May 2, 2017 - 4:07 PM EDT
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Devon Energy Reports First-Quarter Results

Devon Energy Corp. (NYSE: DVN) today reported operational and financial results for the first quarter of 2017. Also included within the release is the company’s guidance outlook for the second quarter and full-year 2017.

Highlights

  • Oil production from U.S. resource plays exceeds expectations
  • Operational momentum builds with strong results from new well activity
  • Higher-value production expands operating cash flow by 54 percent
  • Low cost structure to further improve by year end
  • Multi-year production growth and cash flow expansion targets on track

“Devon’s development programs delivered strong growth in high-value production, significantly enhancing profitability in the first quarter,” said Dave Hager, president and CEO. “Driven by outstanding well productivity from our U.S. resource plays, light-oil production increased by 17 percent in the quarter, exceeding guidance by a wide margin. Importantly, we were able to deliver this outperformance with a low cost structure that is expected to further improve as we progress through the year.”

“Looking ahead, we expect our operational momentum to build as we continue to accelerate investment across our world-class U.S. drilling programs and shift to full-field development,” said Hager. “With excellent first-quarter results in hand, we are firmly on track to achieve our multi-year growth targets and deliver peer-leading cash flow expansion.”

U.S. Resource Plays Drive Oil and Top-Line Production Beat

Devon’s oil-driven capital program delivered strong production results in the first quarter. Oil production averaged 261,000 barrels per day, a 7 percent increase compared to the fourth quarter of 2016. This result exceeded the top end of the company’s guidance range by 5,000 barrels per day.

The strong growth in oil production was driven entirely by Devon’s U.S. resource plays, where the company is attaining the highest margins within its portfolio. In total, U.S. oil production reached 123,000 barrels per day in the first quarter, a 17 percent increase compared to the previous quarter. The robust production growth was largely attributable to higher completion activity across the company’s Eagle Ford and STACK operations.

In Canada, production from Devon’s heavy-oil operations averaged 138,000 barrels per day in the first quarter, a 9 percent increase year over year. This growth was driven by the company’s Jackfish complex, where gross production increased to a record 125,100 barrels per day in the quarter, exceeding nameplate capacity by nearly 20 percent.

Overall, total companywide production averaged 563,000 oil-equivalent barrels (Boe) per day in the first quarter, a 5 percent increase compared to the fourth quarter of 2016. With Devon’s strong growth in higher-value production, oil is the largest component of Devon’s product mix at 46 percent.

Operational Momentum Builds in U.S. Resource Plays

Devon continued to accelerate investment across its asset portfolio and exited the first quarter with 15 rigs running (includes Eagle Ford partner activity). With these higher activity levels, the company continued to build operational momentum across its world-class U.S. resource plays by commencing production on more than 70 new wells in the quarter that achieved 30-day rates averaging 1,800 Boe per day.

For additional details regarding these prolific well results and other information about Devon’s E&P operations, please refer to the company’s first-quarter 2017 operations report at www.devonenergy.com. Highlights from the report include:

  • Wolfcamp program achieves record well result
  • Woodford Shale delivering strong well productivity in Hobson Row
  • STACK appraisal activity confirms fourth landing zone
  • Eagle Ford “diamond stack” pilot successful
  • Jackfish 3 exceeds nameplate capacity by more than 30 percent
  • Powder River Basin produces prolific well results

Upstream Revenue Advances and EnLink Profitability Expands

Revenue from oil, natural gas and natural gas liquids sales totaled $1.3 billion in the first quarter, a 59 percent improvement compared to the first quarter of 2016. The strong year-over-year revenue growth was driven by higher commodity price realizations and a shift in Devon’s product mix to higher-margin oil production.

The company’s midstream business generated $207 million of operating profit in the first quarter, driven entirely by Devon’s strategic investment in EnLink Midstream. Devon has a 64 percent ownership in EnLink’s general partner (NYSE: ENLC) and a 24 percent interest in the limited partner (NYSE: ENLK). In aggregate, the company’s ownership in EnLink has a market value of approximately $4 billion and is expected to generate cash distributions of approximately $270 million annually.

Low Cost Structure to Further Improve by Year End

Devon’s successful cost-reduction initiatives have achieved more than a $1 billion of annualized operating and general and administrative expenses (G&A) savings compared to peak levels in 2014. In the first quarter, Devon continued to effectively control costs with lease operating expenses (LOE) totaling $386 million or $7.62 per Boe. This result was in line with company guidance and was $58 million lower than the first quarter of 2016.

G&A expenses were also in line with expectations, amounting to $181 million in the quarter. Excluding costs associated with EnLink, Devon’s overhead expense for the quarter was $145 million. Devon’s first-quarter G&A expense included $27 million of non-cash stock compensation.

Importantly, the company’s low cost structure is expected to further improve on a per-unit basis in the second half of 2017. This per-unit improvement is driven by the combination of higher production rates from the company’s U.S. resource plays and relatively flat LOE costs, resulting from efficiency gains within its field operations.

Financial Strength Provides Significant Flexibility

Devon’s financial position remains exceptionally strong, with investment-grade credit ratings and excellent liquidity. The company exited the first quarter with $2.1 billion of cash on hand and, having made $2.5 billion of debt repayments in 2016, Devon has no significant debt maturities until mid-2021.

Further bolstering financial strength is the company’s attractive hedge position in 2017. Devon currently has more than 50 percent of its estimated oil and gas production protected for the remainder of 2017 and is in the process of accumulating additional hedges in 2018. This disciplined, risk-management program consists of systematic hedges added on a quarterly basis and discretionary hedges that take advantage of favorable market conditions.

Operating Cash Flow Expands 54 Percent

Devon’s reported net earnings totaled $565 million or $1.07 per diluted share in the first quarter. Adjusting for items securities analysts typically exclude from their published estimates, the company’s core earnings totaled $217 million or $0.41 per diluted share in the first quarter, exceeding consensus expectations.

The company’s profitability in the first quarter was attributable to strong production growth, higher commodity prices and an improved cost structure. These factors also strengthened Devon’s operating cash flow to $834 million, a 54 percent increase from the fourth quarter of 2016.

Multi-Year Growth Targets Firmly on Track

Based on the strong first-quarter operating performance, Devon is firmly on track to deliver on its previously announced U.S. oil production growth targets of 13 to 17 percent in 2017 (compared to the fourth quarter of 2016). This high-margin growth will be driven by Devon’s STACK and Delaware Basin assets, which are projected to deliver top-line production growth of greater than 30 percent in 2017.

To achieve these growth targets, the company expects to invest between $2.0 billion and $2.3 billion of E&P capital in 2017 (no change from prior guidance), with nearly 90 percent of the capital dedicated to U.S. resource plays. The company plans to steadily increase drilling activity throughout the year to as many as 20 operated rigs by year end.

Looking ahead to 2018, the operational momentum created by accelerated drilling activity in the STACK and Delaware Basin is expected to expand light-oil production in the U.S. by approximately 20 percent compared to 2017.

Second-Quarter Production Outlook

Detailed forward-looking guidance for the second quarter and full-year 2017 is provided later in the release. Of note, in the second quarter, Devon expects oil production to range from 230,000 to 240,000 barrels per day due to a planned turnaround at the company’s Jackfish 3 facility and the timing of completions and new well tie-ins within the U.S.

The reduced completion and tie-in activity in the second quarter within the U.S. is expected to be driven entirely by the company’s Eagle Ford asset. In the first quarter, due to efficiency gains, the company and its partner brought online more wells in the Eagle Ford than planned. In spite of this timing difference, the company’s capital and production plan is on track for both the first half of 2017 and the full year.

Non-GAAP Reconciliations

Pursuant to regulatory disclosure requirements, Devon is required to reconcile non-GAAP (generally accepted accounting principles) financial measures to the related GAAP information. Core earnings and core earnings per share referenced within the commentary of this release are non-GAAP financial measures. Reconciliations of these and other non-GAAP measures are provided within the tables of this release.

Conference Call Webcast and Supplemental Earnings Materials

Please note that as soon as practicable today, Devon will post an operations report to its website at www.devonenergy.com. The company’s first-quarter conference call will be held at 10 a.m. Central (11 a.m. Eastern) on Wednesday, May 3, 2017, and will serve primarily as a forum for analyst and investor questions and answers.

Forward-Looking Statements

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission (SEC). Such statements include those concerning strategic plans, expectations and objectives for future operations, and are often identified by use of the words “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 exploration and development activities; risks related to our hedging activities; counterparty credit risks; regulatory restrictions, compliance costs and other risks relating to governmental regulation, including with respect to environmental matters; risks relating to our indebtedness; our ability to successfully complete mergers, acquisitions and divestitures; the extent to which insurance covers any losses we may experience; our limited control over third parties who operate our oil and gas properties; midstream capacity constraints and potential interruptions in production; competition for leases, materials, people and capital; cyberattacks targeting our systems and infrastructure; 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 press release are made as of the date of this press release, even if subsequently made available by Devon on its website or otherwise. Devon does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves. This release may contain certain terms, such as resource potential, 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 a balanced portfolio. The company is the second-largest oil producer among North American onshore independents. For more information, please visit www.devonenergy.com.

 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION

 
 
      Quarter Ended
PRODUCTION NET OF ROYALTIES March 31,
2017       2016
Oil and bitumen (MBbls/d)
U. S. - Core 123 142
Heavy Oil 138 126
Retained assets 261 268
Divested assets 17
Total 261 285
Natural gas liquids (MBbls/d)
U. S. - Core 98 115
Divested assets 22
Total 98 137
Gas (MMcf/d)
U. S. - Core 1,205 1,351
Heavy Oil 23 15
Retained assets 1,228 1,366
Divested assets 215
Total 1,228 1,581
Oil equivalent (MBoe/d)
U. S. - Core 422 482
Heavy Oil 141 129
Retained assets 563 611
Divested assets 74
Total 563 685
 
KEY OPERATING STATISTICS BY REGION
 
      Quarter Ended March 31, 2017
Avg. Production       Gross Wells       Operated Rigs at
(MBoe/d) Drilled March 31, 2017
STACK 95 61 7
Delaware Basin 54 12 4
Eagle Ford (1) 83 39 2
Heavy Oil 141 39 1
Barnett Shale 158
Rockies Oil 17 7 1
Other assets 15 3
Total 563 161 15
 
1) Includes partner rig.
 
 
PRODUCTION TREND       2016       2017
Quarter 1       Quarter 2       Quarter 3       Quarter 4 Quarter 1
Oil and bitumen (MBbls/d)
STACK 15 19 21 19 21
Delaware Basin 38 36 31 29 30
Eagle Ford 59 41 33 34 48
Heavy Oil 126 121 137 139 138
Barnett Shale 1 1 1 1 1
Rockies Oil 17 15 11 11 13
Other assets 12 11 11 11 10
Retained assets 268 244 245 244 261
Divested assets 17 15 6
Total 285 259 251 244 261
Natural gas liquids (MBbls/d)
STACK 30 30 23 21 26
Delaware Basin 12 13 12 10 10
Eagle Ford 24 17 13 11 15
Barnett Shale 46 46 44 43 43
Rockies Oil 1 1 1 1 1
Other assets 2 3 3 4 3
Retained assets 115 110 96 90 98
Divested assets 22 21 8
Total 137 131 104 90 98
Gas (MMcf/d)
STACK 306 289 292 284 287
Delaware Basin 84 99 92 89 88
Eagle Ford 144 103 85 90 119
Heavy Oil 15 28 18 18 23
Barnett Shale 768 757 730 710 683
Rockies Oil 32 31 19 17 15
Other assets 17 14 13 13 13
Retained assets 1,366 1,321 1,249 1,221 1,228
Divested assets 215 206 75
Total 1,581 1,527 1,324 1,221 1,228
Oil equivalent (MBoe/d)
STACK 96 97 92 88 95
Delaware Basin 63 65 59 54 54
Eagle Ford 107 76 61 60 83
Heavy Oil 129 126 140 141 141
Barnett Shale 175 173 166 163 158
Rockies Oil 23 21 16 15 17
Other assets 18 16 16 16 15
Retained assets 611 574 550 537 563
Divested assets 74 70 27
Total 685 644 577 537 563
 
 
BENCHMARK PRICES                      
(average prices) Quarter 1
2017 2016
Oil ($/Bbl) - West Texas Intermediate (Cushing) $ 52.00 $ 33.66
Natural Gas ($/Mcf) - Henry Hub $ 3.32 $ 2.09
 
REALIZED PRICES Quarter Ended March 31, 2017

Oil/Bitumen

NGL Gas Total
(Per Bbl) (Per Bbl) (Per Mcf) (Per Boe)
United States $ 49.65 $ 15.46 $ 2.68 $ 25.86
Canada $ 26.30   N/M   N/M $ 25.73
Realized price without hedges $ 37.33 $ 15.46 $ 2.68 $ 25.82
Cash settlements $ 0.50 $ $ (0.03 ) $ 0.15
Realized price, including cash settlements $ 37.83 $ 15.46 $ 2.65 $ 25.97
 
Quarter Ended March 31, 2016

Oil/Bitumen

NGL Gas Total
(Per Bbl) (Per Bbl) (Per Mcf) (Per Boe)
United States $ 28.74 $ 6.84 $ 1.53 $ 14.22
Canada $ 9.18   N/M   N/M $ 8.95
Realized price without hedges $ 20.06 $ 6.84 $ 1.53 $ 13.23
Cash settlements $ $ $ 0.13 $ 0.30
Realized price, including cash settlements $ 20.06 $ 6.84 $ 1.66 $ 13.53
 
 
CONSOLIDATED STATEMENTS OF EARNINGS            
(in millions, except per share amounts) Quarter Ended
March 31,
  2017     2016  
Oil, gas and NGL sales $ 1,309 $ 825
Oil, gas and NGL derivatives 232 33
Marketing and midstream revenues 2,010 1,268
Asset dispositions and other   (4 )    
Total revenues and other   3,547     2,126  
Lease operating expenses 386 444
Marketing and midstream operating expenses 1,803 1,066
General and administrative expenses 181 194
Production and property taxes 85 78
Depreciation, depletion and amortization 381 542
Asset impairments 7 3,035
Restructuring and transaction costs 247
Other operating items   (2 )   20  
Total operating expenses   2,841     5,626  
Operating income (loss) 706 (3,500 )
Net financing costs 127 164
Other nonoperating items   (19 )   21  
Earnings (loss) before income taxes 598 (3,685 )
Income tax expense (benefit)   19     (217 )
Net earnings (loss) 579 (3,468 )
Net earnings (loss) attributable to noncontrolling interests   14     (412 )
Net earnings (loss) attributable to Devon $ 565   $ (3,056 )
Net earnings (loss) per share attributable to Devon:
Basic $ 1.08 $ (6.44 )
Diluted $ 1.07 $ (6.44 )
 
Weighted average common shares outstanding:
Basic 525 479
Diluted 528 479
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS            
(in millions)
Quarter Ended
March 31,
  2017     2016  
Cash flows from operating activities:
Net earnings (loss) $ 579 $ (3,468 )

Adjustments to reconcile net earnings (loss) to net cash from operating activities:

Depreciation, depletion and amortization 381 542
Asset impairments 7 3,035
Gains and losses on asset sales 4
Deferred income tax benefit (1 ) (207 )
Commodity derivatives (232 ) (33 )
Cash settlements on commodity derivatives 8 19
Other derivatives and financial instruments (9 ) 227
Cash settlements on other derivatives and financial instruments (2 ) (123 )
Asset retirement obligation accretion 17 19
Amortization of stock-based compensation 46 108
Other (194 )
Net change in working capital 15 214
Change in long-term other assets 1 53
Change in long-term other liabilities   20     (27 )
Net cash from operating activities   834     165  
Cash flows from investing activities:
Capital expenditures (747 ) (749 )
Acquisitions of property, equipment and businesses (20 ) (1,627 )
Proceeds from sale of investment 190
Divestitures of property and equipment 38 18
Other   (3 )   (1 )
Net cash from investing activities   (542 )   (2,359 )
Cash flows from financing activities:
Borrowings of long-term debt, net of issuance costs 813 396
Repayments of long-term debt (587 ) (259 )
Payment of installment payable (250 )
Net short-term debt repayments (626 )
Issuance of common stock 1,469
Issuance of subsidiary units 55 727
Dividends paid on common stock (32 ) (125 )
Contributions from noncontrolling interests 21 3
Distributions to noncontrolling interests (81 ) (73 )
Taxes for share-based compensation (61 ) (18 )
Other   (2 )   (1 )
Net cash from financing activities   (124 )   1,493  
Effect of exchange rate changes on cash   (8 )   26  
Net change in cash and cash equivalents 160 (675 )
Cash and cash equivalents at beginning of period   1,959     2,310  
Cash and cash equivalents at end of period $ 2,119   $ 1,635  
           
 
CONSOLIDATED BALANCE SHEETS
(in millions) March 31, December 31,
  2017     2016  
Current assets:
Cash and cash equivalents $ 2,119 $ 1,959
Accounts receivable 1,320 1,356
Assets held for sale 193
Other current assets   336     264  
Total current assets   3,775     3,772  
Property and equipment, at cost:
Oil and gas, based on full cost accounting:
Subject to amortization 76,421 75,648
Not subject to amortization   3,096     3,437  
Total oil and gas 79,517 79,085
Midstream and other   10,701     10,455  
Total property and equipment, at cost 90,218 89,540
Less accumulated depreciation, depletion and amortization   (73,797 )   (73,350 )
Property and equipment, net   16,421     16,190  
Goodwill 3,964 3,964
Other long-term assets   1,974     1,987  
Total assets $ 26,134   $ 25,913  
 
Current liabilities:
Accounts payable $ 638 $ 642
Revenues and royalties payable 991 908
Other current liabilities   841     1,066  
Total current liabilities   2,470     2,616  
Long-term debt 10,381 10,154
Asset retirement obligations 1,067 1,226
Other long-term liabilities 643 894
Deferred income taxes 651 648
Stockholders’ equity:
Common stock 53 52
Additional paid-in capital 7,207 7,237
Accumulated deficit (1,081 ) (1,646 )
Accumulated other comprehensive earnings   287     284  
Total stockholders’ equity attributable to Devon 6,466 5,927
Noncontrolling interests   4,456     4,448  
Total stockholders’ equity   10,922     10,375  
Total liabilities and stockholders’ equity $ 26,134   $ 25,913  
Common shares outstanding 526 523
                       
 
CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions)
Quarter Ended March 31, 2017

Devon U.S.
& Canada

EnLink Eliminations Total
Oil, gas and NGL sales $ 1,309 $ $ $ 1,309
Oil, gas and NGL derivatives 232 232
Marketing and midstream revenues 859 1,322 (171 ) 2,010
Asset dispositions and other   1     (5 )       (4 )
Total revenues and other   2,401     1,317     (171 )   3,547  
Lease operating expenses 386 386
Marketing and midstream operating expenses 879 1,095 (171 ) 1,803
General and administrative expenses 145 36 181
Production and property taxes 74 11 85
Depreciation, depletion and amortization 253 128 381
Asset impairments 7 7
Other operating items   15     (17 )       (2 )
Total operating expenses   1,752     1,260     (171 )   2,841  
Operating income 649 57 706
Net financing costs 82 45 127
Other nonoperating items   (19 )           (19 )
Earnings before income taxes 586 12 598
Income tax expense   16     3         19  
Net earnings 570 9 579
Net earnings attributable to noncontrolling interests       14         14  
Net earnings (loss) attributable to Devon $ 570   $ (5 ) $   $ 565  
     
 
OTHER KEY STATISTICS
(in millions) Quarter Ended March 31, 2017

Devon U.S.
& Canada

      EnLink       Eliminations       Total
Cash flow statement related items:
Operating cash flow $ 657 $ 177 $ $ 834
Proceeds from sale of investment $ $ 190 $ $ 190
Capital expenditures $ (491 ) $ (256 ) $ $ (747 )
Payment of installment payable $ $ (250 ) $ $ (250 )
Debt activity, net $ $ 226 $ $ 226
EnLink distributions received (paid) $ 66 $ (147 ) $ $ (81 )
Issuance of subsidiary units $ $ 55 $

$ 55
 
Balance sheet statement items:
Net debt (1) $ 4,756 $ 3,506 $

$ 8,262
(1)   Net debt is a non-GAAP measure. For a reconciliation of the comparable GAAP measure, see "Non-GAAP Financial Measures" later in this release.
     
 
CAPITAL EXPENDITURES
(in millions)  
Quarter Ended March 31, 2017
Exploration and development capital $ 423
Land and other acquisitions   20
Exploration and production (E&P) capital 443
Capitalized G&A and interest 76
Other   14
Devon capital expenditures (1) $ 533
(1)   Excludes $248 million attributable to EnLink for the first quarter of 2017.
 
 

NON-GAAP FINANCIAL MEASURES

This press release includes non-GAAP financial measures. These non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. Below is additional disclosure regarding each of the non-GAAP measures used in this press release, including reconciliations to their most directly comparable GAAP measure.

CORE EARNINGS

Devon’s reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company’s financial results. Accordingly, the company also uses the measures of core earnings and core earnings per share attributable to Devon. Devon believes these non-GAAP measures facilitate comparisons of its performance to earnings estimates published by securities analysts. Devon also believes these non-GAAP measures can facilitate comparisons of its performance between periods and to the performance of its peers. The following table summarizes the effects of these items on first-quarter 2017 earnings.

(in millions, except per share amounts)       Quarter Ended March 31, 2017
Before-tax       After-tax      

After
Noncontrolling
Interests

      Per Share
Earnings attributable to Devon (GAAP) $ 598 $ 579 $ 565 $ 1.07
Adjustments:
Fair value changes in financial instruments and foreign currency (250 ) (164 ) (161 ) (0.32 )
Deferred tax asset valuation allowance (192 ) (192 ) (0.36 )
Gains and losses on asset sales 4 4 2 0.01
Asset impairments   7     6     3     0.01  
Core earnings attributable to Devon (Non-GAAP) $ 359   $ 233   $ 217   $ 0.41  
 

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)       March 31, 2017
Devon U.S. & Canada       EnLink       Devon Consolidated
Total debt (GAAP) $ 6,860 $ 3,521 $ 10,381
Less cash and cash equivalents   (2,104 )   (15 )   (2,119 )
Net debt (Non-GAAP) $ 4,756   $ 3,506   $ 8,262  
 
 

DEVON ENERGY CORPORATION

FORWARD LOOKING GUIDANCE

 
 
           
PRODUCTION GUIDANCE Quarter 2 Full Year
Low       High Low       High
Oil and bitumen (MBbls/d)
U.S. 110 115 119 123
Heavy Oil 120 125 130 135
Total 230 240 249 258
Natural gas liquids (MBbls/d)
Total 97 102 95 100
Gas (MMcf/d)
U.S. 1,140 1,170 1,160 1,200
Heavy Oil 14 18 14 16
Total

1,154

1,188

1,174 1,216
Oil equivalent (MBoe/d)
U.S. 397 412 407 423
Heavy Oil 122 128 132 138
Total 519 540 539 561
           
 
PRICE REALIZATIONS GUIDANCE Quarter 2 Full Year
Low       High Low       High
Oil and bitumen - % of WTI
U.S. 88 % 98 % 88 % 98 %
Canada 57 % 67 % 50 % 60 %
NGL - realized price $ 12 $ 15 $ 13 $ 16
Natural gas - % of Henry Hub 75 % 85 % 76 % 86 %
           
 
OTHER GUIDANCE ITEMS Quarter 2 Full Year
($ millions, except %) Low       High Low       High
Marketing & midstream operating profit $ 215 $ 235 $ 900 $ 950
Lease operating expenses $ 370 $ 420 $ 1,500 $ 1,600
General & administrative expenses (1) $

185

$

205

$ 630 $ 690
Production and property taxes $ 70 $ 80 $ 275 $ 325
Depreciation, depletion and amortization $ 385 $ 435 $ 1,650 $ 1,750
Other operating items $ 10 $ 20 $ 70 $ 80
Net financing costs $ 125 $ 135 $ 485 $ 535
Current income tax rate 5.0 % 15.0 % 5.0 % 15.0 %
Deferred income tax rate   20.0 %   30.0 %   20.0 %   30.0 %

Total income tax rate

  25.0 %   45.0 %   25.0 %   45.0 %
 
Net earnings attributable to noncontrolling interests $ 10 $ 20 $ 50 $ 100

(1)

 

Includes $20 million of non-recurring charges primarily related to severance.

           
 
CAPITAL EXPENDITURES GUIDANCE Quarter 2 Full Year
(in millions) Low       High Low       High
Exploration and development $ 525 $ 575 $ 2,000 $ 2,300
Capitalized G&A 55 65 200 250
Capitalized interest 15 20 60 90
Other   5   15   25   50
Devon capital expenditures (1) $ 600 $ 675 $ 2,285 $ 2,690
(1)   Excludes capital expenditures related to EnLink.
 
                             
 
COMMODITY HEDGES
 
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)

Q2-Q4 2017 74,615 $ 54.34 64,342 $ 45.63 $ 57.96
Q1-Q4 2018 6,592 $ 53.40 15,921 $ 46.88 $ 56.88
   
 
Oil Basis Swaps
Period Index       Volume (Bbls/d)      

Weighted Average Differential to
WTI ($/Bbl)

Q2-Q4 2017 Western Canadian Select 75,622 $ (14.71 )
Q2-Q4 2017 Midland Sweet 20,000 $ (0.41 )
     
 
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)

Q2-Q4 2017 206,600 $ 3.19 424,800 $ 2.99 $ 3.39
Q1-Q4 2018 78,836 $ 3.18 41,918 $ 3.31 $ 3.65
 

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 April 25, 2017.

Devon Energy Corporation
Investor Contacts
Scott Coody, 405-552-4735
Chris Carr, 405-228-2496
Media Contact
John Porretto, 405-228-7506


Source: Business Wire (May 2, 2017 - 4:07 PM EDT)

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