OKLAHOMA CITY, Aug. 1 /PRNewswire-FirstCall/ -- Devon Energy
Corporation (NYSE: DVN) today reported net earnings of $904 million, or
$2.02 per common share, ($2.00 per diluted common share), for the quarter
ended June 30, 2007. In comparison, second-quarter 2006 net earnings were
$859 million, or $1.94 per common share ($1.92 per diluted common share).
For the six months ended June 30, 2007, the company reported net
earnings of $1.6 billion, or $3.48 per common share ($3.44 per diluted
common share). For the six months ended June 30, 2006, Devon earned $1.6
billion, or $3.52 per common share ($3.47 per diluted common share).
Securities analysts typically exclude certain items from their
published estimates. In aggregate, these items increased Devon's
second-quarter 2007 net earnings by $59 million, or 13 cents per diluted
share. The adjusting items are discussed in detail later in this news
release.
Fifth Consecutive Quarterly Production Increase Exceeds Expectations
Devon increased oil and gas production from continuing operations in
the second quarter of 2007 to 56.2 million oil-equivalent barrels (Boe).
This is a 16 percent increase compared with second-quarter 2006 production.
Devon has increased oil and gas production from retained properties for
five consecutive quarters.
Second-quarter production benefited from better than expected
performance from several core properties including the Barnett Shale. Also
contributing to the production increase were minor favorable royalty
adjustments in Canada, the timing of oil sales in Azerbaijan and a delay in
scheduled downtime at the Panyu field in China.
Record Barnett Shale Production Leads Operating Highlights
Devon drilled 425 successful wells in the second quarter of 2007 with
an overall success rate of 98 percent. Following are highlights of
operations conducted in the second quarter of 2007.
-- Devon's share of natural gas production from the Barnett Shale field in
north Texas averaged 797 million cubic feet of gas equivalent per day
in the second quarter of 2007. This was a new quarterly production
record and 37 percent greater than the second quarter of 2006.
-- The Independence Hub in the Gulf of Mexico was readied for production
in the second quarter of 2007. The Merganser field, in which Devon has
a 50 percent working interest, is expected to begin producing natural
gas to the Independence Hub in August. Devon expects its net share of
production from Merganser to be about 50 million cubic feet of gas per
day.
-- In May, the Ocean Endeavor deepwater drilling rig, which is under
long-term contract to Devon, arrived in the Gulf of Mexico. In July,
the Ocean Endeavor commenced drilling an exploratory well on the Chuck
prospect. Chuck is the first well operated by Devon to target a Lower
Tertiary objective. Chuck, in 6,500 feet of water, is expected to reach
a total depth of about 31,500 feet in the fourth quarter of 2007. Devon
has a 39.5 percent working interest in the Chuck prospect.
-- In the offshore Polvo field in Brazil during the second quarter, Devon
began drilling and completion of the first of 10 planned oil wells.
Production from the first well commenced in late July. Additional wells
will be drilled in 2007 and 2008. The company expects its net share of
production from Polvo to reach about 26,000 barrels per day in 2008.
-- In Canada in the second quarter, Devon was finalizing construction and
commissioning of the Jackfish project in the Alberta oil sands. Steam
injection at Jackfish commenced on July 16, 2007. The 100 percent
Devon-owned project is sized to produce 35,000 barrels of oil per day
when fully operational in late 2008.
-- Also in Alberta, oil production from Devon's Iron River and Manatokan
fields helped the Lloydminster area average 33,000 barrels per day in
the second quarter of 2007. This was 48% higher than the same period a
year ago. Devon plans to drill nearly 400 wells in Lloydminster during
2007.
Increased Production Fuels 26 Percent Sales Growth
Combined oil, gas and natural gas liquids production from continuing
operations averaged 618 thousand Boe per day in the second quarter of 2007.
This was a 16 percent increase in daily production from continuing
operations compared with the second quarter in 2006. The production growth
was concentrated in onshore fields in the United States and in Azerbaijan.
Second-quarter combined daily production from continuing operations
increased five percent compared with the first quarter of 2007. Devon now
expects full-year 2007 production from continuing operations at the high
end of a forecast range of 219 to 221 million Boe. This represents about a
10 percent increase when compared with 2006 annual production.
Sales of oil, natural gas and natural gas liquids reached $2.5 billion
in the second quarter of 2007. This was a 26 percent increase compared with
the second quarter of 2006. The increase in sales was the result of greater
production and increased realized prices for natural gas and natural gas
liquids.
The average realized price for natural gas increased 11 percent in the
second quarter of 2007 to $6.50 per thousand cubic feet. This compares with
$5.85 per thousand cubic feet in the second quarter of 2006. The company's
average realized oil price decreased four percent to $60.01 per barrel in
the second quarter of 2007 compared with $62.38 per barrel in the year-ago
period. Devon's realized natural gas liquids price increased four percent
to $35.03 per barrel from $33.83 per barrel in the second quarter of 2006.
Second-quarter 2007 marketing and midstream operating profit was $119
million, compared with $105 million in the second quarter of 2006. The 13
percent increase resulted primarily from an increase in marketed gas
volumes and higher natural gas and natural gas liquids prices.
Cost Increases Supported by Greater Production and Revenues
Devon's expenses in all categories are higher in 2007 than in 2006, but
generally in line with expectations. The expense increases are being driven
by industry-wide upward cost pressure and higher production and activity
levels. Higher costs in the second quarter of 2007 were more than offset by
higher revenues, leading to an increase in net earnings.
African Results Reported as Discontinued Operations
Devon is in the process of divesting its assets and terminating
operations in Egypt and 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.
Cash Flow Before Balance Sheet Changes Reaches Record Levels
Cash flow before balance sheet changes reached a record total of $1.8
billion in the second quarter of 2007. The company used cash flow and cash
on hand to fund $1.4 billion of capital expenditures during the second
quarter.
At June 30, 2007, net debt had been reduced to 20 percent of adjusted
capitalization, compared with 26 percent at June 30, 2006. 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
second-quarter 2007 reported earnings were as follows:
-- A change in fair value of financial instruments increased
second-quarter 2007 earnings by $10 million pre-tax ($6 million after
tax).
-- An unrealized gain on natural gas derivative instruments increased
second-quarter 2007 earnings by $9 million pre-tax ($6 million after
tax).
-- A reduction in the Canadian statutory income tax rate increased
after-tax earnings by $30 million.
-- The decisions to exit Egypt and West Africa generated financial
benefits that increased second-quarter 2007 earnings by $57 million
pre-tax ($30 million after tax).
-- A reduction in the carrying value of assets held for sale in West
Africa reduced second-quarter earnings by $64 million pre-tax ($13
million after tax).
The following table summarizes the effects of these items on
second-quarter 2007 earnings and income taxes.
Summary of Items Typically Excluded by Securities Analysts -
Second Quarter 2007
(in millions)
Cash Flow
Before
After- Balance
Pretax tax Sheet
Earnings Income Tax Effect Earnings Changes
Effect Current Deferred Total Effect Effect
Change in fair value
of financial
instruments $10 - 4 4 6 -
Unrealized gain on
natural gas
derivatives 9 - 3 3 6 -
Change in Canadian
income tax rate - - (30) (30) 30 -
Financial benefits
generated by
decision to exit
Africa 57 - 27 27 30 -
Reduction of
carrying value in
West Africa (64) - (51) (51) (13) -
Totals $12 - (47) (47) 59 -
In aggregate, these items increased second-quarter 2007 net earnings by
$59 million, or 13 cents per common share (13 cents per diluted share).
Conference Call to be Webcast Today
Devon will discuss its second-quarter 2007 financial and operating
results and changes to its full-year 2007 outlook 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 one of
the world's leading independent oil and gas producers 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
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION DATA (net of royalties)
All periods exclude discontinued Quarter Ended Six Months Ended
operations from Egypt and West Africa June 30, June 30,
2007 2006 2007 2006
Total Period Production
Natural Gas (Bcf)
U.S. Onshore 135.9 117.3 263.6 230.8
U.S. Offshore 18.9 18.6 37.5 35.0
Total U.S. 154.8 135.9 301.1 265.8
Canada 57.0 62.7 112.3 121.8
International 0.5 0.7 0.8 1.3
Total Natural Gas 212.3 199.3 414.2 388.9
Oil (MMBbls)
U.S. Onshore 2.9 2.8 5.7 5.6
U.S. Offshore 2.0 2.3 3.7 4.5
Total U.S. 4.9 5.1 9.4 10.1
Canada 4.0 3.1 7.5 6.3
International 5.5 1.5 10.8 3.2
Total Oil 14.4 9.7 27.7 19.6
Natural Gas Liquids (MMBbls)
U.S. Onshore 5.1 4.4 9.9 8.9
U.S. Offshore 0.2 0.1 0.3 0.2
Total U.S. 5.3 4.5 10.2 9.1
Canada 1.1 1.2 2.2 2.4
International - - - -
Total Natural Gas Liquids 6.4 5.7 12.4 11.5
Oil Equivalent (MMBoe)
U.S. Onshore 30.7 26.8 59.5 53.0
U.S. Offshore 5.3 5.4 10.3 10.5
Total U.S. 36.0 32.2 69.8 63.5
Canada 14.6 14.7 28.4 29.0
International 5.6 1.7 10.9 3.3
Total Oil Equivalent 56.2 48.6 109.1 95.8
Average Daily Production
Natural Gas (MMcf)
U.S. Onshore 1,493.7 1,288.7 1,456.3 1,275.0
U.S. Offshore 207.6 204.0 207.0 193.5
Total U.S. 1,701.3 1,492.7 1,663.3 1,468.5
Canada 626.2 689.0 620.7 672.8
International 5.6 7.2 4.3 7.1
Total Natural Gas 2,333.1 2,188.9 2,288.3 2,148.4
Oil (MBbls)
U.S. Onshore 31.5 30.8 31.1 31.0
U.S. Offshore 22.0 24.7 20.5 24.5
Total U.S. 53.5 55.5 51.6 55.5
Canada 44.0 33.6 41.5 34.7
International 60.9 16.9 59.8 17.4
Total Oil 158.4 106.0 152.9 107.6
Natural Gas Liquids (MBbls)
U.S. Onshore 56.4 48.5 54.8 49.1
U.S. Offshore 2.2 1.0 1.8 1.3
Total U.S. 58.6 49.5 56.6 50.4
Canada 11.7 13.2 12.0 13.4
International - - - -
Total Natural Gas Liquids 70.3 62.7 68.6 63.8
Oil Equivalent (MBoe)
U.S. Onshore 336.9 294.1 328.7 292.7
U.S. Offshore 58.8 59.8 56.8 58.0
Total U.S. 395.7 353.9 385.5 350.7
Canada 160.1 161.6 157.0 160.2
International 61.8 18.1 60.5 18.6
Total Oil Equivalent 617.6 533.6 603.0 529.5
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
REALIZED PRICE DATA Quarter Ended Six Months Ended
(average realized prices) June 30, June 30,
2007 2006 2007 2006
Realized Prices
Natural Gas ($/Mcf)
U.S. Onshore $6.25 $5.67 $6.01 $6.27
U.S. Offshore $7.82 $7.39 $7.51 $7.80
Total U.S. $6.44 $5.91 $6.20 $6.47
Canada $6.66 $5.70 $6.55 $6.51
International $6.19 $7.13 $5.16 $6.61
Total Natural Gas $6.50 $5.85 $6.29 $6.49
Oil ($/Bbl)
U.S. Onshore $60.82 $64.87 $56.02 $61.22
U.S. Offshore $65.35 $67.51 $60.16 $63.87
Total U.S. $62.68 $66.05 $57.67 $62.39
Canada $46.32 $54.52 $45.01 $46.14
International $67.57 $65.96 $62.76 $61.35
Total Oil $60.01 $62.38 $56.22 $56.99
Natural Gas Liquids ($/Bbl)
U.S. Onshore $33.35 $30.53 $30.54 $28.55
U.S. Offshore $31.14 $47.05 $30.52 $41.06
Total U.S. $33.26 $30.88 $30.54 $28.86
Canada $43.82 $44.87 $40.37 $43.70
International $- $- $- $-
Total Natural Gas Liquids $35.03 $33.83 $32.26 $31.98
Oil Equivalent ($/Boe)
U.S. Onshore $38.99 $36.69 $37.05 $38.61
U.S. Offshore $53.24 $53.98 $50.05 $53.90
Total U.S. $41.11 $39.61 $38.96 $41.14
Canada $41.99 $39.31 $40.88 $40.99
International $67.11 $64.45 $62.39 $59.98
Total Oil Equivalent $43.94 $40.36 $41.81 $41.76
BENCHMARK PRICES Quarter Ended Six Months Ended
(average prices) June 30, June 30,
2007 2006 2007 2006
Benchmark Prices
Natural Gas ($/Mcf) -
Henry Hub $7.55 $6.80 $7.16 $7.91
Oil ($/Bbl) -
West Texas Intermediate
(Cushing) $65.08 $70.64 $61.71 $67.03
PRICE DIFFERENTIALS, EXCLUDING
EFFECTS OF HEDGES
(average floating price
differentials from Quarter Ended Six Months Ended
benchmark prices) June 30, June 30,
2007 2006 2007 2006
Price Differentials
Natural Gas ($/Mcf)
U.S. Onshore $(1.39) $(1.13) $(1.11) $(1.64)
U.S. Offshore $0.27 $0.59 $0.35 $(0.11)
Total U.S. $(1.19) $(0.89) $(0.93) $(1.44)
Canada $(0.69) $(0.99) $(0.40) $(1.22)
International $(1.36) $0.33 $(2.00) $(1.30)
Total Natural Gas $(1.06) $(0.92) $(0.79) $(1.37)
Oil ($/Bbl)
U.S. Onshore $(4.26) $(5.77) $(5.69) $(5.81)
U.S. Offshore $0.27 $(3.13) $(1.55) $(3.16)
Total U.S. $(2.40) $(4.59) $(4.04) $(4.64)
Canada $(18.76) $(16.12) $(16.70) $(20.89)
International $2.49 $(4.68) $1.05 $(5.68)
Total Oil $(5.07) $(8.26) $(5.49) $(10.04)
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS
OF OPERATIONS
(in millions, except per Quarter Ended Six Months Ended
share data) June 30, June 30,
2007 2006 2007 2006
Revenues
Oil sales $865 $602 $1,556 $1,110
Gas sales 1,380 1,165 2,606 2,523
Natural gas liquids sales 224 193 401 369
Marketing & midstream revenues 460 390 839 848
Total revenues 2,929 2,350 5,402 4,850
Expenses and other income, net
Lease operating expenses 439 342 869 673
Production taxes 90 86 170 169
Marketing & midstream operating
costs and expenses 341 285 611 623
Depreciation, depletion and
amortization of oil and gas
properties 645 490 1,232 933
Depreciation and amortization of
non-oil and gas properties 49 43 95 84
Accretion of asset retirement
obligation 18 13 36 23
General & administrative expenses 113 90 232 180
Interest expense 107 102 217 203
Change in fair value of financial
instruments (10) 47 (9) 59
Reduction of carrying value of oil
and gas properties - 16 - 16
Other income, net (17) (29) (43) (58)
Total expenses and other income, net 1,775 1,485 3,410 2,905
Earnings from continuing operations
before income tax expense 1,154 865 1,992 1,945
Income tax expense
Current 174 100 363 324
Deferred 156 2 231 142
Total income tax expense 330 102 594 466
Earnings from continuing operations 824 763 1,398 1,479
Discontinued operations
Earnings from discontinued
operations before income tax
expense 128 178 265 225
Income tax expense 48 82 108 145
Earnings from discontinuing
operations 80 96 157 80
Net earnings 904 859 1,555 1,559
Preferred stock dividends 3 3 5 5
Net earnings applicable to common
stockholders $901 $856 $1,550 $1,554
Net earnings per weighted average
common share outstanding
Basic $2.02 $1.94 $3.48 $3.52
Diluted $2.00 $1.92 $3.44 $3.47
Basic weighted average shares
outstanding 446 440 445 441
Diluted weighted average shares
outstanding 450 446 450 447
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions) June 30, December 31,
2007 2006
Assets (Audited)
Current assets
Cash and cash equivalents $1,042 $692
Short-term investments, at fair
value 315 574
Accounts receivable 1,375 1,324
Current assets held for sale 175 232
Other current assets 259 390
Total current assets 3,166 3,212
Property and equipment, at cost,
based on the full cost method of
accounting for oil and gas
properties ($3,282 and $3,293
excluded from amortization in 2007
and 2006, respectively) 43,992 39,585
Less accumulated depreciation,
depletion and amortization 18,338 16,429
Net property and equipment 25,654 23,156
Investment in Chevron Corporation
common stock, at fair value 1,195 1,043
Goodwill 5,961 5,706
Assets held for sale 1,675 1,619
Other assets 380 327
Total Assets $38,031 $35,063
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable - trade $1,139 $1,154
Revenues and royalties due to others 509 522
Income taxes payable 171 82
Short-term debt 2,022 2,205
Accrued interest payable 119 114
Current portion of asset retirement
obligation, at fair value 45 53
Current liabilities associated with
assets held for sale 138 173
Accrued expenses and other current
liabilities 273 342
Total current liabilities 4,416 4,645
Debentures exchangeable into shares
of Chevron Corporation common stock 737 727
Other long-term debt 4,837 4,841
Financial instruments, at fair value 445 302
Asset retirement obligation, at
fair value 1,214 804
Liabilities associated with assets
held for sale 428 429
Other liabilities 666 583
Deferred income taxes 5,602 5,290
Stockholders' equity
Preferred stock 1 1
Common stock 45 44
Additional paid-in capital 6,956 6,840
Retained earnings 10,893 9,114
Accumulated other comprehensive
income 1,791 1,444
Treasury stock - (1)
Stockholders' Equity 19,686 17,442
Total Liabilities &
Stockholders' Equity $38,031 $35,063
Common Shares Outstanding 446 444
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) Six Months Ended June 30,
2007 2006
Cash Flows From Operating Activities
Net earnings $1,555 $1,559
Earnings from discontinued
operations, net of tax (157) (80)
Adjustments to reconcile net
earnings from continuing operations
to net cash provided by operating
activities:
Depreciation, depletion and
amortization 1,327 1,017
Deferred income tax expense 231 142
Net gain on sales of non-oil
and gas property and equipment (1) (5)
Reduction of carrying value of
oil and gas properties - 16
Other non-cash charges 95 112
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 32 247
Other current assets (27) (12)
Long-term other assets (46) 9
Increase (decrease) in:
Accounts payable 47 (166)
Income taxes payable 178 (123)
Other current liabilities (96) (108)
Long-term other liabilities 14 (21)
Cash provided by operating
activities - continuing operations 3,152 2,587
Cash provided by operating
activities - discontinued
operations 197 231
Net cash provided by operating
activities 3,349 2,818
Cash Flows From Investing Activities
Proceeds from sales of property
and equipment 37 26
Capital expenditures, including
acquisitions of businesses (2,990) (4,584)
Purchases of short-term investments (589) (1,698)
Sales of short-term investments 848 2,046
Cash used in investing activities -
continuing operations (2,694) (4,210)
Cash used in investing activities -
discontinued operations (115) (131)
Net cash used in investing activities (2,809) (4,341)
Cash Flows From Financing Activities
Net commercial paper (repayments)
borrowings, net of issuance costs (183) 1,452
Principal payments on debt,
including current maturities - (208)
Proceeds from exercise of stock
options 60 27
Repurchase of common stock (10) (253)
Excess tax benefits related to
share-based compensation 17 7
Dividends paid on common stock (124) (99)
Dividends paid on preferred stock (5) (5)
Net cash (used in) provided by
financing activities $(245) $921
Effect of exchange rate changes
on cash $16 $26
Net increase (decrease) in cash and
cash equivalents 311 (576)
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) $1,067 $1,030
Supplementary cash flow data:
Interest paid (net of capitalized
interest) $202 $195
Income taxes paid $159 $499
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
DRILLING ACTIVITY Quarter Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Exploration Wells Drilled
U.S. 5 18 27 39
Canada 9 30 64 96
International - 2 1 2
Total 14 50 92 138
Exploration Wells Success Rate
U.S. 100% 89% 81% 90%
Canada 67% 100% 95% 99%
International - 0% 0% 0%
Total 79% 92% 90% 95%
Development Wells Drilled
U.S. 360 372 624 655
Canada 54 109 306 382
International 6 7 9 14
Total 420 488 939 1,051
Development Wells Success Rate
U.S. 98% 98% 98% 98%
Canada 100% 100% 100% 99%
International 100% 100% 100% 100%
Total 99% 98% 99% 99%
Total Wells Drilled
U.S. 365 390 651 694
Canada 63 139 370 478
International 6 9 10 16
Total 434 538 1,031 1,189
Total Wells Success Rate
U.S. 98% 97% 98% 98%
Canada 95% 100% 99% 99%
International 100% 78% 90% 88%
Total 98% 98% 98% 99%
COMPANY OPERATED RIGS June 30,
2007 2006
Number of Company Operated Rigs Running
U.S. 77 60
Canada 10 11
International 1 -
Total 88 71
CAPITAL EXPENDITURES DATA (in millions)
Quarter Ended June 30, 2007
U.S. U.S. Canada Inter- Devon
Onshore Offshore national Total
Capital Expenditures
Exploration $57 48 25 12 $124
Development 736 62 145 82 1,043
Exploration and
development
capital $793 110 170 94 $1,167
Capitalized G&A 82
Capitalized interest 15
Discontinued operations 48
Property acquisitions 9
Midstream capital 69
Other capital 38
Total capital expenditures $1,428
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CAPITAL EXPENDITURES DATA (in millions)
Six Months Ended June 30, 2007
U.S. U.S. Canada Inter- Devon
Onshore Offshore national Total
Capital Expenditures
Exploration $99 119 64 45 $309
Development 1,374 122 520 141 2,175
Exploration and
development
capital $1,473 241 584 186 $2,484
Capitalized G&A 146
Capitalized interest 30
Discontinued operations 107
Property acquisitions 12
Midstream capital 168
Other capital 58
Total capital expenditures $3,005
DETAIL OF RECLASSIFICATION FOR
DISCONTINUED OPERATIONS IN EGYPT Quarter Ended Six Months Ended
AND WEST AFRICA June 30, June 30,
2007 2006 2007 2006
Production from Discontinued
Operations
Oil (MMBbls) 3.2 3.8 6.3 7.4
Natural Gas (Bcf) 1.2 1.6 2.6 3.2
Total Oil Equivalent (MMBoe) 3.4 4.1 6.7 7.9
STATEMENTS OF DISCONTINUED
OPERATIONS DATA Quarter Ended Six Months Ended
(in millions) June 30, June 30,
2007 2006 2007 2006
Revenues
Oil sales $205 $255 $375 $462
Gas sales 4 5 8 11
Marketing & midstream revenues 6 7 7 11
Total revenues 215 267 390 484
Expenses and other income, net
Lease operating expenses 19 20 39 38
Marketing & midstream operating
costs and expenses 2 3 3 4
Depreciation, depletion and
amortization of oil and gas
properties 2 66 18 130
Depreciation, depletion and
amortization of non-oil and gas
properties - - - 1
Accretion of asset retirement
obligation 1 - 2 1
Reduction of carrying value of
assets held for sale 63 - 63 85
Total expenses and other income, net 87 89 125 259
Earnings before income tax expense 128 178 265 225
Income tax (benefit) expense
Current 71 98 115 177
Deferred (23) (16) (7) (32)
Total income tax expense 48 82 108 145
Earnings from discontinued operations $80 $96 $157 $80
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
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 Quarter Ended Six Months Ended
(in millions) June 30, June 30,
2007 2006 2007 2006
Net Cash Provided By Operating
Activities (GAAP) $1,832 $1,296 $3,349 $2,818
Changes in assets and liabilities -
continuing operations (59) 161 (102) 174
Changes in assets and liabilities -
discontinuing operations 43 76 37 33
Cash flow before balance sheet
changes (Non-GAAP) $1,816 $1,533 $3,284 $3,025
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. Devon believes that because cash and short-term
investments can be used to repay indebtedness, netting cash and short-term
investments against debt provides a clearer picture of the future demands
on cash to repay debt. Included in Devon's indebtedness are $737 million of
debentures exchangeable into 14.2 million shares of Chevron common stock
owned outright by Devon. As of June 30, 2007, the market value of the
shares ($1.2 billion) exceeded the related debt obligation. Devon believes
deducting the market value of the stock provides a clearer picture of
future demands on cash to repay debt. This methodology is also utilized by
various lenders, rating agencies and securities analysts as a measure of
Devon's indebtedness.
RECONCILIATION TO GAAP INFORMATION June 30,
(in millions) 2007 2006
Total debt (GAAP) $7,596 $8,054
Adjustments:
Cash and short-term investments 1,357 1,266
Market value of Chevron Corporation
common stock 1,195 880
Net Debt (Non-GAAP) $5,044 $5,908
Total Capitalization
Total debt $7,596 $8,054
Stockholders' equity 19,686 16,493
Total Capitalization (GAAP) $27,282 $24,547
Adjusted Capitalization
Net debt $5,044 $5,908
Stockholders' equity 19,686 16,493
Adjusted Capitalization (Non-GAAP) $24,730 $22,401
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, Brian Engel, +1-405-228-7750, both of Devon Energy
Corporation
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