Devon Energy Announces Three-Year Outlook and Detailed 2018 Guidance; Reports Fourth Quarter Earnings Results
Devon Energy Corp. (NYSE: DVN) today announced a three-year business
outlook through the year 2020 and its detailed capital and production
outlook for 2018. Additionally, the company reported operational and
financial results for the fourth quarter and full-year 2017.
Three-Year Outlook Highlights
More detailed commentary regarding Devon’s three-year business outlook
is available within its fourth-quarter 2017 operations report at www.devonenergy.com.
Outlook highlights from the report include:
-
Greater than 15 percent corporate-level rates of return
-
$2.5 billion of cumulative free cash flow through 2020
-
Delaware and STACK oil production CAGR of greater than 25 percent
-
Per-unit cash cost savings of approximately 15 percent by 2020
-
Potential to monetize more than $5 billion of non-core assets
-
Positioned for sustainable increase of cash to shareholders
“Devon has reached an inflection point by building operating momentum
across its U.S. resource plays and has successfully transitioned these
world-class assets into full-field development,” said Dave Hager,
president and CEO. “In 2018 and beyond, with our low-risk development
programs focused in the economic core of the Delaware Basin and STACK
plays, we expect to deliver a dramatic step change in capital
efficiency, achieve attractive corporate-level returns and generate
substantial amounts of free cash flow at prices above our base planning
scenario of $50 WTI pricing.”
“With our disciplined multi-year plan, Devon will accelerate value
creation through the pursuit of capital-efficient cash-flow growth and
portfolio simplification, not top-line production growth,” said Hager.
“Looking beyond our initial priority of reducing up to $1.5 billion of
debt from our upstream business, we plan to return excess cash flow from
operations or divestitures to shareholders through both opportunistic
share buybacks and dividend growth.”
February 2018 Production Update: Delaware and STACK Volume Growth
Accelerates
In early 2018, production growth has accelerated in the company’s
Delaware Basin and STACK assets, with current daily rates from these
assets approximating 195,000 oil-equivalent barrels (Boe) per day. The
combined daily production rates from these two franchise growth assets
represent greater than a 10 percent increase compared to the fourth
quarter of 2017 and nearly a 20 percent increase compared to the
full-year 2017 average.
The substantial increase in daily production is driven by higher
operated completion activity in the Delaware Basin and tie-in of more
than 50 non-operated wells in the STACK around year end. In aggregate,
these two high-growth assets remain on plan to increase oil production
by greater than 35 percent in 2018 compared to 2017.
Timing of Non-Operated Activity Limits Fourth Quarter Production
Devon’s net production averaged 548,000 Boe per day in the fourth
quarter of 2017. Of this total, oil production in the quarter totaled
246,000 barrels per day, which was 14,000 barrels per day below the
company’s midpoint guidance.
In the fourth quarter, net production in the U.S. was limited by
approximately 9,000 barrels per day primarily due to the timing of well
tie-ins associated with non-operated activity in the STACK. This timing
issue has been resolved with the tie-in of more than 50 non-operated
wells around year end in the STACK (see “February 2018 Production
Update” section for more details.)
In Canada, net production averaged 134,000 Boe per day in the fourth
quarter, an 8 percent increase from the prior quarter. Facility
modifications and temporary steam constraints at the company’s Jackfish
complex curtailed production by approximately 5,000 barrels per day in
the fourth quarter.
Delivering Top-Tier Operated Well Productivity
Importantly, Devon’s operated well activity in the fourth quarter across
its U.S. resource plays was delivered on plan with outstanding well
productivity results. Led by the Delaware Basin and STACK, the company’s
top 30 operated wells during the fourth quarter averaged initial 30-day
production rates of greater than 2,500 Boe per day (60 percent oil).
These high-rate wells showcase Devon’s asset quality and technical
excellence that has consistently generated top-tier well productivity in
North America.
For additional details on well results and other information about
Devon’s E&P operations, please refer to the company’s fourth-quarter
2017 operations report at www.devonenergy.com.
Drilling Success Drives U.S. Oil Reserves 32 Percent Higher
Devon’s estimated proved reserves were 2.2 billion Boe on Dec. 31, 2017,
a 5 percent increase compared to 2016. Proved developed reserves
accounted for 81 percent of the total. At year-end, liquids reserves
advanced to 1.2 billion Boe, driven by a 32 percent increase in U.S. oil
reserves during 2017.
The company’s reserve growth in 2017 came entirely from its U.S.
resource plays, where proved reserves increased 11 percent to 1.7
billion Boe. Led by Devon’s capital programs in the Delaware Basin and
STACK, the company’s U.S. resource plays exhibited strong growth by
adding 327 million Boe of reserves in 2017. This result represents a
replacement rate of approximately 215 percent. The capital costs
incurred to contribute to these reserve additions were $1.7 billion,
equating to a finding and development cost in the U.S. of only $5 per
Boe.
Devon Converts to Successful-Efforts Accounting Method
As previously announced, in the fourth quarter, Devon changed its method
of accounting for oil and gas exploration and development activities
from the full-cost method to successful efforts. All reported financial
results contained within this release reflect this change in accounting
policy. The company has provided a supplemental information packet
related to its conversion to successful efforts on its website at www.devonenergy.com,
which includes a reconciliation of financial results from full cost to
successful efforts for prior financial reporting periods.
Upstream Revenue Advances and EnLink Profitability Expands
The company’s upstream revenue totaled $1.3 billion in the fourth
quarter, a 35 percent improvement compared to the fourth quarter of
2016. The strong year-over-year revenue growth was driven by higher
commodity price realizations and an increase in higher-margin liquids
production.
Devon’s midstream business generated operating profits of $272 million
in the fourth quarter, increasing 35 percent year over year. This growth
was driven entirely by Devon’s strategic investment in EnLink Midstream.
Overall, for 2017, Devon’s midstream profits reached $912 million, the
highest in company history.
Devon has a 64 percent ownership interest in EnLink’s general partner
(NYSE: ENLC) and a 23 percent interest in the limited partner (NYSE:
ENLK). In aggregate, the company’s ownership in EnLink has a market
value of approximately $3.5 billion and generated cash distributions of
nearly $270 million in 2017.
Per-Unit Cost Structure Continues to Improve
Devon’s production expense, which represents field-level operating
costs, totaled $463 million in the fourth quarter. This result is a 1
percent improvement on a per-unit basis compared to the third quarter of
2017. The largest components of production expense are lease operating
expense and transportation, which totaled $399 million or $7.90 per Boe
in the quarter. Production and property taxes also contributed $64
million to production expense during the fourth quarter.
The company’s general and administrative expenses (G&A) totaled $222
million in the fourth quarter, a 1 percent improvement compared to the
year-ago quarter. Excluding costs associated with EnLink, Devon’s G&A
expense for the quarter was $192 million. Of this total upstream
overhead, $48 million would have previously been categorized as
capitalized G&A under the company’s prior full-cost accounting
methodology.
Depreciation, depletion and amortization expense (DD&A) amounted to $528
million or $10.47 per Boe in the fourth quarter of 2017. Compared to the
third quarter of 2017, the company’s per-unit DD&A declined by 1
percent. Exploration expense in the fourth quarter totaled $171 million,
with the majority of the expense related to non-cash impairments of
unproved properties in the U.S.
Tax Reform to Provide Lower Tax Rates in 2018
In late 2017, significant changes to the U.S. federal income tax code
were signed into law with legislation commonly referred to as the “Tax
Cuts and Jobs Act.” This tax legislation did not have a material impact
to Devon’s fourth-quarter 2017 results. In 2018 and beyond, Devon
expects the tax reform to have an overall positive impact on its
business. This benefit is primarily due to the U.S. corporate tax rate
being lowered from 35 percent to 21 percent along with the repeal of
alternative minimum tax provisions. The company will also benefit from
legislation allowing the tax-efficient repatriation of future Canadian
earnings to the U.S.
Higher-Margin Production Expands Cash Flow 94 Percent in 2017
In the fourth quarter of 2017, Devon’s operating cash flow totaled $725
million. For the full-year 2017, operating cash flow reached $2.9
billion, a 94 percent increase compared to 2016. The increase is
primarily attributable to improvements in commodity prices, a shift to
higher-margin production and a lower cost structure.
For the fourth quarter, Devon’s reported net earnings totaled $183
million or $0.35 per diluted share. Adjusting for items securities
analysts typically exclude from their published estimates, the company’s
core earnings were $199 million or $0.38 per diluted share in the
quarter.
Financial Position Remains Strong
The company exited the fourth quarter with $2.7 billion of cash on hand.
Overall, Devon’s financial position remains exceptionally strong, with
investment-grade credit ratings and no significant debt maturities until
mid-2021.
Canadian Oil Swaps Protecting Cash Flow in 2018
Further bolstering the company’s financial strength is its hedge
position in 2018. The company currently has around half of its expected
oil and gas production protected in 2018. These contracts consist of
collars and swaps based off the West Texas Intermediate (WTI) oil
benchmark and the Henry Hub natural gas index. The volume and pricing
details associated with the company’s hedges are provided in the tables
within this release.
Also of note, the company has secured Western Canadian Select (WCS)
basis swaps on approximately 50 percent of its estimated Canadian oil
production in 2018. These attractive WCS basis swaps are locked-in at
$15 off the WTI benchmark price and are currently valued at
approximately $300 million.
2018 Capital and Production Outlook
Detailed forward-looking guidance for the first quarter and full-year
2018 is provided later in the release. A notable component of this
outlook is Devon’s upstream capital budget of $2.2 billion to $2.4
billion. This disciplined capital program is expected to be self-funded
at a $50 WTI price deck.
On a retained asset basis, Devon’s upstream capital plans are expected
to drive U.S. oil production growth of approximately 14 percent compared
to 2017. The trajectory of Devon’s U.S. oil production profile is
expected to steadily advance throughout the year and exit 2018 at rates
more than 25 percent higher than the 2017 average.
Also of note, reflected in Devon’s forward-looking revenue and cost
guidance are new revenue recognition accounting rules that will change
the way certain processing fees are presented for natural gas and
natural gas liquids. Historically, these fees have been recorded as a
reduction to revenue. Now, these fees will be recorded directly to
production expense beginning in the first quarter of 2018. This
accounting change will have no impact to per-unit cash margin or net
earnings but will result in higher price realizations, increased
revenues and increased production expenses.
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 and other items 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
Also included with today’s release is the company’s detailed operations
report that is available on the company’s website at www.devonenergy.com.
The company’s fourth-quarter conference call will be held at 10 a.m.
Central (11 a.m. Eastern) on Wednesday, Feb. 21, 2018, and will serve
primarily as a forum for analyst and investor questions and answers.
Forward-Looking Statements
This release includes "forward-looking statements" as defined by the
Securities and Exchange Commission (SEC). Such statements include those
concerning strategic plans, expectations and objectives for future
operations, and are often identified by use of the words “expects,”
“believes,” “will,” “would,” “could,” “forecasts,” “projections,”
“estimates,” “plans,” “expectations,” “targets,” “opportunities,”
“potential,” “anticipates,” “outlook” and other similar terminology. All
statements, other than statements of historical facts, included in this
press release that address activities, events or developments that the
company expects, believes or anticipates will or may occur in the future
are forward-looking statements. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the
control of the company. Statements regarding our business and operations
are subject to all of the risks and uncertainties normally incident to
the exploration for and development and production of oil and gas. These
risks include, but are not limited to: the volatility of oil, gas and
NGL prices; uncertainties inherent in estimating oil, gas and NGL
reserves; the extent to which we are successful in acquiring and
discovering additional reserves; the uncertainties, costs and risks
involved in oil and gas operations; regulatory restrictions, compliance
costs and other risks relating to governmental regulation, including
with respect to environmental matters; risks related to our hedging
activities; counterparty credit risks; risks relating to our
indebtedness; cyberattack risks; our limited control over third parties
who operate our oil and gas properties; midstream capacity constraints
and potential interruptions in production; the extent to which insurance
covers any losses we may experience; competition for leases, materials,
people and capital; our ability to successfully complete mergers,
acquisitions and divestitures; and any of the other risks and
uncertainties identified in our Form 10-K and our other filings with the
SEC. Investors are cautioned that any such statements are not guarantees
of future performance and that actual results or developments may differ
materially from those projected in the forward-looking statements. The
forward-looking statements in this release are made as of the date of
this release, even if subsequently made available by Devon on its
website or otherwise. Devon does not undertake any obligation to update
the forward-looking statements as a result of new information, future
events or otherwise. The SEC permits oil and gas companies, in their
filings with the SEC, to disclose only proved, probable and possible
reserves that meet the SEC's definitions for such terms, and price and
cost sensitivities for such reserves, and prohibits disclosure of
resources that do not constitute such reserves. This release may contain
certain terms, such as resource potential, potential locations, risked
and unrisked locations, estimated ultimate recovery (or EUR),
exploration target size and other similar terms. These estimates are by
their nature more speculative than estimates of proved, probable and
possible reserves and accordingly are subject to substantially greater
risk of being actually realized. The SEC guidelines strictly
prohibit us from including these estimates in filings with the SEC.
Investors are urged to consider closely the disclosure in our Form 10-K,
available at www.devonenergy.com.
You can also obtain this form from the SEC by calling 1-800-SEC-0330 or
from the SEC’s website at www.sec.gov.
About Devon Energy
Devon Energy is a leading independent energy company engaged in finding
and producing oil and natural gas. Based in Oklahoma City and included
in the S&P 500, Devon operates in several of the most prolific oil and
natural gas plays in the U.S. and Canada with an emphasis on achieving
strong returns and capital-efficient cash flow growth. For more
information, please visit www.devonenergy.com.
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
PRODUCTION NET OF ROYALTIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Oil and bitumen (MBbls/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S.
|
|
|
|
114
|
|
|
104
|
|
|
114
|
|
|
117
|
Heavy Oil
|
|
|
|
132
|
|
|
138
|
|
|
128
|
|
|
131
|
Retained assets
|
|
|
|
246
|
|
|
242
|
|
|
242
|
|
|
248
|
Divested assets
|
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|
12
|
Total
|
|
|
|
246
|
|
|
244
|
|
|
244
|
|
|
260
|
Natural gas liquids (MBbls/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S.
|
|
|
|
106
|
|
|
89
|
|
|
99
|
|
|
102
|
Divested assets
|
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
14
|
Total
|
|
|
|
106
|
|
|
90
|
|
|
99
|
|
|
116
|
Gas (MMcf/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S.
|
|
|
|
1,160
|
|
|
1,198
|
|
|
1,182
|
|
|
1,263
|
Heavy Oil
|
|
|
|
15
|
|
|
18
|
|
|
17
|
|
|
20
|
Retained assets
|
|
|
|
1,175
|
|
|
1,216
|
|
|
1,199
|
|
|
1,283
|
Divested assets
|
|
|
|
—
|
|
|
5
|
|
|
4
|
|
|
130
|
Total
|
|
|
|
1,175
|
|
|
1,221
|
|
|
1,203
|
|
|
1,413
|
Oil equivalent (MBoe/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. S.
|
|
|
|
414
|
|
|
392
|
|
|
410
|
|
|
429
|
Heavy Oil
|
|
|
|
134
|
|
|
141
|
|
|
131
|
|
|
134
|
Retained assets
|
|
|
|
548
|
|
|
533
|
|
|
541
|
|
|
563
|
Divested assets
|
|
|
|
—
|
|
|
4
|
|
|
2
|
|
|
48
|
Total
|
|
|
|
548
|
|
|
537
|
|
|
543
|
|
|
611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
|
PRODUCTION TREND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2017
|
|
|
|
|
Quarter 4
|
|
|
Quarter 1
|
|
|
Quarter 2
|
|
|
Quarter 3
|
|
|
Quarter 4
|
Oil and bitumen (MBbls/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STACK
|
|
|
|
19
|
|
|
21
|
|
|
25
|
|
|
27
|
|
|
30
|
Delaware Basin
|
|
|
|
29
|
|
|
30
|
|
|
30
|
|
|
31
|
|
|
32
|
Rockies Oil
|
|
|
|
11
|
|
|
13
|
|
|
13
|
|
|
12
|
|
|
15
|
Heavy Oil
|
|
|
|
138
|
|
|
137
|
|
|
122
|
|
|
121
|
|
|
132
|
Eagle Ford
|
|
|
|
32
|
|
|
46
|
|
|
34
|
|
|
28
|
|
|
27
|
Barnett Shale
|
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
Other
|
|
|
|
12
|
|
|
11
|
|
|
10
|
|
|
11
|
|
|
9
|
Retained assets
|
|
|
|
242
|
|
|
259
|
|
|
235
|
|
|
231
|
|
|
246
|
Divested assets
|
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|
2
|
|
|
—
|
Total
|
|
|
|
244
|
|
|
261
|
|
|
238
|
|
|
233
|
|
|
246
|
Natural gas liquids (MBbls/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STACK
|
|
|
|
21
|
|
|
26
|
|
|
31
|
|
|
32
|
|
|
34
|
Delaware Basin
|
|
|
|
10
|
|
|
10
|
|
|
10
|
|
|
11
|
|
|
13
|
Rockies Oil
|
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
Eagle Ford
|
|
|
|
11
|
|
|
15
|
|
|
10
|
|
|
12
|
|
|
13
|
Barnett Shale
|
|
|
|
43
|
|
|
43
|
|
|
42
|
|
|
36
|
|
|
42
|
Other
|
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
Retained assets
|
|
|
|
89
|
|
|
97
|
|
|
96
|
|
|
94
|
|
|
106
|
Divested assets
|
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
Total
|
|
|
|
90
|
|
|
98
|
|
|
97
|
|
|
94
|
|
|
106
|
Gas (MMcf/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STACK
|
|
|
|
284
|
|
|
287
|
|
|
298
|
|
|
313
|
|
|
316
|
Delaware Basin
|
|
|
|
88
|
|
|
87
|
|
|
94
|
|
|
90
|
|
|
89
|
Rockies Oil
|
|
|
|
17
|
|
|
15
|
|
|
17
|
|
|
11
|
|
|
17
|
Heavy Oil
|
|
|
|
18
|
|
|
23
|
|
|
14
|
|
|
16
|
|
|
15
|
Eagle Ford
|
|
|
|
86
|
|
|
115
|
|
|
92
|
|
|
86
|
|
|
87
|
Barnett Shale
|
|
|
|
710
|
|
|
683
|
|
|
675
|
|
|
672
|
|
|
638
|
Other
|
|
|
|
13
|
|
|
13
|
|
|
12
|
|
|
10
|
|
|
13
|
Retained assets
|
|
|
|
1,216
|
|
|
1,223
|
|
|
1,202
|
|
|
1,198
|
|
|
1,175
|
Divested assets
|
|
|
|
5
|
|
|
5
|
|
|
6
|
|
|
3
|
|
|
—
|
Total
|
|
|
|
1,221
|
|
|
1,228
|
|
|
1,208
|
|
|
1,201
|
|
|
1,175
|
Oil equivalent (MBoe/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STACK
|
|
|
|
88
|
|
|
95
|
|
|
105
|
|
|
111
|
|
|
117
|
Delaware Basin
|
|
|
|
53
|
|
|
54
|
|
|
55
|
|
|
57
|
|
|
60
|
Rockies Oil
|
|
|
|
15
|
|
|
17
|
|
|
18
|
|
|
15
|
|
|
19
|
Heavy Oil
|
|
|
|
141
|
|
|
141
|
|
|
124
|
|
|
124
|
|
|
134
|
Eagle Ford
|
|
|
|
57
|
|
|
80
|
|
|
60
|
|
|
54
|
|
|
55
|
Barnett Shale
|
|
|
|
163
|
|
|
158
|
|
|
155
|
|
|
148
|
|
|
149
|
Other
|
|
|
|
16
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
14
|
Retained assets
|
|
|
|
533
|
|
|
560
|
|
|
532
|
|
|
524
|
|
|
548
|
Divested assets
|
|
|
|
4
|
|
|
3
|
|
|
4
|
|
|
3
|
|
|
—
|
Total
|
|
|
|
537
|
|
|
563
|
|
|
536
|
|
|
527
|
|
|
548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
BENCHMARK PRICES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(average prices)
|
|
|
|
Quarter 4
|
|
|
December YTD
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Oil ($/Bbl) - West Texas Intermediate (Cushing)
|
|
|
|
$
|
55.49
|
|
|
|
$
|
49.21
|
|
|
|
$
|
50.99
|
|
|
|
$
|
43.36
|
|
Natural Gas ($/Mcf) - Henry Hub
|
|
|
|
$
|
2.93
|
|
|
|
$
|
2.98
|
|
|
|
$
|
3.11
|
|
|
|
$
|
2.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REALIZED PRICES
|
|
|
|
Quarter Ended December 31, 2017
|
|
|
|
|
Oil /Bitumen
|
|
|
NGL
|
|
|
Gas
|
|
|
Total
|
|
|
|
|
(Per Bbl)
|
|
|
(Per Bbl)
|
|
|
(Per Mcf)
|
|
|
(Per Boe)
|
United States
|
|
|
|
$
|
54.18
|
|
|
|
$
|
18.46
|
|
|
|
$
|
2.29
|
|
|
|
$
|
26.18
|
|
Canada
|
|
|
|
$
|
32.54
|
|
|
|
|
N/M
|
|
|
|
|
N/M
|
|
|
|
$
|
31.95
|
|
Realized price without hedges
|
|
|
|
$
|
42.59
|
|
|
|
$
|
18.46
|
|
|
|
$
|
2.29
|
|
|
|
$
|
27.59
|
|
Cash settlements
|
|
|
|
$
|
(0.38
|
)
|
|
|
$
|
(0.30
|
)
|
|
|
$
|
0.19
|
|
|
|
$
|
0.19
|
|
Realized price, including cash settlements
|
|
|
|
$
|
42.21
|
|
|
|
$
|
18.16
|
|
|
|
$
|
2.48
|
|
|
|
$
|
27.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended December 31, 2016
|
|
|
|
|
Oil /Bitumen
|
|
|
NGL
|
|
|
Gas
|
|
|
Total
|
|
|
|
|
(Per Bbl)
|
|
|
(Per Bbl)
|
|
|
(Per Mcf)
|
|
|
(Per Boe)
|
United States
|
|
|
|
$
|
46.74
|
|
|
|
$
|
13.81
|
|
|
|
$
|
2.34
|
|
|
|
$
|
22.78
|
|
Canada
|
|
|
|
$
|
25.90
|
|
|
|
|
N/M
|
|
|
|
|
N/M
|
|
|
|
$
|
25.39
|
|
Realized price without hedges
|
|
|
|
$
|
34.90
|
|
|
|
$
|
13.81
|
|
|
|
$
|
2.34
|
|
|
|
$
|
23.47
|
|
Cash settlements
|
|
|
|
$
|
—
|
|
|
|
$
|
(0.31
|
)
|
|
|
$
|
(0.11
|
)
|
|
|
$
|
(0.30
|
)
|
Realized price, including cash settlements
|
|
|
|
$
|
34.90
|
|
|
|
$
|
13.50
|
|
|
|
$
|
2.23
|
|
|
|
$
|
23.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
Oil /Bitumen
|
|
|
NGL
|
|
|
Gas
|
|
|
Total
|
|
|
|
|
(Per Bbl)
|
|
|
(Per Bbl)
|
|
|
(Per Mcf)
|
|
|
(Per Boe)
|
United States
|
|
|
|
$
|
49.41
|
|
|
|
$
|
15.66
|
|
|
|
$
|
2.48
|
|
|
|
$
|
24.88
|
|
Canada
|
|
|
|
$
|
29.99
|
|
|
|
|
N/M
|
|
|
|
|
N/M
|
|
|
|
$
|
29.39
|
|
Realized price without hedges
|
|
|
|
$
|
39.23
|
|
|
|
$
|
15.66
|
|
|
|
$
|
2.48
|
|
|
|
$
|
25.96
|
|
Cash settlements
|
|
|
|
$
|
0.23
|
|
|
|
$
|
(0.10
|
)
|
|
|
$
|
0.08
|
|
|
|
$
|
0.27
|
|
Realized price, including cash settlements
|
|
|
|
$
|
39.46
|
|
|
|
$
|
15.56
|
|
|
|
$
|
2.56
|
|
|
|
$
|
26.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
|
|
|
Oil /Bitumen
|
|
|
NGL
|
|
|
Gas
|
|
|
Total
|
|
|
|
|
(Per Bbl)
|
|
|
(Per Bbl)
|
|
|
(Per Mcf)
|
|
|
(Per Boe)
|
United States
|
|
|
|
$
|
38.92
|
|
|
|
$
|
9.81
|
|
|
|
$
|
1.84
|
|
|
|
$
|
18.34
|
|
Canada
|
|
|
|
$
|
20.53
|
|
|
|
|
N/M
|
|
|
|
|
N/M
|
|
|
|
$
|
20.07
|
|
Realized price without hedges
|
|
|
|
$
|
29.65
|
|
|
|
$
|
9.81
|
|
|
|
$
|
1.84
|
|
|
|
$
|
18.72
|
|
Cash settlements
|
|
|
|
$
|
(0.43
|
)
|
|
|
$
|
(0.11
|
)
|
|
|
$
|
0.07
|
|
|
|
$
|
(0.05
|
)
|
Realized price, including cash settlements
|
|
|
|
$
|
29.22
|
|
|
|
$
|
9.70
|
|
|
|
$
|
1.91
|
|
|
|
$
|
18.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
CONSOLIDATED STATEMENTS OF EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share amounts)
|
|
|
|
Quarter Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016*
|
|
|
2017
|
|
|
2016*
|
Upstream revenues
|
|
|
|
$
|
1,333
|
|
|
|
$
|
988
|
|
|
|
$
|
5,307
|
|
|
|
$
|
3,981
|
|
Marketing and midstream revenues
|
|
|
|
|
2,650
|
|
|
|
|
1,820
|
|
|
|
|
8,642
|
|
|
|
|
6,323
|
|
Total revenues
|
|
|
|
|
3,983
|
|
|
|
|
2,808
|
|
|
|
|
13,949
|
|
|
|
|
10,304
|
|
Production expenses(1)
|
|
|
|
|
463
|
|
|
|
|
409
|
|
|
|
|
1,823
|
|
|
|
|
1,803
|
|
Exploration expenses
|
|
|
|
|
171
|
|
|
|
|
37
|
|
|
|
|
380
|
|
|
|
|
215
|
|
Marketing and midstream expenses
|
|
|
|
|
2,378
|
|
|
|
|
1,617
|
|
|
|
|
7,730
|
|
|
|
|
5,533
|
|
Depreciation, depletion and amortization
|
|
|
|
|
528
|
|
|
|
|
469
|
|
|
|
|
2,074
|
|
|
|
|
2,096
|
|
Asset impairments
|
|
|
|
|
8
|
|
|
|
|
80
|
|
|
|
|
17
|
|
|
|
|
1,310
|
|
Asset dispositions
|
|
|
|
|
(18
|
)
|
|
|
|
(575
|
)
|
|
|
|
(217
|
)
|
|
|
|
(1,483
|
)
|
General and administrative expenses
|
|
|
|
|
222
|
|
|
|
|
218
|
|
|
|
|
872
|
|
|
|
|
865
|
|
Financing costs, net
|
|
|
|
|
126
|
|
|
|
|
335
|
|
|
|
|
498
|
|
|
|
|
907
|
|
Other expenses
|
|
|
|
|
5
|
|
|
|
|
(53
|
)
|
|
|
|
(124
|
)
|
|
|
|
375
|
|
Total expenses
|
|
|
|
|
3,883
|
|
|
|
|
2,537
|
|
|
|
|
13,053
|
|
|
|
|
11,621
|
|
Earnings (loss) before income taxes
|
|
|
|
|
100
|
|
|
|
|
271
|
|
|
|
|
896
|
|
|
|
|
(1,317
|
)
|
Income tax expense (benefit)
|
|
|
|
|
(204
|
)
|
|
|
|
75
|
|
|
|
|
(182
|
)
|
|
|
|
141
|
|
Net earnings (loss)
|
|
|
|
|
304
|
|
|
|
|
196
|
|
|
|
|
1,078
|
|
|
|
|
(1,458
|
)
|
Net earnings (loss) attributable to noncontrolling interests
|
|
|
|
|
121
|
|
|
|
|
(11
|
)
|
|
|
|
180
|
|
|
|
|
(402
|
)
|
Net earnings (loss) attributable to Devon
|
|
|
|
$
|
183
|
|
|
|
$
|
207
|
|
|
|
$
|
898
|
|
|
|
$
|
(1,056
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share attributable to Devon:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
0.35
|
|
|
|
$
|
0.41
|
|
|
|
$
|
1.71
|
|
|
|
$
|
(2.09
|
)
|
Diluted
|
|
|
|
$
|
0.35
|
|
|
|
$
|
0.41
|
|
|
|
$
|
1.70
|
|
|
|
$
|
(2.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
525
|
|
|
|
|
524
|
|
|
|
|
525
|
|
|
|
|
513
|
|
Diluted
|
|
|
|
|
528
|
|
|
|
|
526
|
|
|
|
|
528
|
|
|
|
|
513
|
|
* Prior year amounts have been recast due to change in accounting
principle.
|
|
|
(1) PRODUCTION EXPENSES
|
(in millions)
|
|
|
|
Quarter Ended December 31,
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Lease operating expense
|
|
|
|
$
|
236
|
|
|
$
|
209
|
|
|
$
|
927
|
|
|
$
|
1,027
|
Gathering & transportation
|
|
|
|
|
163
|
|
|
|
158
|
|
|
|
647
|
|
|
|
555
|
Production taxes
|
|
|
|
|
51
|
|
|
|
32
|
|
|
|
194
|
|
|
|
147
|
Property taxes
|
|
|
|
|
13
|
|
|
|
10
|
|
|
|
55
|
|
|
|
74
|
Production expenses
|
|
|
|
$
|
463
|
|
|
$
|
409
|
|
|
$
|
1,823
|
|
|
$
|
1,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
Quarter Ended
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016*
|
|
|
2017
|
|
|
2016*
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
|
$
|
304
|
|
|
|
$
|
196
|
|
|
|
$
|
1,078
|
|
|
|
$
|
(1,458
|
)
|
Adjustments to reconcile net earnings (loss) to net cash from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
|
528
|
|
|
|
|
469
|
|
|
|
|
2,074
|
|
|
|
|
2,096
|
|
Exploratory dry hole expense and unproved leasehold impairments
|
|
|
|
|
139
|
|
|
|
|
5
|
|
|
|
|
219
|
|
|
|
|
113
|
|
Asset impairments
|
|
|
|
|
8
|
|
|
|
|
80
|
|
|
|
|
17
|
|
|
|
|
1,310
|
|
Gains and losses on asset sales
|
|
|
|
|
(18
|
)
|
|
|
|
(575
|
)
|
|
|
|
(217
|
)
|
|
|
|
(1,483
|
)
|
Deferred income tax expense (benefit)
|
|
|
|
|
(245
|
)
|
|
|
|
47
|
|
|
|
|
(294
|
)
|
|
|
|
41
|
|
Commodity derivatives
|
|
|
|
|
57
|
|
|
|
|
171
|
|
|
|
|
(157
|
)
|
|
|
|
201
|
|
Cash settlements on commodity derivatives
|
|
|
|
|
10
|
|
|
|
|
(14
|
)
|
|
|
|
53
|
|
|
|
|
1
|
|
Other derivatives and financial instruments
|
|
|
|
|
7
|
|
|
|
|
(144
|
)
|
|
|
|
23
|
|
|
|
|
185
|
|
Cash settlements on other derivatives and financial instruments
|
|
|
|
|
(6
|
)
|
|
|
|
5
|
|
|
|
|
(6
|
)
|
|
|
|
(143
|
)
|
Asset retirement obligation accretion
|
|
|
|
|
15
|
|
|
|
|
17
|
|
|
|
|
62
|
|
|
|
|
75
|
|
Share-based compensation
|
|
|
|
|
47
|
|
|
|
|
40
|
|
|
|
|
198
|
|
|
|
|
233
|
|
Other
|
|
|
|
|
16
|
|
|
|
|
337
|
|
|
|
|
(122
|
)
|
|
|
|
270
|
|
Net change in working capital
|
|
|
|
|
(73
|
)
|
|
|
|
(184
|
)
|
|
|
|
21
|
|
|
|
|
24
|
|
Change in long-term other assets
|
|
|
|
|
(58
|
)
|
|
|
|
26
|
|
|
|
|
(46
|
)
|
|
|
|
36
|
|
Change in long-term other liabilities
|
|
|
|
|
(6
|
)
|
|
|
|
(8
|
)
|
|
|
|
6
|
|
|
|
|
(1
|
)
|
Net cash from operating activities
|
|
|
|
|
725
|
|
|
|
|
468
|
|
|
|
|
2,909
|
|
|
|
|
1,500
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(799
|
)
|
|
|
|
(593
|
)
|
|
|
|
(2,759
|
)
|
|
|
|
(2,047
|
)
|
Acquisitions of property, equipment and businesses
|
|
|
|
|
(7
|
)
|
|
|
|
—
|
|
|
|
|
(46
|
)
|
|
|
|
(1,641
|
)
|
Divestitures of property and equipment
|
|
|
|
|
101
|
|
|
|
|
1,224
|
|
|
|
|
417
|
|
|
|
|
3,113
|
|
Proceeds from sale of investment
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
190
|
|
|
|
|
—
|
|
Other
|
|
|
|
|
(7
|
)
|
|
|
|
(26
|
)
|
|
|
|
(12
|
)
|
|
|
|
(19
|
)
|
Net cash from investing activities
|
|
|
|
|
(712
|
)
|
|
|
|
605
|
|
|
|
|
(2,210
|
)
|
|
|
|
(594
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of long-term debt, net of issuance costs
|
|
|
|
|
168
|
|
|
|
|
483
|
|
|
|
|
2,376
|
|
|
|
|
2,145
|
|
Repayments of long-term debt
|
|
|
|
|
(168
|
)
|
|
|
|
(1,687
|
)
|
|
|
|
(2,118
|
)
|
|
|
|
(4,409
|
)
|
Payment of installment payable
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(250
|
)
|
|
|
|
—
|
|
Net short-term debt repayments
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(626
|
)
|
Early retirement of debt
|
|
|
|
|
—
|
|
|
|
|
(183
|
)
|
|
|
|
(6
|
)
|
|
|
|
(265
|
)
|
Issuance of common stock
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1,469
|
|
Issuance of subsidiary units
|
|
|
|
|
15
|
|
|
|
|
57
|
|
|
|
|
501
|
|
|
|
|
892
|
|
Dividends paid on common stock
|
|
|
|
|
(32
|
)
|
|
|
|
(31
|
)
|
|
|
|
(127
|
)
|
|
|
|
(221
|
)
|
Contributions from noncontrolling interests
|
|
|
|
|
10
|
|
|
|
|
17
|
|
|
|
|
57
|
|
|
|
|
168
|
|
Distributions to noncontrolling interests
|
|
|
|
|
(107
|
)
|
|
|
|
(80
|
)
|
|
|
|
(354
|
)
|
|
|
|
(304
|
)
|
Shares exchanged for tax withholdings
|
|
|
|
|
(1
|
)
|
|
|
|
(5
|
)
|
|
|
|
(68
|
)
|
|
|
|
(35
|
)
|
Other
|
|
|
|
|
—
|
|
|
|
|
(4
|
)
|
|
|
|
(2
|
)
|
|
|
|
(10
|
)
|
Net cash from financing activities
|
|
|
|
|
(115
|
)
|
|
|
|
(1,433
|
)
|
|
|
|
9
|
|
|
|
|
(1,196
|
)
|
Effect of exchange rate changes on cash
|
|
|
|
|
(6
|
)
|
|
|
|
(66
|
)
|
|
|
|
6
|
|
|
|
|
(61
|
)
|
Net change in cash and cash equivalents
|
|
|
|
|
(108
|
)
|
|
|
|
(426
|
)
|
|
|
|
714
|
|
|
|
|
(351
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
2,781
|
|
|
|
|
2,385
|
|
|
|
|
1,959
|
|
|
|
|
2,310
|
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
2,673
|
|
|
|
$
|
1,959
|
|
|
|
$
|
2,673
|
|
|
|
$
|
1,959
|
|
* Prior year amounts have been recast due to change in accounting
principle.
|
|
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2017
|
|
|
2016*
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
2,673
|
|
|
$
|
1,959
|
|
Accounts receivable
|
|
|
|
|
1,670
|
|
|
|
1,356
|
|
Assets held for sale
|
|
|
|
|
—
|
|
|
|
193
|
|
Other current assets
|
|
|
|
|
448
|
|
|
|
264
|
|
Total current assets
|
|
|
|
|
4,791
|
|
|
|
3,772
|
|
Oil and gas property and equipment, based on successful efforts
accounting, net
|
|
|
|
|
13,318
|
|
|
|
12,998
|
|
Midstream and other property and equipment, net
|
|
|
|
|
7,853
|
|
|
|
7,535
|
|
Total property and equipment, net
|
|
|
|
|
21,171
|
|
|
|
20,533
|
|
Goodwill
|
|
|
|
|
2,383
|
|
|
|
2,383
|
|
Other long-term assets
|
|
|
|
|
1,896
|
|
|
|
1,987
|
|
Total assets
|
|
|
|
$
|
30,241
|
|
|
$
|
28,675
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
819
|
|
|
$
|
642
|
|
Revenues and royalties payable
|
|
|
|
|
1,180
|
|
|
|
908
|
|
Short-term debt
|
|
|
|
|
115
|
|
|
|
—
|
|
Other current liabilities
|
|
|
|
|
1,201
|
|
|
|
1,066
|
|
Total current liabilities
|
|
|
|
|
3,315
|
|
|
|
2,616
|
|
Long-term debt
|
|
|
|
|
10,291
|
|
|
|
10,154
|
|
Asset retirement obligations
|
|
|
|
|
1,113
|
|
|
|
1,226
|
|
Other long-term liabilities
|
|
|
|
|
583
|
|
|
|
894
|
|
Deferred income taxes
|
|
|
|
|
835
|
|
|
|
1,063
|
|
Equity:
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
53
|
|
|
|
52
|
|
Additional paid-in capital
|
|
|
|
|
7,333
|
|
|
|
7,237
|
|
Retained earnings (accumulated deficit)
|
|
|
|
|
702
|
|
|
|
(69
|
)
|
Accumulated other comprehensive earnings
|
|
|
|
|
1,166
|
|
|
|
1,054
|
|
Total stockholders’ equity attributable to Devon
|
|
|
|
|
9,254
|
|
|
|
8,274
|
|
Noncontrolling interests
|
|
|
|
|
4,850
|
|
|
|
4,448
|
|
Total equity
|
|
|
|
|
14,104
|
|
|
|
12,722
|
|
Total liabilities and equity
|
|
|
|
$
|
30,241
|
|
|
$
|
28,675
|
|
Common shares outstanding
|
|
|
|
|
525
|
|
|
|
523
|
|
* Prior year amounts have been recast due to change in accounting
principle.
|
|
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
|
CONSOLIDATING STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
Quarter Ended December 31, 2017
|
|
|
|
|
Devon U.S. & Canada
|
|
|
EnLink
|
|
|
Eliminations
|
|
|
Total
|
Upstream revenues
|
|
|
|
$
|
1,333
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
1,333
|
|
Marketing and midstream revenues
|
|
|
|
|
1,048
|
|
|
|
|
1,756
|
|
|
|
|
(154
|
)
|
|
|
|
2,650
|
|
Total revenues
|
|
|
|
|
2,381
|
|
|
|
|
1,756
|
|
|
|
|
(154
|
)
|
|
|
|
3,983
|
|
Production expenses
|
|
|
|
|
463
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
463
|
|
Exploration expenses
|
|
|
|
|
171
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
171
|
|
Marketing and midstream expenses
|
|
|
|
|
1,048
|
|
|
|
|
1,484
|
|
|
|
|
(154
|
)
|
|
|
|
2,378
|
|
Depreciation, depletion and amortization
|
|
|
|
|
389
|
|
|
|
|
139
|
|
|
|
|
—
|
|
|
|
|
528
|
|
Asset impairments
|
|
|
|
|
—
|
|
|
|
|
8
|
|
|
|
|
—
|
|
|
|
|
8
|
|
Asset dispositions
|
|
|
|
|
(17
|
)
|
|
|
|
(1
|
)
|
|
|
|
—
|
|
|
|
|
(18
|
)
|
General and administrative expenses
|
|
|
|
|
192
|
|
|
|
|
30
|
|
|
|
|
—
|
|
|
|
|
222
|
|
Financing costs, net
|
|
|
|
|
78
|
|
|
|
|
48
|
|
|
|
|
—
|
|
|
|
|
126
|
|
Other expenses
|
|
|
|
|
10
|
|
|
|
|
(5
|
)
|
|
|
|
—
|
|
|
|
|
5
|
|
Total expenses
|
|
|
|
|
2,334
|
|
|
|
|
1,703
|
|
|
|
|
(154
|
)
|
|
|
|
3,883
|
|
Earnings before income taxes
|
|
|
|
|
47
|
|
|
|
|
53
|
|
|
|
|
—
|
|
|
|
|
100
|
|
Income tax expense (benefit)
|
|
|
|
|
3
|
|
|
|
|
(207
|
)
|
|
|
|
—
|
|
|
|
|
(204
|
)
|
Net earnings
|
|
|
|
|
44
|
|
|
|
|
260
|
|
|
|
|
—
|
|
|
|
|
304
|
|
Net earnings attributable to noncontrolling interests
|
|
|
|
|
—
|
|
|
|
|
121
|
|
|
|
|
—
|
|
|
|
|
121
|
|
Net earnings attributable to Devon
|
|
|
|
$
|
44
|
|
|
|
$
|
139
|
|
|
|
$
|
—
|
|
|
|
$
|
183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER KEY STATISTICS
|
(in millions)
|
|
|
|
Quarter Ended December 31, 2017
|
|
|
|
|
Devon U.S. & Canada
|
|
|
EnLink
|
|
|
Eliminations
|
|
|
Total
|
Cash flow statement related items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flow
|
|
|
|
$
|
553
|
|
|
|
$
|
172
|
|
|
|
$
|
—
|
|
|
$
|
725
|
|
Divestitures of property and equipment
|
|
|
|
$
|
101
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
101
|
|
Capital expenditures
|
|
|
|
$
|
(670
|
)
|
|
|
$
|
(129
|
)
|
|
|
$
|
—
|
|
|
$
|
(799
|
)
|
EnLink distributions received (paid)
|
|
|
|
$
|
66
|
|
|
|
$
|
(173
|
)
|
|
|
$
|
—
|
|
|
$
|
(107
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet statement items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt (1)
|
|
|
|
$
|
4,222
|
|
|
|
$
|
3,511
|
|
|
|
$
|
—
|
|
|
$
|
7,733
|
|
(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.
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL EXPENDITURES
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
Quarter Ended
|
|
|
Year Ended
|
|
|
|
|
December 31, 2017
|
|
|
December 31, 2017
|
Exploration and development capital
|
|
|
|
$
|
648
|
|
|
$
|
1,947
|
Land and other acquisitions
|
|
|
|
|
9
|
|
|
|
56
|
Exploration and production (E&P) capital
|
|
|
|
|
657
|
|
|
|
2,003
|
Capitalized interest
|
|
|
|
|
18
|
|
|
|
69
|
Other
|
|
|
|
|
33
|
|
|
|
97
|
Devon capital expenditures (1)
|
|
|
|
$
|
708
|
|
|
$
|
2,169
|
(1) Excludes $132 million and $768 million attributable to EnLink for
the fourth quarter and year end of 2017, respectively.
|
COSTS INCURRED
|
|
|
|
Total
|
(in millions)
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2017
|
|
|
2016*
|
Property acquisition costs:
|
|
|
|
|
|
|
|
Proved properties
|
|
|
|
$
|
2
|
|
|
$
|
237
|
Unproved properties
|
|
|
|
|
54
|
|
|
|
1,358
|
Exploration costs
|
|
|
|
|
677
|
|
|
|
360
|
Development costs
|
|
|
|
|
1,261
|
|
|
|
929
|
Costs incurred
|
|
|
|
$
|
1,994
|
|
|
$
|
2,884
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2017
|
|
|
2016*
|
Property acquisition costs:
|
|
|
|
|
|
|
|
Proved properties
|
|
|
|
$
|
2
|
|
|
$
|
237
|
Unproved properties
|
|
|
|
|
50
|
|
|
|
1,356
|
Exploration costs
|
|
|
|
|
590
|
|
|
|
282
|
Development costs
|
|
|
|
|
1,036
|
|
|
|
875
|
Costs incurred
|
|
|
|
$
|
1,678
|
|
|
$
|
2,750
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2017
|
|
|
2016*
|
Property acquisition costs:
|
|
|
|
|
|
|
|
Proved properties
|
|
|
|
$
|
—
|
|
|
$
|
—
|
Unproved properties
|
|
|
|
|
4
|
|
|
|
2
|
Exploration costs
|
|
|
|
|
87
|
|
|
|
78
|
Development costs
|
|
|
|
|
225
|
|
|
|
54
|
Costs incurred
|
|
|
|
$
|
316
|
|
|
$
|
134
|
* Prior year amounts have been recast due to change in accounting
principle.
|
DEVON ENERGY CORPORATION
|
FINANCIAL AND OPERATIONAL INFORMATION
|
|
|
RESERVES RECONCILIATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Oil / Bitumen (MMBbls)
|
|
|
Gas (Bcf)
|
|
|
NGL (MMBbls)
|
|
|
Total (MMBoe)
|
As of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved developed
|
|
|
|
367
|
|
|
|
5,377
|
|
|
|
387
|
|
|
|
1,649
|
|
Proved undeveloped
|
|
|
|
328
|
|
|
|
254
|
|
|
|
38
|
|
|
|
409
|
|
Total Proved
|
|
|
|
695
|
|
|
|
5,631
|
|
|
|
425
|
|
|
|
2,058
|
|
Revisions due to prices
|
|
|
|
(26
|
)
|
|
|
399
|
|
|
|
32
|
|
|
|
73
|
|
Revisions other than price
|
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
(10
|
)
|
|
|
(12
|
)
|
Extensions and discoveries
|
|
|
|
106
|
|
|
|
403
|
|
|
|
63
|
|
|
|
237
|
|
Production
|
|
|
|
(89
|
)
|
|
|
(439
|
)
|
|
|
(36
|
)
|
|
|
(198
|
)
|
Sale of reserves
|
|
|
|
(3
|
)
|
|
|
(9
|
)
|
|
|
(1
|
)
|
|
|
(6
|
)
|
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved developed
|
|
|
|
393
|
|
|
|
5,632
|
|
|
|
410
|
|
|
|
1,742
|
|
Proved undeveloped
|
|
|
|
288
|
|
|
|
355
|
|
|
|
63
|
|
|
|
410
|
|
Total Proved
|
|
|
|
681
|
|
|
|
5,987
|
|
|
|
473
|
|
|
|
2,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
|
|
|
Oil / Bitumen (MMBbls)
|
|
|
Gas (Bcf)
|
|
|
NGL (MMBbls)
|
|
|
Total (MMBoe)
|
As of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved developed
|
|
|
|
160
|
|
|
|
5,361
|
|
|
|
387
|
|
|
|
1,439
|
|
Proved undeveloped
|
|
|
|
34
|
|
|
|
254
|
|
|
|
38
|
|
|
|
115
|
|
Total Proved
|
|
|
|
194
|
|
|
|
5,615
|
|
|
|
425
|
|
|
|
1,554
|
|
Revisions due to prices
|
|
|
|
12
|
|
|
|
398
|
|
|
|
32
|
|
|
|
111
|
|
Revisions other than price
|
|
|
|
6
|
|
|
|
—
|
|
|
|
(10
|
)
|
|
|
(5
|
)
|
Extensions and discoveries
|
|
|
|
90
|
|
|
|
403
|
|
|
|
63
|
|
|
|
221
|
|
Production
|
|
|
|
(42
|
)
|
|
|
(433
|
)
|
|
|
(36
|
)
|
|
|
(150
|
)
|
Sale of reserves
|
|
|
|
(3
|
)
|
|
|
(9
|
)
|
|
|
(1
|
)
|
|
|
(6
|
)
|
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved developed
|
|
|
|
178
|
|
|
|
5,619
|
|
|
|
410
|
|
|
|
1,524
|
|
Proved undeveloped
|
|
|
|
79
|
|
|
|
355
|
|
|
|
63
|
|
|
|
201
|
|
Total Proved
|
|
|
|
257
|
|
|
|
5,974
|
|
|
|
473
|
|
|
|
1,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
|
|
Oil / Bitumen (MMBbls)
|
|
|
Gas (Bcf)
|
|
|
NGL (MMBbls)
|
|
|
Total (MMBoe)
|
As of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved developed
|
|
|
|
207
|
|
|
|
16
|
|
|
|
—
|
|
|
|
210
|
|
Proved undeveloped
|
|
|
|
294
|
|
|
|
—
|
|
|
|
—
|
|
|
|
294
|
|
Total Proved
|
|
|
|
501
|
|
|
|
16
|
|
|
|
—
|
|
|
|
504
|
|
Revisions due to prices
|
|
|
|
(38
|
)
|
|
|
1
|
|
|
|
—
|
|
|
|
(38
|
)
|
Revisions other than price
|
|
|
|
(8
|
)
|
|
|
2
|
|
|
|
—
|
|
|
|
(7
|
)
|
Extensions and discoveries
|
|
|
|
16
|
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
Production
|
|
|
|
(47
|
)
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
(48
|
)
|
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved developed
|
|
|
|
215
|
|
|
|
13
|
|
|
|
—
|
|
|
|
218
|
|
Proved undeveloped
|
|
|
|
209
|
|
|
|
—
|
|
|
|
—
|
|
|
|
209
|
|
Total Proved
|
|
|
|
424
|
|
|
|
13
|
|
|
|
—
|
|
|
|
427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
NON-GAAP FINANCIAL MEASURES
This 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 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 fourth-quarter 2017 earnings.
|
|
|
|
|
(in millions, except per share amounts)
|
|
|
|
Quarter Ended December 31, 2017
|
|
|
|
|
Before-tax
|
|
|
After-tax
|
|
|
After Noncontrolling Interests
|
|
|
Per Diluted Share
|
Earnings attributable to Devon (GAAP)
|
|
|
|
$
|
100
|
|
|
|
$
|
304
|
|
|
|
$
|
183
|
|
|
|
$
|
0.35
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset and exploration impairments
|
|
|
|
|
146
|
|
|
|
|
94
|
|
|
|
|
91
|
|
|
|
|
0.18
|
|
Fair value changes in financial instruments and foreign currency
|
|
|
|
|
74
|
|
|
|
|
30
|
|
|
|
|
31
|
|
|
|
|
0.06
|
|
Asset dispositions
|
|
|
|
|
(18
|
)
|
|
|
|
(11
|
)
|
|
|
|
(11
|
)
|
|
|
|
(0.02
|
)
|
Legal entity restructuring
|
|
|
|
|
—
|
|
|
|
|
(86
|
)
|
|
|
|
(86
|
)
|
|
|
|
(0.16
|
)
|
Deferred tax asset valuation allowance
|
|
|
|
|
—
|
|
|
|
|
103
|
|
|
|
|
103
|
|
|
|
|
0.18
|
|
U.S. tax reform
|
|
|
|
|
—
|
|
|
|
|
(211
|
)
|
|
|
|
(112
|
)
|
|
|
|
(0.21
|
)
|
Core earnings attributable to Devon (Non-GAAP)
|
|
|
|
$
|
302
|
|
|
|
$
|
223
|
|
|
|
$
|
199
|
|
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
December 31, 2017
|
|
|
|
|
Devon U.S. & Canada
|
|
|
EnLink
|
|
|
Devon Consolidated
|
Total debt (GAAP)
|
|
|
|
$
|
6,864
|
|
|
|
$
|
3,542
|
|
|
|
$
|
10,406
|
|
Less cash and cash equivalents
|
|
|
|
|
(2,642
|
)
|
|
|
|
(31
|
)
|
|
|
|
(2,673
|
)
|
Net debt (Non-GAAP)
|
|
|
|
$
|
4,222
|
|
|
|
$
|
3,511
|
|
|
|
$
|
7,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEVON ENERGY CORPORATION
|
FORWARD LOOKING GUIDANCE
|
|
PRODUCTION GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 1
|
|
|
Full Year
|
|
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
Oil and bitumen (MBbls/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
117
|
|
|
122
|
|
|
128
|
|
|
133
|
Heavy Oil
|
|
|
|
125
|
|
|
130
|
|
|
125
|
|
|
130
|
Total
|
|
|
|
242
|
|
|
252
|
|
|
253
|
|
|
263
|
Natural gas liquids (MBbls/d)
|
|
|
|
98
|
|
|
103
|
|
|
105
|
|
|
110
|
Gas (MMcf/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
1,125
|
|
|
1,175
|
|
|
1,150
|
|
|
1,200
|
Heavy Oil
|
|
|
|
14
|
|
|
16
|
|
|
14
|
|
|
16
|
Total
|
|
|
|
1,139
|
|
|
1,191
|
|
|
1,164
|
|
|
1,216
|
Oil equivalent (MBoe/d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
403
|
|
|
421
|
|
|
425
|
|
|
443
|
Heavy Oil
|
|
|
|
127
|
|
|
133
|
|
|
127
|
|
|
133
|
Total
|
|
|
|
530
|
|
|
554
|
|
|
552
|
|
|
576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRICE REALIZATIONS GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 1
|
|
|
Full Year
|
|
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
Oil and bitumen - % of WTI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
95
|
%
|
|
|
100
|
%
|
|
|
95
|
%
|
|
|
100
|
%
|
Canada
|
|
|
|
25
|
%
|
|
|
35
|
%
|
|
|
25
|
%
|
|
|
50
|
%
|
NGL - realized price(1)
|
|
|
$
|
22
|
|
|
$
|
27
|
|
|
$
|
20
|
|
|
$
|
25
|
|
Natural gas - % of Henry Hub(1)
|
|
|
|
75%
|
|
|
|
85
|
%
|
|
|
75
|
%
|
|
|
85
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER GUIDANCE ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 1
|
|
|
Full Year
|
|
($ millions, except %)
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
Marketing & midstream operating profit
|
|
$
|
260
|
|
|
$
|
280
|
|
|
$
|
1,050
|
|
|
$
|
1,150
|
|
Production expenses(1)(2)
|
|
$
|
500
|
|
|
$
|
550
|
|
|
$
|
2,100
|
|
|
$
|
2,200
|
|
Exploration expenses
|
|
$
|
25
|
|
|
$
|
35
|
|
|
$
|
90
|
|
|
$
|
100
|
|
Depreciation, depletion and amortization
|
|
$
|
530
|
|
|
$
|
580
|
|
|
$
|
2,300
|
|
|
$
|
2,400
|
|
General & administrative expenses
|
|
$
|
210
|
|
|
$
|
230
|
|
|
$
|
800
|
|
|
$
|
850
|
|
Financing costs, net
|
|
$
|
115
|
|
|
$
|
125
|
|
|
$
|
465
|
|
|
$
|
515
|
|
Other expenses
|
|
$
|
15
|
|
|
$
|
20
|
|
|
$
|
60
|
|
|
$
|
80
|
|
Current income tax rate
|
|
|
0%
|
|
|
|
5%
|
|
|
|
0%
|
|
|
|
5%
|
|
Deferred income tax rate
|
|
|
20%
|
|
|
|
25%
|
|
|
|
20%
|
|
|
|
25%
|
|
Total income tax rate
|
|
|
20%
|
|
|
|
30%
|
|
|
|
20%
|
|
|
|
30%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to noncontrolling interests
|
|
$
|
30
|
|
|
$
|
50
|
|
|
$
|
150
|
|
|
$
|
200
|
|
|
|
CAPITAL EXPENDITURES GUIDANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter 1
|
|
|
Full Year
|
|
(in millions)
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
|
High
|
|
Exploration and production
|
|
|
$
|
550
|
|
|
$
|
650
|
|
|
$
|
2,200
|
|
|
$
|
2,400
|
|
Capitalized interest
|
|
|
|
15
|
|
|
|
20
|
|
|
|
60
|
|
|
|
90
|
|
Other
|
|
|
|
20
|
|
|
|
30
|
|
|
|
75
|
|
|
|
125
|
|
Devon capital expenditures (3)
|
|
|
$
|
585
|
|
|
$
|
700
|
|
|
$
|
2,335
|
|
|
$
|
2,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) In 2018, Devon adopted new accounting regulations that will change
the way certain processing fees are presented for natural gas and
natural gas liquids. Historically, these fees have been recorded as a
reduction to revenue. Now, these fees will be recorded directly to
production expense beginning in the first quarter of 2018 and prior
periods will be recast for consistent presentation. This accounting
change will have no impact to per-unit cash margin
or net earnings but will result in higher price realizations, increased
revenues and increased production expenses.
(2) Production expense includes LOE, transportation, gathering and
production and property taxes.
(3) Excludes capital expenditures related to EnLink.
|
DEVON ENERGY CORPORATION
|
FORWARD LOOKING GUIDANCE
|
|
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)
|
Q1-Q4 2018
|
|
|
49,625
|
|
|
$
|
52.13
|
|
|
51,860
|
|
|
$
|
46.06
|
|
|
$
|
56.06
|
Q1-Q4 2019
|
|
|
7,307
|
|
|
$
|
52.22
|
|
|
6,559
|
|
|
$
|
45.82
|
|
|
$
|
55.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Basis Swaps
|
|
|
|
|
|
|
|
|
|
Period
|
|
|
Index
|
|
|
Volume (Bbls/d)
|
|
|
Weighted Average Differential to WTI ($/Bbl)
|
Q1-Q4 2018
|
|
|
Midland Sweet
|
|
|
23,000
|
|
|
$
|
(1.02
|
)
|
Q1-Q4 2018
|
|
|
Argus LLS
|
|
|
12,000
|
|
|
$
|
3.95
|
|
Q1-Q4 2018
|
|
|
Western Canadian Select
|
|
|
75,490
|
|
|
$
|
(14.84
|
)
|
Q1-Q4 2019
|
|
|
Midland Sweet
|
|
|
27,000
|
|
|
$
|
(0.47
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Commodity Hedges
|
|
|
|
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)
|
Q1-Q4 2018
|
|
|
371,956
|
|
|
$
|
3.06
|
|
|
197,516
|
|
|
$
|
2.94
|
|
|
$
|
3.26
|
Q1-Q4 2019
|
|
|
28,466
|
|
|
$
|
2.98
|
|
|
28,466
|
|
|
$
|
2.84
|
|
|
$
|
3.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Basis Swaps
|
|
|
|
|
|
|
|
|
|
Period
|
|
|
Index
|
|
|
Volume (MMBtu/d)
|
|
|
Weighted Average Differential to Henry Hub ($/MMBtu)
|
Q1-Q4 2018
|
|
|
Panhandle Eastern Pipe Line
|
|
|
50,000
|
|
|
$
|
(0.29
|
)
|
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 December 31, 2017.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180220006627/en/
Copyright Business Wire 2018