OKLAHOMA CITY, Feb. 6 /PRNewswire-FirstCall/ -- Devon Energy
Corporation (NYSE: DVN) today reported record net earnings of $3.6 billion
for the year ended December 31, 2007, a 27 percent increase compared with
full-year 2006 earnings. Earnings per share in 2007 increased 26 percent to
a record $8.08 per common share ($8.00 per diluted common share). In the
year ended December 31, 2006, Devon earned $2.8 billion, or $6.42 per
common share ($6.34 per diluted common share).
For the quarter ended December 31, 2007, Devon earned a record $1.3
billion, or $2.96 per common share ($2.92 per diluted common share). This
was 126 percent greater than reported net earnings of $582 million or,
$1.31 per common share ($1.29 per diluted common share) in the fourth
quarter of 2006.
"Devon's 2007 results were exceptional, both financially and
operationally," said J. Larry Nichols, chairman and chief executive
officer. "We set earnings and cash flow records, increased production by 12
percent and drilled 2,440 wells with a 98 percent success rate. Our 2007
drilling program added 390 million barrels of proved reserves at very
competitive finding and development costs setting the stage for continued
production growth in the future. In 2008 we expect to deliver similar
organic growth of reserves and production."
Securities analysts typically exclude certain items from their
published estimates. These items include non-cash charges, unrealized gains
and other items discussed in detail later in this news release. In
aggregate, these items increased Devon's fourth-quarter 2007 earnings by
$342 million, or 76 cents per diluted share.
Drill-bit Success Drives Reserves to a Record 2.5 Billion Boe
Capital and Reserve Summary
(detailed tables and non-GAAP reconciliations
are also provided in this release) Year Ended
December 31,
2007 2006
Drill-bit Capital (in millions) $5,812 $5,035
Reserve Data (MMBoe)
Discoveries and extensions 315 433
Revisions other than price 75 (8)
Drill-bit and performance reserve additions 390 425
Devon's estimated proved reserves attributable to continuing operations
reached a record 2,496 million oil-equivalent barrels (Boe) at December 31,
2007. This was nine percent greater than year-end 2006 estimated proved
reserves from continuing operations. Devon added 437 million Boe of proved
reserves from all sources. Annual oil and gas production from continuing
operations of 224 million Boe in 2007 was 12 percent more than in 2006. The
company's reserve life index (proved reserves divided by annual production)
is more than 11 years.
The company added 390 million Boe through successful drilling
(discoveries, extensions and performance revisions) in 2007. Revisions
related to changes in year-end oil and gas prices increased 2007 proved
reserves by 44 million Boe.
Proved developed reserves were 1,874 million Boe at December 31, 2007.
This represented 75 percent of total proved reserves. Year-end proved
reserves included 677 million barrels of crude oil, nine trillion cubic
feet of natural gas and 321 million barrels of natural gas liquids.
New Gulf of Mexico Field and Barnett Shale Growth Led 2007 Operating
Achievements
Devon drilled 2,440 wells in 2007, with a 98 percent rate of success.
Following are operational highlights from the past year:
-- In the third quarter of 2007, Devon commenced production from the
Merganser field in the deepwater Gulf of Mexico. Combined initial
production from the two Merganser natural gas wells was about
150 million cubic feet per day. The company has a 50 percent working
interest in the Merganser field, which produces into the Independence
Hub.
-- In the Barnett Shale in north Texas, Devon retained its position as the
largest producer and largest lease holder. The company increased its
net production from the Barnett by 33 percent in 2007, exiting the year
at 950 million cubic feet of gas equivalent per day. The company holds
approximately 727,000 net acres of Barnett Shale leases.
-- The company drilled 539 wells in the Barnett Shale in 2007. This
included Devon's 1,000th horizontal well. Devon has interests in nearly
3,200 producing wells in the Barnett Shale.
-- In Canada in 2007, Devon completed construction at the Jackfish project
in the Alberta oil sands and commenced steam injection. Oil production
from 100 percent-owned Jackfish is expected to ramp up throughout 2008
toward a peak production target of 35,000 barrels per day.
-- Also in Canada, the company increased production in 2007 from the
Lloydminster area by 40 percent to approximately 33,500 Boe per day.
Devon drilled 429 wells at Lloydminster in 2007.
-- Also in the third quarter, Devon began producing oil from the first of
ten planned wells in the Polvo field offshore Brazil. Polvo, located in
the Campos basin, was discovered in 2004 and is Devon's first operated
development project in Brazil. Devon has a 60 percent working interest
in Polvo.
-- The company commenced drilling the first Devon-operated exploratory
well in the Lower Tertiary trend of the Gulf of Mexico in 2007. The
Chuck exploratory well is currently drilling below 30,000 feet and
nearing its objective. Devon has a 39.5 percent working interest in the
Chuck prospect.
-- Devon made progress toward commercial development of four previous
discoveries in the Lower Tertiary trend in 2007. This included
sanctioning of phase one of the Cascade project and delineation
drilling on the Jack, St. Malo and Kaskida prospects.
African Divestiture Update
In October 2007, Devon completed the sale of its operations in Egypt
for an adjusted sales price of $341 million as of the closing date. In
November 2007, the company announced an agreement to sell its operations in
Gabon for $205.5 million. Devon is in the process of divesting its
remaining assets and terminating all of its operations in West Africa. In
accordance with accounting standards, Devon has reclassified the assets,
liabilities and results of its operations in Egypt and West Africa as
discontinued operations for all accounting periods presented in this
release. Although revenues and expenses for prior periods were
reclassified, there was no impact upon previously reported net earnings.
Included with the financial information that follows is a table of
revenues, expenses and production categories and the amounts reclassified
as discontinued operations for each period presented.
Oil and Gas Sales Increase 19 Percent
Sales from continuing operations of oil, gas and natural gas liquids
increased 19 percent to $9.6 billion in the year ended December 31, 2007.
This compares with sales for the year ended December 31, 2006, of $8.1
billion. The combined effects of increased oil and gas production and
higher realized oil and natural gas liquids prices led to the increase in
sales.
Combined oil, gas and natural gas liquids production from continuing
operations averaged 614 thousand Boe per day in 2007. This was 12 percent
more than Devon's 2006 average daily production from continuing operations
of 549 thousand Boe per day. The increase in 2007 production reflects
growth in all three of Devon's geographic producing areas: the United
States, Canada and international.
Marketing and midstream operating profit was $509 million in 2007. This
compares with marketing and midstream operating profit of $436 million in
2006. The 17 percent increase was largely attributable to higher natural
gas processing margins.
Cash Flow Jumps 21 Percent to Top $7 Billion
Cash flow before balance sheet changes in 2007 increased 21 percent
compared with 2006, to a record $7.3 billion. Utilizing cash flow and
borrowings under the company's commercial paper and credit facilities,
Devon funded $6.5 billion of capital expenditures, repurchased $326 million
of common stock, paid $259 million in dividends and retired $567 million of
long-term debt. The company ended 2007 with cash and short-term investments
of $1.7 billion and a net debt to adjusted capitalization ratio of just 18
percent. Reconciliations of cash flow before balance sheet changes, net
debt and adjusted capitalization, which are non-GAAP measures, are provided
in this release.
Items Excluded from Published Earnings Estimates
Devon's reported net earnings include items of income and expense that
are typically excluded by securities analysts in their published estimates
of the company's financial results. These items and their effects upon
reported earnings for the full year and fourth quarter of 2007 were as
follows:
-- A change in fair value of derivative financial instruments increased
full-year earnings by $34 million pre-tax ($22 million after tax) and
increased fourth-quarter earnings by $3 million pre-tax ($2 million
after tax).
-- An unrealized loss on natural gas derivative instruments decreased
full-year earnings by $25 million pre-tax ($16 million after tax). An
unrealized gain on natural gas derivative instruments increased
fourth-quarter earnings by $4 million pre-tax ($3 million after tax).
-- A reduction in Canadian statutory income tax rates increased full-year
after-tax earnings by $261 million and increased fourth-quarter
after-tax earnings by $231 million.
-- A gain on the sale of the Egyptian operations increased full-year and
fourth-quarter pre-tax and after-tax earnings by $90 million.
-- A reduction in the carrying value of assets held for sale in West
Africa decreased full-year earnings by $64 million pre-tax ($13 million
after tax).
-- The decisions to exit Egypt and West Africa generated financial
benefits that increased full-year earnings by $179 million pre-tax
($92 million after tax) and increased fourth-quarter earnings by
$33 million pre-tax ($16 million after tax).
The following tables summarize the full-year and fourth-quarter effects
of these items on 2007 earnings and income taxes.
Summary of Items Typically Excluded by Securities Analysts -
Full Year 2007
(in millions) Cash Flow
Pretax Income Tax Effect After-tax Before Balance
Earnings ----------------------- Earnings Sheet Changes
Effect Current Deferred Total Effect Effect
Change in fair
value of
financial
instruments $34 - 12 12 22 -
Unrealized loss
on natural gas
derivative
instruments (25) - (9) (9) (16) -
Change in
Canadian
income tax
rate - - (261) (261) 261 -
Gain on sale of
Egyptian
operations 90 - - - 90 -
Reduction of the
carrying value
in West Africa (64) - (51) (51) (13) -
Financial benefits
of decision to
exit Africa 179 - 87 87 92 -
Totals $214 - (222) (222) 436 -
In aggregate, these items increased full-year 2007 net earnings by $436
million, or 98 cents per common share (97 cents per diluted share).
Summary of Items Typically Excluded by Securities Analysts -
Fourth Quarter 2007
(in millions) Cash Flow
Pretax Income Tax Effect After-tax Before Balance
Earnings ----------------------- Earnings Sheet Changes
Effect Current Deferred Total Effect Effect
Change in fair
value of
financial
instruments $3 - 1 1 2 -
Unrealized gain
on natural gas
derivative
instruments 4 - 1 1 3 -
Change in
Canadian income
tax rate - - (231) (231) 231 -
Gain on sale of
Egyptian
operations 90 - - - 90 -
Financial
benefits of
decision to
exit Africa 33 - 17 17 16 -
Totals $130 - (212) (212) 342 -
In aggregate, these items increased fourth-quarter 2007 net earnings by
$342 million, or 77 cents per common share (76 cents per diluted share).
Conference Call to be Webcast Today
Devon will discuss its 2007 financial and operating results in a
conference call webcast today. The webcast will begin at 10 a.m. Central
Time (11 a.m. Eastern Time). The webcast may be accessed from Devon's
internet home page at http://www.devonenergy.com.
This press release includes "forward-looking statements" as defined by
the Securities and Exchange Commission. Such statements are those
concerning strategic plans, expectations and objectives for future
operations. All statements, other than statements of historical facts,
included in this press release that address activities, events or
developments that the company expects, believes or anticipates will or may
occur in the future are forward-looking statements. Such statements are
subject to a number of assumptions, risks and uncertainties, many of which
are beyond the control of the company. Statements regarding future drilling
and production are subject to all of the risks and uncertainties normally
incident to the exploration for and development and production of oil and
gas. These risks include, but are not limited to, inflation or lack of
availability of goods and services, environmental risks, drilling risks and
regulatory changes. Investors are cautioned that any such statements are
not guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements.
The United States Securities and Exchange Commission permits oil and
gas companies, in their filings with the SEC, to disclose only proved
reserves that a company has demonstrated by actual production or conclusive
formation tests to be economically and legally producible under existing
economic and operating conditions. This release may contain certain terms,
such as resource potential, reserve potential, probable reserves, possible
reserves and exploration target size. The SEC guidelines strictly prohibit
us from including these terms in filings with the SEC. U.S. investors are
urged to consider closely the disclosure in our Form 10-K, File No.
001-32318, available from us at Devon Energy Corporation, Attn. Investor
Relations, 20 North Broadway, Oklahoma City, OK 73102. You can also obtain
this form from the SEC by calling 1-800-SEC-0330.
Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration and production. Devon is the
largest U.S.-based independent oil and gas producer and is included in the
S&P 500 Index. For more information about Devon, please visit our website
at http://www.devonenergy.com.
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION (net of royalties) Year Ended Quarter Ended
All periods exclude discontinued December 31, December 31,
operations 2007 2006 2007 2006
Total Period Production
Natural Gas (Bcf)
U.S. Onshore 557.9 487.5 150.1 129.5
U.S. Offshore 77.0 78.6 19.6 21.4
Total U.S. 634.9 566.1 169.7 150.9
Canada 226.0 240.4 55.8 57.8
International 1.7 1.8 0.5 0.3
Total Natural Gas 862.6 808.3 226.0 209.0
Oil (MMBbls)
U.S. Onshore 11.2 11.1 2.8 2.7
U.S. Offshore 7.8 8.5 1.9 2.0
Total U.S. 19.0 19.6 4.7 4.7
Canada 16.1 12.8 4.4 3.4
International 19.5 10.0 4.3 3.9
Total Oil 54.6 42.4 13.4 12.0
Natural Gas Liquids (MMBbls)
U.S. Onshore 20.6 18.1 5.7 4.7
U.S. Offshore 0.8 0.5 0.2 0.1
Total U.S. 21.4 18.6 5.9 4.8
Canada 4.3 4.7 1.1 1.1
International - - - -
Total Natural Gas Liquids 25.7 23.3 7.0 5.9
Oil Equivalent (MMBoe)
U.S. Onshore 124.8 110.5 33.5 29.1
U.S. Offshore 21.4 22.0 5.4 5.6
Total U.S. 146.2 132.5 38.9 34.7
Canada 58.1 57.6 14.8 14.2
International 19.8 10.3 4.4 4.0
Total Oil Equivalent 224.1 200.4 58.1 52.9
Average Daily Production
Natural Gas (MMcf)
U.S. Onshore 1,528.5 1,335.6 1,631.5 1,407.5
U.S. Offshore 210.9 215.4 213.4 232.8
Total U.S. 1,739.4 1,551.0 1,844.9 1,640.3
Canada 619.2 658.7 606.2 627.9
International 4.8 5.1 5.0 3.0
Total Natural Gas 2,363.4 2,214.8 2,456.1 2,271.2
Oil (MBbls)
U.S. Onshore 30.7 30.5 30.6 29.9
U.S. Offshore 21.3 23.1 20.8 21.2
Total U.S. 52.0 53.6 51.4 51.1
Canada 44.2 35.2 48.2 37.1
International 53.4 27.4 47.2 42.5
Total Oil 149.6 116.2 146.8 130.7
Natural Gas Liquids (MBbls)
U.S. Onshore 56.6 49.6 61.4 51.4
U.S. Offshore 2.1 1.4 2.0 1.2
Total U.S. 58.7 51.0 63.4 52.6
Canada 11.7 12.9 12.1 12.2
International - - - -
Total Natural Gas Liquids 70.4 63.9 75.5 64.8
Oil Equivalent (MBoe)
U.S. Onshore 342.0 302.7 363.9 315.9
U.S. Offshore 58.5 60.4 58.4 61.2
Total U.S. 400.5 363.1 422.3 377.1
Canada 159.1 157.9 161.3 153.9
International 54.2 28.2 48.0 43.0
Total Oil Equivalent 613.8 549.2 631.6 574.0
AVERAGE REALIZED PRICES Year Ended Quarter Ended
December 31, December 31,
2007 2006 2007 2006
Realized Prices
Natural Gas ($/Mcf)
U.S. Onshore $5.72 $5.90 $5.77 $5.59
U.S. Offshore $7.17 $7.24 $7.26 $6.72
Total U.S. $5.89 $6.09 $5.95 $5.75
Canada $6.24 $6.05 $6.49 $5.78
International $6.22 $6.05 $7.58 $4.41
Total Natural Gas $5.99 $6.08 $6.09 $5.76
Oil ($/Bbl)
U.S. Onshore $67.34 $60.70 $87.46 $54.50
U.S. Offshore $71.95 $64.24 $88.82 $57.35
Total U.S. $69.23 $62.23 $88.01 $55.68
Canada $49.80 $46.94 $54.54 $41.08
International $70.60 $61.35 $86.29 $57.85
Total Oil $63.98 $57.39 $76.46 $52.24
Natural Gas Liquids ($/Bbl)
U.S. Onshore $36.08 $29.26 $45.19 $27.57
U.S. Offshore $36.78 $35.43 $47.48 $28.38
Total U.S. $36.11 $29.42 $45.27 $27.59
Canada $46.07 $42.67 $56.64 $37.78
International $- $- $- $-
Total Natural Gas Liquids $37.76 $32.10 $47.08 $29.51
Oil Equivalent ($/Boe)
U.S. Onshore $37.57 $36.94 $40.86 $34.57
U.S. Offshore $53.30 $51.23 $59.81 $45.96
Total U.S. $39.87 $39.31 $43.48 $36.42
Canada $41.51 $39.21 $44.94 $36.45
International $70.11 $60.60 $85.59 $57.49
Total Oil Equivalent $42.96 $40.38 $47.05 $38.00
BENCHMARK PRICES Year Ended Quarter Ended
(average prices) December 31, December 31,
2007 2006 2007 2006
Benchmark Prices
Natural Gas ($/Mcf) - Henry Hub $6.86 $7.24 $6.97 $6.56
Oil ($/Bbl) - West Texas Intermediate
(Cushing) $72.39 $66.22 $90.92 $60.19
PRICE DIFFERENTIALS, EXCLUDING EFFECTS
OF HEDGES Year Ended Quarter Ended
(average floating price differentials December 31, December 31,
from benchmark prices) 2007 2006 2007 2006
Price Differentials
Natural Gas ($/Mcf)
U.S. Onshore $(1.16) $(1.41) $(1.27) $(1.21)
U.S. Offshore $0.31 $0.00 $0.29 $0.16
Total U.S. $(0.98) $(1.22) $(1.09) $(1.02)
Canada $(0.44) $(1.02) $(0.29) $(0.61)
International $(0.64) $(1.19) $0.61 $(2.15)
Total Natural Gas $(0.85) $(1.16) $(0.90) $(0.91)
Oil ($/Bbl)
U.S. Onshore $(5.05) $(5.52) $(3.46) $(5.69)
U.S. Offshore $(0.44) $(1.98) $(2.10) $(2.84)
Total U.S. $(3.16) $(3.99) $(2.91) $(4.51)
Canada $(22.59) $(19.28) $(36.38) $(19.11)
International $(1.79) $(4.87) $(4.63) $(2.34)
Total Oil $(8.41) $(8.83) $(14.46) $(7.95)
CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended Quarter Ended
(in millions, except per share data) December 31, December 31,
2007 2006 2007 2006
Revenues
Oil sales $3,493 $2,434 $1,032 $628
Gas sales 5,163 4,912 1,375 1,203
NGL sales 970 749 327 176
Marketing and midstream revenues 1,736 1,672 463 411
Total revenues 11,362 9,767 3,197 2,418
Expenses and other income, net
Lease operating expenses 1,828 1,425 502 389
Production taxes 340 341 85 80
Marketing and midstream operating
costs and expenses 1,227 1,236 315 312
Depreciation, depletion and
amortization of oil and gas
properties 2,655 2,058 718 578
Depreciation and amortization of
non-oil and gas properties 203 173 57 46
Accretion of asset retirement
obligation 74 47 19 12
General and administrative expenses 513 397 155 113
Interest expense 430 421 105 106
Change in fair value of financial
instruments (34) 178 (3) 97
Reduction of carrying value of oil
and gas properties - 36 - -
Other income, net (98) (115) (27) (29)
Total expenses and other income, net 7,138 6,197 1,926 1,704
Earnings from continuing operations
before income tax expense 4,224 3,570 1,271 714
Income tax expense
Current 500 528 41 57
Deferred 578 408 126 155
Total income tax expense 1,078 936 167 212
Earnings from continuing operations 3,146 2,634 1,104 502
Discontinued operations
Earnings from discontinued
operations before income tax
expense 696 464 254 127
Income tax expense 236 252 42 47
Earnings from discontinuing
operations 460 212 212 80
Net earnings 3,606 2,846 1,316 582
Preferred stock dividends 10 10 3 3
Net earnings applicable to common
stockholders $3,596 $2,836 $1,313 $579
Net earnings per weighted average
common shares outstanding
Basic $8.08 $6.42 $2.96 $1.31
Diluted $8.00 $6.34 $2.92 $1.29
Basic weighted average shares
outstanding 445 442 444 443
Diluted weighted average shares
outstanding 450 448 449 448
CONSOLIDATED BALANCE SHEETS Year Ended
(in millions) December 31,
2007 2006
Assets
Current assets
Cash and cash equivalents $1,364 $692
Short-term investments, at fair value 372 574
Accounts receivable 1,779 1,324
Deferred income taxes 44 102
Current assets held for sale 120 232
Other current assets 235 288
Total current assets 3,914 3,212
Property and equipment, at cost, based on
the full cost method of accounting for oil
and gas properties ($3,417 and $3,293
excluded from amortization in 2007 and
2006, respectively) 48,473 39,585
Less accumulated depreciation, depletion
and amortization 20,394 16,429
Net property and equipment 28,079 23,156
Investment in Chevron Corporation common
stock, at fair value 1,324 1,043
Goodwill 6,172 5,706
Assets held for sale 1,512 1,619
Other assets 455 327
Total Assets $41,456 $35,063
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable - trade $1,360 $1,154
Revenues and royalties due to others 578 522
Income taxes payable 97 82
Short-term debt 1,004 2,205
Accrued interest payable 109 114
Current portion of asset retirement
obligation 82 53
Current liabilities associated with
assets held for sale 145 173
Accrued expenses and other current
liabilities 282 342
Total current liabilities 3,657 4,645
Debentures exchangeable into shares of
Chevron Corporation common stock 641 727
Other long-term debt 6,283 4,841
Financial instruments, at fair value 488 302
Asset retirement obligation, at fair value 1,236 804
Liabilities associated with assets held for
sale 404 429
Other liabilities 699 583
Deferred income taxes 6,042 5,290
Stockholders' equity
Preferred stock 1 1
Common stock 44 44
Additional paid-in capital 6,743 6,840
Retained earnings 12,813 9,114
Accumulated other comprehensive income 2,405 1,444
Treasury stock - (1)
Total Stockholders' Equity 22,006 17,442
Total Liabilities & Stockholders'
Equity $41,456 $35,063
Common Shares Outstanding 444 444
CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended
(in millions) December 31,
2007 2006
Cash Flows From Operating Activities
Net earnings $3,606 $2,846
Earnings from discontinued operations, net
of tax (460) (212)
Adjustments to reconcile net earnings from
continuing operations to net cash
provided by operating activities:
Depreciation, depletion and amortization 2,858 2,231
Deferred income tax expense 578 408
Net gain on sales of non-oil and gas
property and equipment (1) (5)
Reduction of carrying value of oil and
gas properties - 36
Other noncash charges 177 269
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (329) 91
Other current assets (38) (33)
Long-term other assets (92) (58)
Increase (decrease) in:
Accounts payable 119 (175)
Income taxes payable (28) (245)
Other current liabilities (223) 80
Long-term other liabilities (5) 141
Cash provided by operating activities -
continuing operations 6,162 5,374
Cash provided by operating activities -
discontinued operations 489 619
Net cash provided by operating activities $6,651 $5,993
Cash Flows From Investing Activities
Proceeds from sales of property and
equipment 76 40
Capital expenditures, including
acquisitions of businesses (6,158) (7,346)
Purchases of short-term investments (934) (2,395)
Sales of short-term investments 1,136 2,501
Cash used in investing activities -
continuing operations (5,880) (7,200)
Cash provided by (used in) investing
activities - discontinued
operations 166 (249)
Net cash used in investing activities $(5,714) $(7,449)
Cash Flows From Financing Activities
Net senior credit facility borrowings,
net of issuance costs 1,450 -
Net commercial paper (repayments)
borrowings, net of issuance costs (804) 1,808
Principal payments on debt, including
current maturities (567) (862)
Proceeds from stock options exercises 91 73
Repurchase of common stock (326) (253)
Excess tax benefits related to
share-based compensation 44 36
Dividends paid on common stock (249) (199)
Dividends paid on preferred stock (10) (10)
Net cash (used in) provided by financing
activities $(371) $593
Effect of exchange rate changes on cash 51 13
Net increase (decrease) in cash and cash
equivalents 617 (850)
Cash and cash equivalents at beginning of
period (including assets held for sale) 756 1,606
Cash and cash equivalents at end of period
(including assets held for sale) $1,373 $756
Supplementary cash flow data:
Interest paid (net of capitalized interest) $406 $384
Income taxes paid (including assets held
for sale) $588 $960
RESERVE RECONCILIATION
Total Total U.S.
Oil Gas NGLs Total Oil Gas NGLs Total
(MMBbls)(Bcf)(MMBbls)(MMBoe) (MMBbls)(Bcf)(MMBbls)(MMBoe)
As of December
31, 2006:
Proved
developed 318 6,484 229 1,628 147 4,916 196 1,163
Proved
undeveloped 316 1,775 46 658 23 1,439 37 299
Total proved 634 8,259 275 2,286 170 6,355 233 1,462
Production (55) (863) (26) (224) (19) (635) (22) (146)
Discoveries and
extensions 56 1,272 47 315 9 1,133 45 242
Divestitures (1) (13) - (3) (1) (13) - (3)
Acquisitions 1 15 - 3 1 10 - 2
Revisions due
to prices 11 169 5 44 4 119 5 29
Revisions other
than price 31 155 20 75 6 174 21 56
As of December
31, 2007:
Proved
developed 391 7,255 274 1,874 148 5,743 244 1,349
Proved
undeveloped 286 1,739 47 622 22 1,400 38 293
Total Proved 677 8,994 321 2,496 170 7,143 282 1,642
U.S. Onshore U.S. Offshore
Oil Gas NGLs Total Oil Gas NGLs Total
(MMBbls)(Bcf)(MMBbls)(MMBoe) (MMBbls)(Bcf)(MMBbls)(MMBoe)
As of December
31, 2006:
Proved
developed 116 4,672 194 1,089 31 244 2 74
Proved
undeveloped 11 1,307 36 264 12 132 1 35
Total proved 127 5,979 230 1,353 43 376 3 109
Production (11) (558) (21) (124) (8) (77) (1) (22)
Discoveries and
extensions 8 1,055 45 228 1 78 - 14
Divestitures (1) (13) - (3) - - - -
Acquisitions 1 10 - 2 - - - -
Revisions due
to prices 4 117 5 28 - 2 - 1
Revisions other
than price 3 175 22 55 3 (1) (1) 1
As of December
31, 2007:
Proved
developed 122 5,547 243 1,290 26 196 1 59
Proved
undeveloped 9 1,218 38 249 13 182 - 44
Total Proved 131 6,765 281 1,539 39 378 1 103
Canada International
Oil Gas NGLs Total Oil Gas NGLs Total
(MMBbls)(Bcf)(MMBbls)(MMBoe) (MMBbls)(Bcf)(MMBbls)(MMBoe)
As of December
31, 2006:
Proved
developed 112 1,560 33 405 59 8 - 60
Proved
undeveloped 217 336 9 282 76 - - 77
Total proved 329 1,896 42 687 135 8 - 137
Production (16) (227) (4) (58) (20) (1) - (20)
Discoveries and
extensions 46 139 2 72 1 - - 1
Divestitures - - - - - - - -
Acquisitions - 5 - 1 - - - -
Revisions due
to prices 16 50 - 25 (9) - - (10)
Revisions
other than
price 13 (19) (1) 7 12 - - 12
As of December
31, 2007:
Proved
developed 195 1,506 30 476 48 6 - 49
Proved
undeveloped 193 338 9 258 71 1 - 71
Total Proved 388 1,844 39 734 119 7 - 120
COSTS INCURRED Total Total U.S.
(in millions) Year Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Property Acquisition Costs:
Total Proved $10 $1,113 $3 $1,066
Total Unproved $206 $1,481 $156 $1,366
Exploration and Development Costs $5,885 $4,916 $4,111 $3,105
Costs Incurred $6,101 $7,510 $4,270 $5,537
U.S. Onshore U.S. Offshore
Year Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Property Acquisition Costs:
Total Proved $3 $1,066 $- $-
Total Unproved $77 $1,311 $79 $55
Exploration and Development Costs $3,378 $2,479 $733 $626
Costs Incurred $3,458 $4,856 $812 $681
Canada International
Year Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Property Acquisition Costs:
Total Proved $7 $23 $- $24
Total Unproved $49 $70 $1 $45
Exploration and Development Costs $1,309 $1,461 $465 $350
Costs Incurred $1,365 $1,554 $466 $419
Devon capitalizes certain general and administrative expenses related
to property acquisition, exploration and development activities. These
capitalized expenses were $312 million and $243 million in 2007 and 2006,
respectively. Devon also capitalizes certain interest expenses related to
property development activities. These capitalized expenses were $65
million and $49 million in 2007 and 2006, respectively. These capitalized
general and administrative expenses and interest expenses are included in
the costs shown in the preceding tables.
DRILLING ACTIVITY Year Ended
December 31,
2007 2006
Exploration Wells Drilled
U.S. 35 79
Canada 122 139
International 1 4
Total 158 222
Exploration Wells Success Rate
U.S. 71% 82%
Canada 98% 99%
International 0% 0%
Total 91% 91%
Development Wells Drilled
U.S. 1,627 1,471
Canada 626 738
International 29 26
Total 2,282 2,235
Development Wells Success Rate
U.S. 98% 99%
Canada 100% 99%
International 100% 100%
Total 99% 99%
Total Wells Drilled
U.S. 1,662 1,550
Canada 748 877
International 30 30
Total 2,440 2,457
Total Wells Success Rate
U.S. 98% 98%
Canada 99% 99%
International 97% 87%
Total 98% 98%
COMPANY OPERATED RIGS Year Ended
December 31,
2007 2006
Number of Company Operated Rigs
Running
U.S. 72 58
Canada 14 11
International 1 1
Total 87 70
CAPITAL EXPENDITURES (in millions)
Quarter Ended December 31, 2007
U.S. U.S. Devon
Onshore Offshore Canada International Total
Capital Expenditures
Exploration $88 159 155 16 $418
Development 821 70 188 96 1,175
Exploration and
development capital $909 229 343 112 $1,593
Capitalized G&A 82
Capitalized interest 18
Discontinued operations 24
Property acquisitions (15)
Midstream capital 103
Other capital 61
Total Capital Expenditures $1,866
CAPITAL EXPENDITURES (in millions)
Year Ended December 31, 2007
U.S. U.S. Devon
Onshore Offshore Canada International Total
Capital Expenditures
Exploration $266 370 250 75 $961
Development 2,956 257 931 324 4,468
Exploration and
development capital $3,222 627 1,181 399 $5,429
Capitalized G&A 312
Capitalized interest 65
Discontinued operations 163
Property acquisitions 2
Midstream capital 376
Other capital 143
Total Capital Expenditures $6,490
PRODUCTION FROM DISCONTINUED
OPERATIONS Year Ended Quarter Ended
December 31, December 31,
2007 2006 2007 2006
Production from Discontinued
Operations
Oil (MMBbls) 10.9 14.6 2.0 3.9
Natural Gas (Bcf) 5.0 6.2 1.2 1.5
Total Oil Equivalent (MMBoe) 11.8 15.5 2.2 4.1
STATEMENTS OF DISCONTINUED OPERATIONS Year Ended Quarter Ended
(in millions) December 31, December 31,
2007 2006 2007 2006
Revenues
Oil sales $746 $889 $175 $213
Gas sales 15 20 3 4
Marketing and midstream revenues 20 20 7 5
Total revenues 781 929 185 222
Expenses and other income, net
Lease operating expenses 75 86 16 29
Marketing and midstream operating
costs and expenses 7 8 2 2
Depreciation, depletion and
amortization of oil and gas
properties 20 249 - 62
Depreciation, depletion and
amortization of non-oil and gas
properties - 4 - 2
Accretion of asset retirement
obligation 3 2 - -
Gain on sale of Egypt (90) - (90) -
Reduction of carrying value of oil
and gas properties 70 116 3 -
Total expenses and other income, net 85 465 (69) 95
Earnings before income tax expense 696 464 254 127
Income tax expense (benefit)
Current 230 305 46 43
Deferred 6 (53) (4) 4
Total income tax expense 236 252 42 47
Earnings from discontinued operations $460 $212 $212 $80
RESERVE DATA FOR DISCONTINUED OPERATIONS
Oil Gas NGLs Total
(MMBbls) (Bcf) (MMBbls) (MMboe)
As of December 31, 2006:
Proved developed 48 33 - 53
Proved undeveloped 34 63 - 45
Total proved 82 96 - 98
As of December 31, 2007:
Proved developed 30 28 - 35
Proved undeveloped 30 62 - 40
Total proved 60 90 - 75
NON-GAAP FINANCIAL MEASURES
The United States Securities and Exchange Commission has adopted
disclosure requirements for public companies such as Devon concerning
Non-GAAP financial measures. (GAAP refers to generally accepted accounting
principles.) The company must reconcile the Non-GAAP financial measure to
related GAAP information. Cash flow before balance sheet changes is a
Non-GAAP financial measure. Devon believes cash flow before balance sheet
changes is relevant because it is a measure of cash available to fund the
company's capital expenditures, dividends and to service its debt. Cash
flow before balance sheet changes is also used by certain securities
analysts as a measure of Devon's financial results.
RECONCILIATION TO GAAP INFORMATION Year Ended Quarter Ended
(in millions) December 31, December 31,
2007 2006 2007 2006
Net Cash Provided By Operating
Activities (GAAP) $6,651 $5,993 $1,542 $1,111
Changes in assets and
liabilities - continuing
operations 596 164 633 396
Changes in assets and
liabilities - discontinued
operations 71 (100) 94 (12)
Cash flow before balance sheet
changes (Non-GAAP) $7,318 $6,057 $2,269 $1,495
Devon believes that using net debt, defined as debt less cash,
short-term investments and the market value of Chevron Common stock, for
the calculation of "net debt to adjusted capitalization" provides a better
measure than using debt. Owned outright by Devon and included in Devon's
indebtedness are $641 million of debentures exchangeable into shares of
Chevron common stock. As of December 31, 2007, the market value of the
shares ($1.3 billion) exceeded the related debt obligation. Because cash
and short-term investments can repay indebtedness, netting cash and
short-term investments against debt provides a clearer picture of the
future demands on cash to repay debt. Various lenders, rating agencies and
securities analysts also use this methodology as a measure of Devon's
indebtedness.
RECONCILIATION TO GAAP INFORMATION Year Ended
(in millions) December 31,
2007 2006
Total debt (GAAP) $7,928 $7,773
Adjustments:
Cash and short-term investments (1,736) (1,266)
Market value of Chevron Corporation
common stock (1,324) (1,043)
Net Debt (Non-GAAP) $4,868 $5,464
Total debt $7,928 $7,773
Stockholders' equity 22,006 17,442
Total Capitalization (GAAP) $29,934 $25,215
Net debt $4,868 $5,464
Stockholders' equity 22,006 17,442
Adjusted Capitalization (Non-GAAP) $26,874 $22,906
Drill-bit capital is defined as costs incurred less proved acquisition
costs, unproved acquisition costs resulting from business combinations and
other significant similar transactions, and the net difference of accrued
future asset retirement costs less actual cash retirement expenditures.
Drill-bit capital is a non-GAAP measure. Devon believes drill-bit capital
is relevant because it provides additional insight into costs associated
with current year drilling, facilities and unproved acreage acquisitions
unrelated to business combinations and other significant similar
transactions. It should be noted that the actual costs of reserves added
through Devon's drilling program will differ, sometimes significantly, from
the direct comparison of capital spent and reserves added in any given
period due to the timing of capital expenditures and reserve bookings.
Certain securities analysts also use this methodology to measure Devon's
performance.
RECONCILIATION TO GAAP INFORMATION Total Total U.S.
(in millions) Year Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Costs Incurred (GAAP) $6,101 $7,510 $4,270 $5,537
Less:
Proved acquisition costs 10 1,113 3 1,066
Unproved portion of Chief acquisition (13) 1,185 (13) 1,185
Accrued asset retirement costs 365 236 223 78
Plus: Actual retirement expenditures 73 59 48 41
Drill-bit capital (Non-GAAP) $5,812 $5,035 $4,105 $3,249
U.S. Onshore U.S. Offshore
Year Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Costs Incurred (GAAP) $3,458 $4,856 $812 $681
Less:
Proved acquisition costs 3 1,066 - -
Unproved portion of Chief acquisition (13) 1,185 - -
Accrued asset retirement costs 96 36 127 42
Plus: Actual retirement expenditures 10 6 38 35
Drill-bit capital (Non-GAAP) $3,382 $2,575 $723 $674
Canada International
Year Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Costs Incurred (GAAP) $1,365 $1,554 $466 $419
Less:
Proved acquisition costs 7 23 - 24
Unproved portion of Chief acquisition - - - -
Accrued asset retirement costs 129 107 13 51
Plus: Actual retirement expenditures 25 18 - -
Drill-bit capital (Non-GAAP) $1,254 $1,442 $453 $344
SOURCE Devon Energy Corporation
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Related links:
http://www.devonenergy.com
http://www.prnewswire.com/comp/118040.html/
CONTACT:
Investors, Zack Hager, +1-405-552-4526, or
Media, Chip Minty, +1-405-228-8647, both of Devon Energy
Corporation
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