OKLAHOMA CITY, Aug. 3 /PRNewswire-FirstCall/ -- Devon Energy Corporation
(NYSE: DVN) today reported net earnings for the quarter ended June 30, 2005,
of $653 million, or a record $1.40 per common share ($1.38 per diluted common
share). This compares to Devon's second quarter 2004 net earnings of
$502 million, or $1.04 per common share ($1.01 per diluted common share). Per-
share amounts reflect a two-for-one stock split completed in November 2004.
For the six months ended June 30, 2005, Devon reported net earnings of
$1.2 billion or $2.57 per common share ($2.53 per diluted common share). Net
earnings for the six months ended June 30, 2004, were $996 million, or
$2.06 per share ($2.01 per diluted common share).
"Devon's impressive second quarter results were driven by production
growth from our core, North American property base and strong oil and gas
prices," commented J. Larry Nichols, chairman and chief executive officer. "In
a separate release today, we also announced plans to launch a second share
repurchase program. This reflects our focus on building value per share and
the abundant free cash flow Devon is generating in today's environment."
200th Horizontal Barnett Shale Well Leads Exploration and Production
Highlights
Devon drilled 493 gross wells in the second quarter of 2005 with a
98 percent success rate. Also in the second quarter:
* The company initiated production from its 200th horizontal natural gas
well in the Barnett Shale field in north Texas in June. Production
from horizontal wells has grown to 27 percent of Devon's Barnett Shale
production. Devon's net Barnett Shale production averaged
approximately 560 million cubic feet equivalent per day in the second
quarter.
* Also in the Barnett Shale, the company obtained regulatory approval
for 20-acre well spacing covering most of its acreage. Devon drilled
its first 20-acre Barnett Shale wells in June.
* Devon acquired 165,000 net acres in the Iron River area of eastern
Alberta from ExxonMobil Canada Energy. The company plans to drill
800 wells at Iron River in the next four years, increasing production
to approximately 30,000 barrels of oil per day by 2010.
* The company continued to ramp up production from the deepwater
Magnolia field in the Gulf of Mexico. In June, the fourth well was
completed bringing field production to 36,000 barrels of oil and
105 million cubic feet of natural gas per day. Devon's net production
from Magnolia is approximately 12,000 barrels of oil equivalent (Boe)
per day, up from 7,000 Boe per day in the first quarter of 2005.
* Also in the deepwater Gulf of Mexico, the company conducted a
successful four-well recompletion program at Nansen. In aggregate, the
four wells increased Devon's net production from Nansen by 13,000 Boe
per day.
* In June, Devon finalized plans to develop its block BM-C-8 discovery
in the Campos Basin offshore Brazil. Construction of facilities sized
to handle up to 50,000 barrels per day is expected to begin in early
2006 with first production projected for the second half of 2007.
Oil, Gas and NGL Sales Increase to Record $2.1 Billion; Core Property
Production Climbs
Quarterly sales of oil, gas and natural gas liquids increased to a record
high $2.1 billion in the second quarter of 2005. This was 13 percent higher
than second quarter 2004 sales of $1.8 billion. Increased production from
Devon's core, retained properties coupled with record high realized oil, gas
and natural gas liquids prices led to the sales increase. The increase in
sales was achieved despite lower oil and gas production in the second quarter
of 2005, caused by divestitures of non-core oil and gas properties in the
first half of 2005.
Combined daily oil, gas and natural gas liquids production was
641 thousand Boe in the second quarter of 2005. This was six percent lower
than second quarter 2004 production of 685 thousand Boe per day. Excluding
production from oil and gas properties divested in 2005, second quarter
production was 610 thousand Boe per day. This was three percent greater than
second quarter 2004 production, excluding the divestiture properties, of
590 thousand Boe per day.
The company's second quarter 2005 average realized natural gas price
increased 15 percent to $6.09 per thousand cubic feet, compared with $5.29 per
thousand cubic feet in the second quarter of 2004. Devon's second quarter 2005
average realized oil price increased 33 percent to $37.28 per barrel compared
with $28.04 per barrel in the same quarter in 2004. The company's second
quarter 2005 average realized price for natural gas liquids increased
24 percent to $25.99 per barrel from $20.89 per barrel in the second quarter
of 2004.
Marketing and midstream revenues increased three percent to $389 million
in the second quarter of 2005, while related expenses decreased one percent to
$296 million. This resulted in a 19 percent increase in the marketing and
midstream operating margin to $93 million for the second quarter of 2005.
Expense Increases Include Interest Associated with Debt Redemption
Lease operating expenses increased 10 percent to $338 million in the
second quarter of 2005 compared with the second quarter of 2004. Lease
operating expenses per unit of production increased 18 percent to $5.80 per
Boe. Increases in transportation costs, ad valorem taxes, well workover
expenses, power, fuel and repairs and maintenance costs, in addition to the
compounding effect of the weaker U. S. dollar, contributed to higher unit
costs. Production taxes increased six percent to $75 million in the second
quarter of 2005 due to higher overall oil and gas prices.
Depreciation, depletion and amortization of oil and gas properties
decreased four percent to $494 million in the second quarter of 2005 compared
with 2004. The decrease was due to lower overall production resulting from the
property divestitures.
General and administrative expenses increased 11 percent, to $78 million
in the second quarter of 2005. Increases in personnel expenses and charitable
contributions were primary causes of the increase.
Interest expense increased nine percent to $146 million in the second
quarter of 2005. This amount included $30 million attributable to the early
redemption of the company's zero coupon convertible debentures, as described
below.
Second quarter 2005 income tax expense was $357 million, or 35 percent of
pre-tax earnings. Gains for income tax purposes on sales of assets in the
second quarter resulted in a shift of $59 million of income taxes to current
from deferred.
Devon Retires $427 Million of Debt, Completes Stock Repurchase Program
In May, Devon announced that it would call for redemption its $427 million
principal amount zero coupon convertible debentures due June 2020. The
redemption date was June 27, 2005. All but one percent of the outstanding
debentures were presented for conversion prior to the redemption date. Devon
settled the redemptions from cash on hand for $452 million.
Following redemption of the zero coupon convertible debentures, Devon's
net debt to adjusted capitalization was 23 percent at June 30, 2005. Net debt
to adjusted capitalization was 34 percent at June 30, 2004. Reconciliations of
net debt and adjusted capitalization, which are non-GAAP measures, are
provided in this release.
Also during the second quarter, the company repurchased 21.5 million
shares of its common stock for approximately $1 billion. As of today, Devon
has completed its targeted 50 million share repurchase program announced in
September 2004. Devon announced a second share repurchase program in a
separate news release today.
Divestiture Proceeds Add to Cash on Hand
Devon closed sales of non-core oil and gas properties during the second
quarter of 2005 for aggregate proceeds of $1.7 billion. The divestiture
program, first announced in September 2004, is now substantially complete.
Cash flow before balance sheet changes increased nine percent to
$1.3 billion in the second quarter of 2005. A reconciliation of cash flow
before balance sheet changes, which is a non-GAAP measure, is also provided in
this release.
Cash and short term investments on hand were $2.8 billion as of June 30,
2005. Approximately $1.6 billion of this amount is intended for additional
debt repayments through 2006. This includes early retirement in 2005 of
$400 million of 6.75 percent senior notes due in 2011 that the company
announced in a separate news release today.
Items Excluded from Published 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
2005 reported earnings were as follows:
* A change in fair value of derivative financial instruments not
associated with hedges increased earnings by $18 million pre-tax
($11 million after tax).
* Effects of changes in foreign currency exchange rates decreased
earnings $11 million pre-tax ($8 million after tax).
* A loss on oil hedges associated with divestiture properties that no
longer qualify for hedge accounting decreased earnings by $16 million
pre-tax ($11 million after tax).
* A reduction in the previously estimated current income tax expense
resulting from the repatriation of foreign earnings increased earnings
by $5 million.
* Additional interest expense attributable to redemption of zero coupon
convertible debentures decreased earnings by $30 million pre-tax
($19 million after tax).
The following table summarizes the effects of these items on earnings and
income taxes. Included in the table are the tax effects of oil and gas
property divestitures that had no effect on net earnings.
Summary of Items Typically Excluded by Securities Analysts
(in millions)
Cash Flow
Pretax After-tax Before
Earnings Income Tax Effect Earnings Balance Sheet
Effect Current Deferred Total Effect Changes Effect
Change in fair
value of
derivative
financial
instruments $18 --- 7 7 11 ---
Foreign exchange
effect (11) --- (3) (3) (8) ---
Loss on hedges
for divestiture
properties (16) (5) --- (5) (11) (11)
Repatriation of
Canadian cash --- (5) --- (5) 5 5
Additional interest
costs on debt
retirement (30) (11) --- (11) (19) (14)
Effects of oil
and gas property
divestitures --- 59 (59) --- --- (59)
Totals $(39) 38 (55) (17) (22) (79)
In aggregate, these items decreased 2005 net earnings by $22 million, or
five cents per common share (three cents per diluted share). The diluted
calculation is based upon 480 million shares, which includes nine million
shares that are anti-dilutive for GAAP purposes. These items and their
associated tax effects decreased cash flow before balance sheet changes by
$79 million.
Conference Call to be Webcast Today
Devon will discuss its second quarter 2005 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,
2005 2004 2005 2004
Total Period Production
Natural Gas (Bcf)
U.S. Onshore 113.9 120.2 229.6 239.0
U.S. Offshore 25.7 30.1 54.8 63.1
Total U.S. 139.6 150.3 284.4 302.1
Canada 66.9 71.0 133.0 138.3
International 2.4 2.1 5.2 5.1
Total Natural Gas 208.9 223.4 422.6 445.5
Oil (MMBbls)
U.S. Onshore 3.0 3.5 6.3 7.2
U.S. Offshore 3.9 4.6 8.4 9.6
Total U.S. 6.9 8.1 14.7 16.8
Canada 3.4 3.4 6.7 6.8
International 7.1 7.7 13.9 16.5
Total Oil 17.4 19.2 35.3 40.1
Natural Gas Liquids (MMBbls)
U.S. Onshore 4.4 4.4 8.8 8.9
U.S. Offshore 0.2 0.2 0.5 0.5
Total U.S. 4.6 4.6 9.3 9.4
Canada 1.3 1.1 2.6 2.3
International 0.1 0.1 0.1 0.2
Total Natural Gas Liquids 6.0 5.8 12.0 11.9
Oil Equivalent (MMBoe)
U.S. Onshore 26.4 28.0 53.4 55.9
U.S. Offshore 8.4 9.9 18.0 20.7
Total U.S. 34.8 37.9 71.4 76.6
Canada 15.9 16.3 31.4 32.2
International 7.6 8.1 14.9 17.4
Total Oil Equivalent 58.3 62.3 117.7 126.2
Average Daily Production
Natural Gas (MMcf)
U.S. Onshore 1,251.0 1,320.3 1,268.4 1,312.9
U.S. Offshore 282.6 331.0 303.0 347.2
Total U.S. 1,533.6 1,651.3 1,571.4 1,660.1
Canada 734.6 779.9 735.0 759.7
International 26.9 23.5 28.5 28.3
Total Natural Gas 2,295.1 2,454.7 2,334.9 2,448.1
Oil (MBbls)
U.S. Onshore 33.1 38.8 35.0 39.6
U.S. Offshore 42.8 50.7 46.1 52.8
Total U.S. 75.9 89.5 81.1 92.4
Canada 38.0 37.4 37.1 37.6
International 77.8 84.3 76.7 90.4
Total Oil 191.7 211.2 194.9 220.4
Natural Gas Liquids (MBbls)
U.S. Onshore 48.5 48.9 48.8 48.6
U.S. Offshore 2.6 2.5 2.6 3.0
Total U.S. 51.1 51.4 51.4 51.6
Canada 14.4 12.0 14.1 12.7
International 0.9 0.8 0.9 0.8
Total Natural Gas Liquids 66.4 64.2 66.4 65.1
Oil Equivalent (MBoe)
U.S. Onshore 290.1 307.7 295.2 307.0
U.S. Offshore 92.5 108.4 99.2 113.7
Total U.S. 382.6 416.1 394.4 420.7
Canada 174.8 179.4 173.7 177.0
International 83.2 89.0 82.3 96.0
Total Oil Equivalent 640.6 684.5 650.4 693.7
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
PRODUCTION DATA - RETAINED PROPERTIES
All periods exclude properties divested in 2005
YOY Sequential
Q2 2005 Q2 2004 Q1 2005 %Change %Change
Total Period Production
Natural Gas (Bcf)
U.S. Onshore 113.2 112.4 109.0 1% 4%
U.S. Offshore 23.5 15.7 19.7 51% 20%
Total U.S. 136.7 128.1 128.7 7% 6%
Canada 61.3 61.2 57.6 --- 6%
International 2.4 2.1 2.7 14% -10%
Total Natural Gas 200.4 191.4 189.0 5% 6%
Oil (MMBbls)
U.S. Onshore 2.9 3.0 2.9 --- 4%
U.S. Offshore 3.0 3.0 2.9 --- 3%
Total U.S. 5.9 6.0 5.8 --- 3%
Canada 3.2 2.7 2.7 14% 14%
International 7.1 7.7 6.8 -8% 4%
Total Oil 16.2 16.4 15.3 -1% 6%
Natural Gas Liquids (MMBbls)
U.S. Onshore 4.4 4.1 4.1 6% 6%
U.S. Offshore 0.2 0.1 0.1 52% 56%
Total U.S. 4.6 4.2 4.2 8% 8%
Canada 1.2 1.0 1.2 22% 4%
International 0.1 0.1 0.1 14% 5%
Total Natural Gas Liquids 5.9 5.3 5.5 10% 7%
Oil Equivalent (MMBoe)
U.S. Onshore 26.2 25.8 25.2 1% 4%
U.S. Offshore 7.1 5.7 6.3 24% 13%
Total U.S. 33.3 31.5 31.5 6% 6%
Canada 14.6 14.1 13.6 4% 8%
International 7.6 8.1 7.3 -6% 3%
Total Oil Equivalent 55.5 53.7 52.4 3% 6%
Average Daily Production
Natural Gas (MMcf)
U.S. Onshore 1,243.4 1,235.2 1,210.9 1% 3%
U.S. Offshore 258.8 171.8 218.8 51% 18%
Total U.S. 1,502.2 1,407.0 1,429.7 7% 5%
Canada 672.9 672.6 640.5 --- 5%
International 26.9 23.6 30.2 14% -11%
Total Natural Gas 2,202.0 2,103.2 2,100.4 5% 5%
Oil (MBbls)
U.S. Onshore 32.8 32.9 31.9 --- 3%
U.S. Offshore 32.6 32.6 32.0 --- 2%
Total U.S. 65.4 65.5 63.9 --- 2%
Canada 35.0 30.6 31.0 14% 13%
International 77.8 84.3 75.6 -8% 3%
Total Oil 178.2 180.4 170.5 -1% 5%
Natural Gas Liquids (MBbls)
U.S. Onshore 48.1 45.3 45.9 6% 5%
U.S. Offshore 2.1 1.4 1.4 52% 54%
Total U.S. 50.2 46.7 47.3 8% 6%
Canada 13.8 11.3 13.3 22% 3%
International 0.9 0.8 0.8 14% 4%
Total Natural Gas Liquids 64.9 58.8 61.4 10% 6%
Oil Equivalent (MBoe)
U.S. Onshore 288.2 284.0 279.6 1% 3%
U.S. Offshore 77.8 62.7 69.8 24% 11%
Total U.S. 366.0 346.7 349.4 6% 5%
Canada 160.9 154.0 151.1 4% 6%
International 83.2 89.0 81.5 -6% 2%
Total Oil Equivalent 610.1 589.7 582.0 3% 5%
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
REALIZED PRICE DATA Quarter Ended Six Months Ended
(average realized prices) June 30, June 30,
2005 2004 2005 2004
Realized Prices
Natural Gas ($/Mcf)
U.S. Onshore $5.96 $5.18 $5.56 $5.04
U.S. Offshore $7.10 $6.22 $6.81 $6.12
Total U.S. $6.17 $5.39 $5.80 $5.27
Canada $5.98 $5.16 $5.83 $5.04
International $4.08 $2.43 $3.95 $2.84
Total Natural Gas $6.09 $5.29 $5.79 $5.17
Oil ($/Bbl)
U.S. Onshore $48.40 $30.58 $45.82 $29.94
U.S. Offshore $33.81 $29.96 $33.29 $30.19
Total U.S. $40.18 $30.23 $38.70 $30.08
Canada $24.05 $21.49 $23.98 $22.27
International $40.91 $28.63 $38.59 $28.03
Total Oil $37.28 $28.04 $35.86 $27.91
Natural Gas Liquids ($/Bbl)
U.S. Onshore $23.42 $18.99 $22.69 $18.54
U.S. Offshore $29.48 $25.93 $27.83 $23.59
Total U.S. $23.73 $19.33 $22.95 $18.83
Canada $34.28 $27.54 $33.16 $26.33
International $21.16 $21.19 $24.56 $21.12
Total Natural Gas
Liquids $25.99 $20.89 $25.15 $20.32
Oil Equivalent ($/Boe)
U.S. Onshore $35.15 $29.11 $33.08 $28.35
U.S. Offshore $38.16 $33.62 $37.01 $33.34
Total U.S. $35.88 $30.29 $34.07 $29.70
Canada $33.20 $28.74 $32.50 $28.27
International $39.82 $27.95 $37.58 $27.44
Total Oil Equivalent $35.66 $29.58 $34.09 $29.02
BENCHMARK PRICES Quarter Ended Six Months Ended
(average prices) June 30, June 30,
2005 2004 2005 2004
Benchmark Prices
Natural Gas ($/Mcf) -
Henry Hub $6.74 $6.00 $6.51 $5.84
Oil ($/Bbl) - West Texas
Intermediate (Cushing) $53.23 $38.26 $51.57 $36.70
PRICE DIFFERENTIALS, EXCLUDING EFFECTS OF HEDGES
(average floating price
differentials from Quarter Ended Six Months Ended
benchmark prices) June 30, June 30,
2005 2004 2005 2004
Price Differentials
Natural Gas ($/Mcf)
U.S. Onshore $(0.76) $(0.79) $(0.94) $(0.80)
U.S. Offshore $ 0.39 $ 0.22 $ 0.31 $ 0.28
Total U.S. $(0.55) $(0.59) $(0.69) $(0.57)
Canada $(0.58) $(0.69) $(0.51) $(0.64)
International $(1.27) $(3.57) $(1.40) $(3.00)
Total Natural Gas $(0.56) $(0.65) $(0.64) $(0.62)
Oil ($/Bbl)
U.S. Onshore $(4.83) $(1.94) $(4.83) $(2.04)
U.S. Offshore $(4.41) $(2.15) $(4.74) $(1.51)
Total U.S. $(4.59) $(2.06) $(4.78) $(1.74)
Canada $(15.77) $(8.76) $(14.43) $(7.71)
International $(5.63) $(4.74) $(6.74) $(5.18)
Total Oil $(7.23) $(4.32) $(7.38) $(4.17)
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except Quarter Ended Six Months Ended
per share data) June 30, June 30,
2005 2004 2005 2004
Revenues
Oil sales $650 $539 $1,265 $1,120
Gas sales 1,272 1,181 2,447 2,302
Natural gas liquids sales 157 122 302 241
Marketing & midstream revenues 389 377 805 794
Total revenues 2,468 2,219 4,819 4,457
Expenses and Other Income, net
Lease operating expenses 338 306 686 616
Production taxes 75 71 153 133
Marketing & midstream
operating costs and expenses 296 299 627 630
Depreciation, depletion and
amortization of oil and
gas properties 494 517 1,035 1,055
Depreciation and amortization
of non-oil and gas properties 41 35 79 69
Accretion of asset
retirement obligation 11 10 23 22
General & administrative
expenses 78 70 136 147
Interest expense 146 134 264 252
Effects of changes in
foreign currency exchange
rates 11 9 11 15
Change in fair value of
derivative financial
instruments (18) 11 34 7
Other income, net (14) (15) (152) (37)
Total expenses and other
income, net 1,458 1,447 2,896 2,909
Earnings before income
tax expense 1,010 772 1,923 1,548
Income Tax Expense
Current 277 198 629 401
Deferred 80 72 78 151
Total income tax expense 357 270 707 552
Net earnings 653 502 1,216 996
Preferred stock dividends 3 3 5 5
Net earnings applicable to
common stockholders $650 $499 $1,211 $991
Net earnings per weighted average
common shares outstanding
Basic $1.40 $1.04 $2.57 $2.06
Diluted $1.38 $1.01 $2.53 $2.01
Basic weighted average
shares outstanding 464 482 472 480
Diluted weighted average
shares outstanding 471 498 479 495
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED BALANCE SHEETS
(in millions) June 30, December 31,
2005 2004
Assets (Audited)
Current assets
Cash and cash equivalents $2,227 $1,152
Short-term investments 549 967
Accounts receivable 1,308 1,320
Fair value of derivative financial instruments --- 1
Deferred income taxes 248 289
Other current assets 149 143
Total current assets 4,481 3,872
Property and equipment, at cost 31,819 32,114
Less accumulated depreciation, depletion
and amortization 13,793 12,768
Net property and equipment 18,026 19,346
Investment in Chevron Corporation common
stock, at fair value 793 745
Fair value of derivative financial instruments --- 8
Goodwill 5,592 5,637
Other assets 378 417
Total Assets $29,270 $30,025
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable:
Trade $900 $715
Revenues and royalties due to others 470 487
Income taxes payable 148 223
Current portion of long-term debt 906 933
Accrued interest payable 144 139
Fair value of derivative financial instruments 376 399
Current portion of asset retirement obligation 49 46
Accrued expenses and other current liabilities 192 158
Total current liabilities 3,185 3,100
Debentures exchangeable into shares of
Chevron Corporation common stock 700 692
Other long-term debt 5,917 6,339
Fair value of derivative financial instruments 101 72
Asset retirement obligation, long-term 667 693
Other liabilities 377 366
Deferred income taxes 5,024 5,089
Stockholders' equity
Preferred stock 1 1
Common stock 45 48
Additional paid-in capital 7,609 9,087
Retained earnings 4,834 3,693
Accumulated other comprehensive income 882 930
Deferred compensation and other (72) (85)
Stockholders' Equity 13,299 13,674
Total Liabilities & Stockholders' Equity $29,270 $30,025
Common Shares Outstanding 453 484
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) Six Months Ended June 30,
2005 2004
Cash Flows From Operating Activities
Net earnings $1,216 $996
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation, depletion and amortization 1,114 1,124
Accretion of asset retirement obligation 23 22
Amortization of premiums on long-term debt, net (2) (3)
Effects of changes in foreign currency
exchange rates 11 15
Change in fair value of derivative
financial instruments 34 7
Deferred income tax expense 78 151
Net gain on sales of non-oil and gas properties (150) (4)
Other 29 35
2,353 2,343
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 9 (161)
Other current assets (6) (27)
Long-term other assets 35 ---
Increase (decrease) in:
Accounts payable 112 134
Income taxes payable (75) 157
Accrued interest and expenses 46 (81)
Long-term debt, including current maturities (67) 8
Long-term other liabilities (22) (13)
Net cash provided by operating activities $2,385 $2,360
Cash Flows From Investing Activities
Proceeds from sales of property and equipment $2,161 $20
Capital expenditures (1,976) (1,655)
Purchases of short-term investments (2,765) (1,627)
Sales of short-term investments 3,183 1,603
Net cash provided by (used in) investing
activities $603 $(1,659)
Cash Flows From Financing Activities
Principal payments on long-term debt $(354) $(971)
Issuance of common stock, net of issuance costs 81 188
Repurchase of common stock (1,562) ---
Dividends paid on common stock (70) (48)
Dividends paid on preferred stock (5) (5)
Net cash used in financing activities $(1,910) $(836)
Effect of exchange rate changes on cash $(3) $(15)
Net increase (decrease) in cash and
cash equivalents 1,075 (150)
Cash and cash equivalents at beginning of period 1,152 932
Cash and cash equivalents at end of period $2,227 $782
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
DRILLING ACTIVITY Quarter Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Exploration Wells Drilled
U.S. 9 4 21 10
Canada 35 32 152 131
International 7 --- 7 2
Total 51 36 180 143
Exploration Wells Success Rate
U.S. 89% 75% 76% 40%
Canada 100% 97% 93% 92%
International 43% --- 43% 50%
Total 90% 94% 89% 87%
Development Wells Drilled
U.S. 317 231 597 508
Canada 115 110 382 334
International 10 21 19 36
Total 442 362 998 878
Development Wells Success Rate
U.S. 98% 99% 98% 98%
Canada 99% 99% 99% 93%
International 100% 100% 100% 100%
Total 98% 99% 99% 97%
Total Wells Drilled
U.S. 326 235 618 518
Canada 150 142 534 465
International 17 21 26 38
Total 493 398 1,178 1,021
Total Wells Success Rate
U.S. 98% 98% 98% 97%
Canada 99% 99% 97% 93%
International 76% 100% 85% 97%
Total 98% 98% 97% 95%
COMPANY OPERATED RIGS June 30,
2005 2004
Number of Company Operated Rigs Running
U.S. 50 47
Canada 9 20
International 2 3
Total 61 70
CAPITAL EXPENDITURES DATA Quarter Ended Six Months Ended
(in millions) June 30, 2005 June 30, 2005
Capital Expenditures
U.S. Onshore $363 $695
U.S. Offshore 112 218
Total U.S. 475 913
Canada 463 938
International 18 51
Marketing & midstream 22 34
Capitalized general & administrative costs 45 92
Capitalized interest costs 18 37
Other 16 22
Total $1,057 $2,087
DEVON ENERGY CORPORATION
UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
Non-GAAP Financial Measure
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 Devon's
financial results.
RECONCILIATION TO GAAP INFORMATION Quarter Ended Six Months Ended
(in millions) June 30, June 30,
2005 2004 2005 2004
Net Cash Provided By Operating
Activities (GAAP) $997 $1,137 $2,385 $2,360
Changes in assets and
liabilities, net of effects
of acquisitions of businesses 291 44 (32) (17)
Cash flow before balance sheet
changes (Non-GAAP) $1,288 $1,181 $2,353 $2,343
Devon believes that using net debt, defined as debt less cash 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 can be used to repay indebtedness, netting cash
against debt provides a clearer picture of the future demands on cash to repay
debt. Included in Devon's indebtedness are $700 million of debentures
exchangeable into 14.2 million shares of Chevron common stock owned outright
by Devon. As of June 30, 2005, the market value of the shares ($793 million)
exceeded the related debt obligation of $700 million. Since the value of
Chevron common stock held by Devon is higher than the 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,
2005 2004
Total debt (GAAP) $7,523 7,907
Adjustments:
Cash and short-term investments (2,776) (1,147)
Market value of Chevron Corporation common stock (793) (667)
Net Debt (Non-GAAP) $3,954 6,093
Total Capitalization
Total debt $7,523 7,907
Stockholders' equity 13,299 11,963
Total Capitalization (GAAP) $20,822 19,870
Adjusted Capitalization
Net debt $3,954 6,093
Stockholders' equity 13,299 11,963
Adjusted Capitalization (Non-GAAP) $17,253 18,056
SOURCE Devon Energy Corporation
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Related links:
http://www.devonenergy.com
Company News On-Call:
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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