OKLAHOMA CITY, Aug. 2 /PRNewswire-FirstCall/ -- Devon Energy
Corporation (NYSE: DVN) today reported net earnings for the quarter ended
June 30, 2006, of $859 million, or $1.94 per common share ($1.92 per
diluted common share). These results compare with second-quarter 2005 net
earnings of $653 million, or $1.40 per common share ($1.38 per diluted
common share). Earnings per share increased 39 percent compared with the
second quarter of 2005.
For the six months ended June 30, 2006, Devon's net earnings were $1.6
billion, or $3.52 per common share ($3.47 per diluted common share). Net
earnings for the six months ended June 30, 2005, were $1.2 billion, or
$2.57 per common share ($2.53 per diluted common share).
Second-quarter 2006 reported net earnings of $859 million benefited
from certain items securities analysts typically exclude from their
published estimates. Excluding these items, Devon earned $701 million, or
$1.57 per diluted share. The excluded items are described in detail in this
news release.
"The strength of Devon's property base and drilling programs is
reflected in our production growth. Second-quarter oil and gas production
was up two percent over the first quarter and we expect production growth
to accelerate in the second half of the year," commented J. Larry Nichols,
chairman and chief executive officer.
Acquisition of Chief Properties Enhances Devon's Lead in Barnett Shale
Devon completed its acquisition of Chief Holdings LLC on June 29, 2006,
increasing its position in the Barnett Shale in north Texas. With net
production of approximately 650 million cubic feet of gas equivalent per
day, Devon produces almost half of the total Barnett Shale production.
Following the acquisition, Devon has more than 2,500 producing wells and
733,000 net acres in the Barnett Shale.
"Acquisition of the Chief acreage gives us 2,000 additional drilling
locations in the Barnett Shale," said Stephen J. Hadden, senior vice
president, exploration and production. "We plan to have 30 rigs drilling in
the Barnett Shale by year-end and to drive Devon's share of Barnett
production to one billion cubic feet of gas equivalent per day by 2009."
Second-Quarter Highlights Include Gulf of Mexico and International
Operations
Devon drilled 546 wells in the second quarter of 2006 with a 97 percent
overall success rate. Following are second-quarter operating highlights:
* Devon and its partners completed the production test of the deepwater
Jack well in the Gulf of Mexico's lower Tertiary trend in June. The
test results are currently being evaluated and will be announced later
this year. This test is an important step in Devon's evaluation of
its extensive inventory of discoveries and prospects in the lower
Tertiary trend.
* In May, the company restored production from the deepwater Red Hawk
field in the Gulf of Mexico that was suspended by the 2005 hurricanes.
Red Hawk produces about 10,000 oil equivalent barrels (Boe) per day
net to Devon. In July, Devon restored another 6,000 Boe per day in
the Eugene Island and West Cameron areas of the shallow water shelf.
About 90 percent of the production interrupted by the hurricanes has
now been restored.
* Construction and fabrication for the 50 million barrel Polvo oil
development project in Brazil continues on schedule. The drilling
deck was lifted into place and initial dry-dock work on the floating
production, storage and offloading vessel was completed in June.
Devon expects first oil production from Polvo in mid-2007.
* The inaugural shipment of crude oil from the Baku-Tbilisi-Ceyhan
pipeline marked an important milestone for the 5.5 billion barrel ACG
field in Azerbaijan in June. Devon's average daily oil production
from ACG is expected to increase by approximately 30,000 barrels per
day within the next six months.
Pre-Tax Earnings Climb on Higher Revenues
Sales of oil, gas and natural gas liquids increased seven percent to
$2.2 billion in the second quarter of 2006. The increase in revenues more
than exceeded combined expense increases, leading to higher earnings before
income taxes.
Substantially higher realized prices for oil and natural gas liquids
led to the increase in sales revenues. Devon's second-quarter 2006 average
realized oil price increased 71 percent to $63.69 per barrel compared with
$37.28 per barrel in the second quarter of 2005. The higher realized oil
price is attributable to a global increase in crude oil prices and to the
expiration of Devon's oil price hedges at December 31, 2005. None of
Devon's oil production is hedged in 2006. The average realized price for
natural gas liquids increased 30 percent to $33.83 per barrel in the second
quarter of 2006 compared with $25.99 per barrel in the same quarter in
2005.
Conversely, the realized price of natural gas decreased by four percent
in the second quarter of 2006 to $5.83 per thousand cubic feet. This
compares with a realized price of $6.09 per thousand cubic feet in the
second quarter of 2005.
Devon's combined oil, gas and natural gas liquids production averaged
578 thousand Boe per day in the second quarter of 2006. This compares with
second quarter 2005 average production of 641 thousand Boe per day. The
decrease in 2006 production was primarily attributable to property
divestitures and the continued impact of hurricanes experienced in the
second half of 2005. Devon has now restored about 90 percent of the
production suspended by the 2005 hurricanes. Second-quarter 2006 daily
production was approximately two percent greater than first-quarter 2006
daily production.
Marketing and midstream operating profit increased 17 percent in the
second quarter of 2006 to $109 million. Marketing and midstream revenues
increased two percent to $397 million. Related expenses decreased three
percent to $288 million.
Lease operating expenses increased seven percent to $362 million in the
second quarter of 2006. Higher ad valorem taxes, rising oil field service
and supply costs and the continued strengthening of the Canadian dollar all
contributed to the increase.
Production taxes increased 15 percent to $86 million in the second
quarter of 2006. Higher production taxes resulted primarily from higher oil
and gas revenues.
Depreciation, depletion and amortization (DD&A) of oil and gas
properties increased 12 percent to $556 million in the second quarter of
2006 compared with the same quarter in 2005. Unit DD&A increased 25 percent
to $10.56 per Boe compared with the second quarter of 2005.
Second-quarter general and administrative (G&A) expenses increased 16
percent to $90 million compared with the second quarter of 2005. Beginning
in 2006, accounting rules require that stock option costs be expensed,
contributing to the increase in G&A expenses.
Interest expense for the second quarter of 2006 decreased 31 percent to
$102 million. Interest expense of $146 million in the second quarter of
2005 included $30 million attributable to the company's early redemption of
zero coupon convertible debentures.
Lower Canadian Rate Decreases Income Tax Expense
Income tax expense was $185 million in the second quarter of 2006, or
18 percent of pre-tax earnings. Current income tax expense decreased 28
percent compared with the second quarter of 2005. A reduction in Canadian
statutory income tax rates resulted in a $243 million reduction in deferred
taxes. This was offset in part by a $39 million deferred tax increase
attributable to a new income-based tax in the state of Texas.
Cash Flow Before Balance Sheet Changes Increases 19 Percent
Cash flow before balance sheet changes increased 19 percent to $1.5
billion in the second quarter of 2006. This was sufficient to fully fund
Devon's second-quarter 2006 drilling budget of $1.1 billion and other
capital expenditures. The $2.2 billion Chief acquisition was funded with
cash on hand and debt.
At June 30, 2006, cash and short-term investments were $1.4 billion.
Net debt at June 30, 2006, was 26 percent of adjusted capitalization,
compared with 23 percent of adjusted capitalization at June 30, 2005.
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
for the company's financial results. These items and their effects upon
second- quarter 2006 reported earnings were as follows:
* A change in fair value of derivative financial instruments decreased
earnings by $47 million pre-tax ($30 million after tax).
* A reduction in the carrying value of oil and gas properties reduced
earnings by $16 million before and after income taxes.
* A reduction in Canadian statutory income tax rates increased after-tax
earnings by $243 million.
* A new income-based tax in the state of Texas decreased after-tax
earnings by $39 million.
The following table summarizes the effects of these items on second-
quarter 2006 earnings and income taxes.
Summary of Items Typically Excluded by Securities Analysts
(in millions)
Cash Flow
Before
Balance
Pretax After-tax Sheet
Earnings Income Tax Effect Earnings Changes
Effect Current Deferred Total Effect Effect
Change in fair
value of financial
instruments $(47) --- (17) (17) (30) ---
Reduction in the
carrying value of
properties (16) --- --- --- (16) ---
Change in Canadian
income tax rate --- --- (243) (243) 243 ---
Texas income-based
tax --- --- 39 39 (39) ---
Totals $(63) --- (221) (221) 158 ---
In aggregate, these items increased second-quarter 2006 net earnings by
$158 million, or 35 cents per common share (35 cents per diluted share).
Conference Call to be Webcast Today
Devon will discuss its second-quarter 2006 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.
Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration, production and property
acquisitions. 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
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION DATA Quarter Ended Six Months Ended
(net of royalties) June 30, June 30,
2006 2005 2006 2005
Total Period Production
Natural Gas (Bcf)
U.S. Onshore 117.3 113.9 230.8 229.6
U.S. Offshore 18.6 25.7 35.0 54.8
Total U.S. 135.9 139.6 265.8 284.4
Canada 62.7 66.9 121.8 133.0
International 2.2 2.4 4.5 5.2
Total Natural Gas 200.8 208.9 392.1 422.6
Oil (MMBbls)
U.S. Onshore 2.8 3.0 5.6 6.3
U.S. Offshore 2.3 3.9 4.5 8.4
Total U.S. 5.1 6.9 10.1 14.7
Canada 3.1 3.4 6.3 6.7
International 5.3 7.1 10.5 13.9
Total Oil 13.5 17.4 26.9 35.3
Natural Gas Liquids (MMBbls)
U.S. Onshore 4.4 4.4 8.9 8.8
U.S. Offshore 0.1 0.2 0.2 0.5
Total U.S. 4.5 4.6 9.1 9.3
Canada 1.2 1.3 2.4 2.6
International --- 0.1 --- 0.1
Total Natural Gas Liquids 5.7 6.0 11.5 12.0
Oil Equivalent (MMBoe)
U.S. Onshore 26.8 26.4 53.0 53.4
U.S. Offshore 5.4 8.4 10.5 18.0
Total U.S. 32.2 34.8 63.5 71.4
Canada 14.7 15.9 29.0 31.4
International 5.7 7.6 11.2 14.9
Total Oil Equivalent 52.6 58.3 103.7 117.7
Average Daily Production
Natural Gas (MMcf)
U.S. Onshore 1,288.7 1,251.0 1,275.0 1,268.4
U.S. Offshore 204.0 282.6 193.5 303.0
Total U.S. 1,492.7 1,533.6 1,468.5 1,571.4
Canada 689.0 734.6 672.8 735.0
International 24.7 26.9 24.8 28.5
Total Natural Gas 2,206.4 2,295.1 2,166.1 2,334.9
Oil (MBbls)
U.S. Onshore 30.8 33.1 31.0 35.0
U.S. Offshore 24.7 42.8 24.5 46.1
Total U.S. 55.5 75.9 55.5 81.1
Canada 33.6 38.0 34.7 37.1
International 58.7 77.8 58.2 76.7
Total Oil 147.8 191.7 148.4 194.9
Natural Gas Liquids (MBbls)
U.S. Onshore 48.5 48.5 49.1 48.8
U.S. Offshore 1.0 2.6 1.3 2.6
Total U.S. 49.5 51.1 50.4 51.4
Canada 13.2 14.4 13.4 14.1
International --- 0.9 --- 0.9
Total Natural Gas Liquids 62.7 66.4 63.8 66.4
Oil Equivalent (MBoe)
U.S. Onshore 294.1 290.1 292.7 295.2
U.S. Offshore 59.8 92.5 58.0 99.2
Total U.S. 353.9 382.6 350.7 394.4
Canada 161.6 174.8 160.2 173.7
International 62.8 83.2 62.3 82.3
Total Oil Equivalent 578.3 640.6 573.2 650.4
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION DATA - RETAINED PROPERTIES YOY Sequential
All periods exclude properties % %
divested in 2005 Q2 2006 Q2 2005 Q1 2006 Change Change
Total Period Production
Natural Gas (Bcf)
U.S. Onshore 117.3 113.2 113.5 4% 3%
U.S. Offshore 18.6 23.5 16.5 -21% 13%
Total U.S. 135.9 136.7 130.0 -1% 5%
Canada 62.7 61.3 59.1 2% 6%
International 2.2 2.4 2.2 -8% 0%
Total Natural Gas 200.8 200.4 191.3 0% 5%
Oil (MMBbls)
U.S. Onshore 2.8 2.9 2.8 -6% 0%
U.S. Offshore 2.3 3.0 2.2 -24% 5%
Total U.S. 5.1 5.9 5.0 -15% 2%
Canada 3.1 3.2 3.2 -4% -3%
International 5.3 7.1 5.2 -25% 2%
Total Oil 13.5 16.2 13.4 -17% 1%
Natural Gas Liquids (MMBbls)
U.S. Onshore 4.4 4.4 4.5 1% -2%
U.S. Offshore 0.1 0.2 0.1 -52% 0%
Total U.S. 4.5 4.6 4.6 -1% -2%
Canada 1.2 1.2 1.2 -4% 0%
International --- 0.1 --- -100% 0%
Total Natural Gas Liquids 5.7 5.9 5.8 -3% -2%
Oil Equivalent (MMBoe)
U.S. Onshore 26.8 26.2 26.2 2% 2%
U.S. Offshore 5.4 7.1 5.1 -23% 6%
Total U.S. 32.2 33.3 31.3 -3% 3%
Canada 14.7 14.6 14.3 0% 3%
International 5.7 7.6 5.5 -25% 4%
Total Oil Equivalent 52.6 55.5 51.1 -5% 3%
Average Daily Production
Natural Gas (MMcf)
U.S. Onshore 1,288.7 1,243.4 1,261.2 4% 2%
U.S. Offshore 204.0 258.8 182.9 -21% 12%
Total U.S. 1,492.7 1,502.2 1,444.1 -1% 3%
Canada 689.0 672.9 656.3 2% 5%
International 24.7 26.9 24.9 -8% -1%
Total Natural Gas 2,206.4 2,202.0 2,125.3 0% 4%
Oil (MBbls)
U.S. Onshore 30.8 32.8 31.2 -6% -1%
U.S. Offshore 24.7 32.6 24.3 -24% 2%
Total U.S. 55.5 65.4 55.5 -15% 0%
Canada 33.6 35.0 35.7 -4% -6%
International 58.7 77.8 57.7 -25% 2%
Total Oil 147.8 178.2 148.9 -17% -1%
Natural Gas Liquids (MBbls)
U.S. Onshore 48.5 48.1 49.8 1% -3%
U.S. Offshore 1.0 2.1 1.4 -52% -29%
Total U.S. 49.5 50.2 51.2 -1% -3%
Canada 13.2 13.8 13.6 -4% -3%
International --- 0.9 --- -100% 0%
Total Natural Gas Liquids 62.7 64.9 64.8 -3% -3%
Oil Equivalent (MBoe)
U.S. Onshore 294.1 288.2 291.2 2% 1%
U.S. Offshore 59.8 77.8 56.3 -23% 6%
Total U.S. 353.9 366.0 347.5 -3% 2%
Canada 161.6 160.9 158.6 0% 2%
International 62.8 83.2 61.9 -25% 1%
Total Oil Equivalent 578.3 610.1 568.0 -5% 2%
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
Quarter Ended Six Months Ended
REALIZED PRICE DATA June 30, June 30,
(average realized prices)
2006 2005 2006 2005
Realized Prices
Natural Gas ($/Mcf)
U.S. Onshore $ 5.67 $ 5.96 $ 6.27 $ 5.56
U.S. Offshore $ 7.39 $ 7.10 $ 7.80 $ 6.81
Total U.S. $ 5.91 $ 6.17 $ 6.47 $ 5.80
Canada $ 5.70 $ 5.98 $ 6.51 $ 5.83
International $ 4.65 $ 4.08 $ 4.43 $ 3.95
Total Natural Gas $ 5.83 $ 6.09 $ 6.46 $ 5.79
Oil ($/Bbl)
U.S. Onshore $64.87 $48.40 $61.22 $45.82
U.S. Offshore $67.51 $33.81 $63.87 $33.29
Total U.S. $66.05 $40.18 $62.39 $38.70
Canada $54.52 $24.05 $46.14 $23.98
International $66.72 $40.91 $62.22 $38.59
Total Oil $63.69 $37.28 $58.53 $35.86
Natural Gas Liquids ($/Bbl)
U.S. Onshore $30.53 $23.42 $28.55 $22.69
U.S. Offshore $47.05 $29.48 $41.06 $27.83
Total U.S. $30.88 $23.73 $28.86 $22.95
Canada $44.87 $34.28 $43.70 $33.16
International $ --- $21.16 $ --- $24.56
Total Natural Gas Liquids $33.83 $25.99 $31.98 $25.15
Oil Equivalent ($/Boe)
U.S. Onshore $36.69 $35.15 $38.61 $33.08
U.S. Offshore $53.98 $38.16 $53.90 $37.01
Total U.S. $39.61 $35.88 $41.14 $34.07
Canada $39.31 $33.20 $40.99 $32.50
International $64.17 $39.82 $59.86 $37.58
Total Oil Equivalent $42.19 $35.66 $43.14 $34.09
Quarter Ended Six Months Ended
BENCHMARK PRICES June 30, June 30,
(average prices)
2006 2005 2006 2005
Benchmark Prices
Natural Gas ($/Mcf) - Henry Hub $ 6.80 $ 6.74 $ 7.91 $ 6.51
Oil ($/Bbl) - West Texas
Intermediate (Cushing) $70.64 $53.23 $67.03 $51.57
PRICE DIFFERENTIALS, Quarter Ended Six Months Ended
EXCLUDING EFFECTS OF HEDGES June 30, June 30,
(average floating price
differentials from benchmark prices) 2006 2005 2006 2005
Price Differentials
Natural Gas ($/Mcf)
U.S. Onshore $ (1.13) $ (0.76) $ (1.64) $ (0.94)
U.S. Offshore $ 0.59 $ 0.39 $ (0.11) $ 0.31
Total U.S. $ (0.89) $ (0.55) $ (1.44) $ (0.69)
Canada $ (1.10) $ (0.58) $ (1.40) $ (0.51)
International $ (2.15) $ (1.27) $ (3.48) $ (1.40)
Total Natural Gas $ (0.97) $ (0.56) $ (1.45) $ (0.64)
Oil ($/Bbl)
U.S. Onshore $ (5.77) $ (4.83) $ (5.81) $ (4.83)
U.S. Offshore $ (3.13) $ (4.41) $ (3.16) $ (4.74)
Total U.S. $ (4.59) $ (4.59) $ (4.64) $ (4.78)
Canada $ (16.12) $(15.77) $(20.89) $(14.43)
International $ (3.92) $ (5.63) $ (4.81) $ (6.74)
Total Oil $ (6.95) $ (7.23) $ (8.50) $ (7.38)
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
Quarter Ended Six Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS June 30, June 30,
(in millions, except per share data)
2006 2005 2006 2005
Revenues
Oil sales $ 857 $ 650 $1,572 $1,265
Gas sales 1,170 1,272 2,534 2,447
Natural gas liquids sales 193 157 369 302
Marketing & midstream revenues 397 389 859 805
Total revenues 2,617 2,468 5,334 4,819
Expenses and Other Income, net
Lease operating expenses 362 338 711 686
Production taxes 86 75 169 153
Marketing & midstream operating
costs and expenses 288 296 627 627
Depreciation, depletion and
amortization of oil and gas
properties 556 494 1,063 1,035
Depreciation and amortization of
non-oil and gas properties 43 41 85 79
Accretion of asset retirement
obligation 13 11 24 23
General & administrative expenses 90 78 180 136
Interest expense 102 146 203 264
Effects of changes in foreign
currency exchange rates --- 11 (1) 11
Change in fair value of derivative
financial instruments 47 (18) 59 34
Reduction of carrying value of oil
and gas properties 16 --- 101 ---
Other income, net (30) (14) (58) (152)
Total expenses and other income, net 1,573 1,458 3,163 2,896
Earnings before income tax expense 1,044 1,010 2,171 1,923
Income Tax Expense (Benefit)
Current 198 277 502 629
Deferred (13) 80 110 78
Total income tax expense 185 357 612 707
Net earnings 859 653 1,559 1,216
Preferred stock dividends 3 3 5 5
Net earnings applicable to common
stockholders $ 856 $ 650 $1,554 $1,211
Net earnings per weighted average
common shares outstanding
Basic $ 1.94 $ 1.40 $ 3.52 $ 2.57
Diluted $ 1.92 $ 1.38 $ 3.47 $ 2.53
Basic weighted average shares
outstanding 440 464 441 472
Diluted weighted average shares
outstanding 446 471 447 479
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions) June 30, December 31,
2006 2005
Assets (Audited)
Current assets
Cash and cash equivalents $ 1,030 $ 1,606
Short-term investments 332 680
Accounts receivable 1,404 1,601
Deferred income taxes 90 158
Other current assets 189 161
Total current assets 3,045 4,206
Property and equipment, at cost,
based on the full cost method of
accounting for oil and gas
properties ($3,890 and $2,747
excluded from amortization in 2006
and 2005, respectively) 39,773 34,246
Less accumulated depreciation,
depletion and amortization 16,454 15,114
Net property and equipment 23,319 19,132
Investment in Chevron Corporation
common stock, at fair value 880 805
Goodwill 5,823 5,705
Other assets 451 425
Total Assets $33,518 $30,273
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable:
Trade $ 1,137 $ 947
Revenues and royalties due to
others 492 666
Income taxes payable 147 293
Short-term debt 2,098 662
Accrued interest payable 127 127
Fair value of derivative financial
instruments 17 18
Current portion of asset retirement
obligation 73 50
Accrued expenses and other current
liabilities 107 171
Total current liabilities 4,198 2,934
Debentures exchangeable into shares
of Chevron Corporation common stock 718 709
Other long-term debt 5,238 5,248
Fair value of derivative financial
instruments 183 125
Asset retirement obligation, long-
term 766 618
Other liabilities 370 372
Deferred income taxes 5,552 5,405
Stockholders' equity
Preferred stock 1 1
Common stock 44 44
Additional paid-in capital 6,762 6,928
Retained earnings 7,932 6,477
Accumulated other comprehensive
income 1,772 1,414
Treasury stock (18) (2)
Stockholders' Equity 16,493 14,862
Total Liabilities & Stockholders'
Equity $33,518 $30,273
Common Shares Outstanding 441 443
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) Six Months Ended June 30,
2006 2005
Cash Flows From Operating Activities
Net earnings $ 1,559 $ 1,216
Adjustments to reconcile net earnings
to net cash provided by operating
activities
Depreciation, depletion and amortization 1,148 1,114
Deferred income tax expense 110 78
Net gain on sales of non-oil and gas
property and equipment (5) (150)
Reduction of carrying value of oil
and gas properties 101 ---
Other non-cash charges to net earnings 112 95
3,025 2,353
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 269 9
Other current assets (17) (6)
Long-term other assets (6) 35
Increase (decrease) in:
Accounts payable (168) 112
Income taxes payable (156) (75)
Debt, including current maturities --- (67)
Accrued interest and expenses (108) 46
Long-term other liabilities (21) (22)
Net cash provided by operating
activities $ 2,818 $ 2,385
Cash Flows From Investing Activities
Proceeds from sales of property and
equipment $ 26 $ 2,161
Capital expenditures (4,715) (1,976)
Purchases of short-term investments (1,698) (2,765)
Sales of short-term investments 2,046 3,183
Net cash (used in) provided by
investing activities $(4,341) $ 603
Cash Flows From Financing Activities
Proceeds from borrowings of debt,
net of issuance costs $ 1,452 $ ---
Principal payments on debt,
including current maturities (208) (354)
Proceeds from exercise of stock options 27 81
Repurchase of common stock (253) (1,562)
Excess tax benefits related to
share-based compensation 7 ---
Dividends paid on common stock (99) (70)
Dividends paid on preferred stock (5) (5)
Net cash provided by (used in)
financing activities $ 921 $(1,910)
Effect of exchange rate changes on cash $ 26 $ (3)
Net (decrease) increase in cash and
cash equivalents (576) 1,075
Cash and cash equivalents at
beginning of period 1,606 1,152
Cash and cash equivalents at end of
period $ 1,030 $ 2,227
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
Quarter Ended Six Months Ended
DRILLING ACTIVITY June 30, June 30,
2006 2005 2006 2005
Exploration Wells Drilled
U.S. 18 9 39 21
Canada 30 35 96 152
International 5 7 8 7
Total 53 51 143 180
Exploration Wells Success Rate
U.S. 89% 89% 90% 76%
Canada 100% 100% 99% 93%
International 20% 43% 13% 43%
Total 89% 90% 92% 89%
Development Wells Drilled
U.S. 372 317 655 597
Canada 109 115 382 382
International 12 10 22 19
Total 493 442 1,059 998
Development Wells Success Rate
U.S. 98% 98% 98% 98%
Canada 100% 99% 99% 99%
International 92% 100% 95% 100%
Total 98% 98% 99% 99%
Total Wells Drilled
U.S. 390 326 694 618
Canada 139 150 478 534
International 17 17 30 26
Total 546 493 1,202 1,178
Total Wells Success Rate
U.S. 97% 98% 98% 98%
Canada 100% 99% 99% 97%
International 71% 76% 73% 85%
Total 97% 98% 98% 97%
COMPANY OPERATED RIGS June 30,
2006 2005
Number of Company Operated Rigs Running
U.S. 60 50
Canada 11 9
International --- 2
Total 71 61
Quarter Ended Six Months Ended
CAPITAL EXPENDITURES DATA June 30, 2006 June 30, 2006
(in millions)
Capital Expenditures
U.S. Onshore $ 588 $1,089
U.S. Offshore 183 330
Total U.S. 771 1,419
Canada 253 835
International 73 200
Chief acquisition 2,223 2,223
Marketing & midstream 75 152
Capitalized general &
administrative costs 61 118
Capitalized interest costs 20 36
Other 44 71
Total $3,520 $5,054
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,
2006 2005 2006 2005
Net Cash Provided By Operating
Activities (GAAP) $1,296 $ 997 $2,818 $2,385
Changes in assets and liabilities,
net of effects of acquisitions of
businesses 237 291 207 (32)
Cash flow before balance sheet
changes (Non-GAAP) $1,533 $1,288 $3,025 $2,353
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 $718 million of
debentures exchangeable into 14.2 million shares of Chevron common stock
owned outright by Devon. As of June 30, 2006, the market value of the
shares ($880 million) 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
(in millions) June 30,
2006 2005
Total debt (GAAP) $ 8,054 7,523
Adjustments:
Cash and short-term investments 1,362 (2,776)
Market value of Chevron Corporation
common stock 880 (793)
Net Debt (Non-GAAP) $ 5,812 3,954
Total Capitalization
Total debt $ 8,054 7,523
Stockholders' equity 16,493 13,299
Total Capitalization (GAAP) $24,547 20,822
Adjusted Capitalization
Net debt $ 5,812 3,954
Stockholders' equity 16,493 13,299
Adjusted Capitalization (Non-GAAP) $22,305 17,253
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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