 | 100 | ||||||||||||
Other capital |
15 | 25 | 40 | 80 | ||||||||||||
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Total capital |
$ | 530 | $ | 590 | $ | 1,720 | $ | 1,980 | ||||||||
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PRICE REALIZATIONS GUIDANCE
Quarter 2 | Full Year | |||||||||||||||
Low | High | Low | High | |||||||||||||
Oil - % of WTI |
92 | % | 100 | % | 92 | % | 100 | % | ||||||||
NGL - % of WTI |
35 | % | 45 | % | 35 | % | 45 | % | ||||||||
Natural gas - % of Henry Hub |
70 | % | 80 | % | 75 | % | 85 | % |
OTHER GUIDANCE ITEMS
Quarter 2 | Full Year | |||||||||||||||
($ millions, except Boe and %) | Low | High | Low | High | ||||||||||||
Marketing & midstream operating profit |
$ | (10 | ) | $ | (5 | ) | $ | (50 | ) | $ | (40 | ) | ||||
LOE & GP&T per BOE |
$ | 7.80 | $ | 8.00 | $ | 7.70 | $ | 7.90 | ||||||||
Production & property taxes as % of upstream sales |
7.0 | % | 8.0 | % | 7.0 | % | 8.0 | % | ||||||||
Exploration expenses |
$ | | $ | 5 | $ | 5 | $ | 15 | ||||||||
Depreciation, depletion and amortization |
$ | 500 | $ | 550 | $ | 2,000 | $ | 2,100 | ||||||||
General & administrative expenses |
$ | 95 | $ | 105 | $ | 400 | $ | 420 | ||||||||
Restructuring & transaction expenses |
$ | 15 | $ | 25 | $ | 205 | $ | 215 | ||||||||
Cash financing costs, net |
$ | 95 | $ | 105 | $ | 395 | $ | 415 | ||||||||
Other expenses |
$ | 5 | $ | 15 | $ | | $ | 10 | ||||||||
Current income tax rate from continuing operations |
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Deferred income tax rate from continuing operations |
20 | % | 30 | % | 20 | % | 30 | % | ||||||||
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Total income tax rate from continuing operations |
20 | % | 30 | % | 20 | % | 30 | % | ||||||||
Average common shares outstanding |
675 | 679 | 669 | 673 |
1
CONTINGENT PAYMENTS FOR BARNETT SHALE DIVESTITURE (4-year period beginning in 2021) |
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WTI Threshold | WTI Annual Earnout Amount | Henry Hub Threshold | Henry Hub Annual Earnout Amount |
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$ | 50.00 | $ | 10,000,000 | $ | 2.75 | $ | 20,000,000 | |||||||
$ | 55.00 | $ | 12,500,000 | $ | 3.00 | $ | 25,000,000 | |||||||
$ | 60.00 | $ | 15,000,000 | $ | 3.25 | $ | 35,000,000 | |||||||
$ | 65.00 | $ | 20,000,000 | $ | 3.50 | $ | 45,000,000 |
2021 & 2022 HEDGING POSITIONS
Oil Commodity Hedges
Price Swaps | Price Collars | |||||||||||||||
Period |
Volume (Bbls/d) | Weighted Average Price ($/Bbl) |
Volume (Bbls/d) |
Weighted Average Floor Price ($/Bbl) |
Weighted Average Ceiling Price ($/Bbl) |
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Q2 2021 |
129,976 | $ | 39.46 | 21,000 | $ | 42.46 | $ | 52.46 | ||||||||
Q3 2021 |
57,460 | $ | 41.68 | 53,250 | $ | 39.74 | $ | 49.74 | ||||||||
Q4 2021 |
56,460 | $ | 41.44 | 48,250 | $ | 38.82 | $ | 48.82 | ||||||||
Q1-Q4 2022 |
25,619 | $ | 43.82 | 20,233 | $ | 46.41 | $ | 56.41 |
Price Swaptions | Price Call Options | |||||||||||
Period |
Volume (Bbls/d) | Weighted Average Price ($/Bbl) |
Volume (Bbls/d) | Weighted Average Price ($/Bbl) |
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Q2 2021 |
| $ | | 5,000 | $ | 39.50 | ||||||
Q3 2021 |
10,000 | $ | 40.12 | 5,000 | $ | 39.50 | ||||||
Q4 2021 |
10,000 | $ | 40.12 | 5,000 | $ | 39.50 | ||||||
Q1-Q4 2022 |
10,323 | $ | 46.46 | | $ | |
Oil Basis Swaps
Period |
Index | Volume (Bbls/d) | Weighted Average Differential to WTI ($/Bbl) |
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Q2-Q4 2021 |
Midland Sweet | 22,669 | $ | 0.84 | ||||
Q2-Q4 2021 |
BRENT/WTI Spread | 1,000 | $ | (8.00 | ) | |||
Q1-Q4 2022 |
BRENT/WTI Spread | 1,000 | $ | (7.75 | ) |
Natural Gas Commodity Hedges - Henry Hub
Price Swaps | Price Collars | |||||||||||||||
Period |
Volume (MMBtu/d) | Weighted Average Price ($/MMBtu) |
Volume (MMBtu/d) |
Weighted Average Floor Price ($/MMBtu) |
Weighted Average Ceiling Price ($/MMBtu) |
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Q2 2021 |
279,000 | $ | 2.64 | 228,000 | $ | 2.43 | $ | 2.93 | ||||||||
Q3 2021 |
279,000 | $ | 2.64 | 228,000 | $ | 2.43 | $ | 2.93 | ||||||||
Q4 2021 |
254,000 | $ | 2.63 | 133,000 | $ | 2.55 | $ | 3.05 | ||||||||
Q1-Q4 2022 |
3,452 | $ | 2.85 | 74,110 | $ | 2.53 | $ | 3.03 |
2
2021 & 2022 HEDGING POSITIONS (continued) |
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Price Swaptions | Price Call Options | |||||||||||
Period |
Volume (MMBtu/d) | Weighted Average Price ($/MMBtu) |
Volume (MMBtu/d) | Weighted Average Price ($/MMBtu) |
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Q2 2021 |
| $ | | 50,000 | $ | 2.68 | ||||||
Q3 2021 |
| $ | | 50,000 | $ | 2.68 | ||||||
Q4 2021 |
| $ | | 50,000 | $ | 2.68 | ||||||
Q1-Q4 2022 |
100,000 | $ | 2.70 | | $ | |
Natural Gas Basis Swaps
Period |
Index | Volume (MMBtu/d) | Weighted Average Differential to Henry Hub ($/MMBtu) |
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Q2-Q4 2021 |
El Paso Natural Gas | 35,000 | $ | (0.92 | ) | |||
Q2-Q4 2021 |
WAHA | 80,000 | $ | (0.65 | ) | |||
Q1-Q4 2022 |
WAHA | 70,000 | $ | (0.57 | ) |
NGL Commodity Hedges
Price Swaps | ||||||||
Period |
Product | Volume (Bbls/d) | Weighted Average Price ($/Bbl) |
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Q2-Q4 2021 |
Natural Gasoline | 1,000 | $ | 47.57 | ||||
Q2-Q4 2021 |
Normal Butane | 1,000 | $ | 31.40 | ||||
Q2-Q4 2021 |
Propane | 1,000 | $ | 27.88 |
Devons oil derivatives settle against the average of the prompt month NYMEX West Texas Intermediate futures price. Devons natural gas derivatives settle against the Inside FERC first of the month Henry Hub index. Devons NGL derivatives settle against the average of the prompt month OPIS Mont Belvieu, Texas index. Commodity hedge positions are shown as of April 29, 2021.
3