OKLAHOMA CITY, Dec. 8 /PRNewswire-FirstCall/ -- Devon Energy
Corporation (NYSE: DVN) today updated its estimate of fourth-quarter 2006
oil and gas production and revised its summary estimates of oil and gas
production for the years 2006 through 2009. These estimates result in
compound annual production growth of eight to 10 percent for the three-year
period.
The company also provided summary estimates of 2006 and 2007 capital
expenditures and reserve additions. Devon will report its results for 2006
and provide detailed forecasts for 2007 in early February 2007.
Updated 2006 through 2009 Production Guidance
Devon expects to produce approximately 57 million oil-equivalent
barrels (Boe) in the fourth quarter of 2006. This represents a seven
percent increase over Devon's fourth-quarter 2005 production of 53.3
million Boe. On a sequential quarter basis, estimated fourth-quarter
production would be three percent greater than third-quarter 2006
production of 55.4 million Boe.
For the full year 2006, Devon expects to produce approximately 216
million Boe. This includes approximately two million Boe (500,000 Boe in
the fourth quarter of 2006) of production from Devon's Egyptian assets. At
year-end Egypt will be reported as a discontinued operation and these
volumes will be excluded from reported production for all periods
presented. Devon announced its plans to sell all of its interests in Egypt
on November 14, 2006. The decision to sell the Egyptian assets results in
the exclusion of the related production volumes from the following
future-year forecasts.
Building on production growth momentum from 2006, Devon estimates its
2007 oil and gas production at 230 million to 232 million Boe. This
represents 2007 production growth from retained properties of approximately
eight percent. This growth is driven by strong performance from Devon's
U.S. onshore properties, a full year of production from the ACG field in
Azerbaijan and mid-year start-ups of production from the company's
Merganser field in the deepwater Gulf of Mexico and the Polvo discovery
offshore Brazil.
Production in 2008 is expected to total 251 million to 258 million Boe.
Based on the midpoints of the forecast ranges, this represents 10 percent
year-over-year production growth. Production growth in 2008 is expected to
include additional contributions from U.S. onshore properties as well as a
full year of production from Merganser, Polvo and Devon's Jackfish thermal
oil sands project in Canada. Devon expects similar production growth in
2009 with production of 270 to 285 million Boe.
As previously disclosed by Devon, the company has significantly reduced
activity levels on conventional gas projects in Canada until business
conditions improve. Competitive pressures for equipment, services and
supplies in Canada have created a highly inflationary cost environment. In
addition, the strengthening of the Canadian dollar relative to the U.S.
dollar has negatively impacted profit margins on these projects. This
curtailment of drilling activity in Canada is the largest factor
contributing to the revisions from Devon's previous estimates of 2007
through 2009 production.
Additionally, higher than expected oil prices in 2006 and higher
forecast prices for 2007 through 2009 have reduced Devon's expected
production from international areas operating under production sharing
agreements. Under the terms of production sharing contracts, higher oil
prices increase revenues and profitability; however, higher prices also
reduce reported production volumes.
Drill-Bit Reserve Additions Expected to Nearly Double 2006 Production
Drill-bit capital for 2006 is expected to total $6.3 billion to $6.5
billion, including $1.2 billion of unproven acquisition costs related to
the June 29, 2006, acquisition of Chief Holdings LLC. Devon estimates that
its additions to proved reserves in 2006 will be 415 million to 425 million
Boe, excluding 100 million Boe of reserves acquired from Chief and before
any revisions related to changes in oil and gas prices. This would nearly
double estimated 2006 production.
The estimated range of proved reserve additions in 2006 is slightly
lower than the company's previous estimated range of 420 million to 450
million Boe. The reduction is primarily attributable to lower than
anticipated reserve additions in Canada, following lower activity levels.
The company also announced that no proved reserves would be booked in 2006
for its lower Tertiary discoveries in the Gulf of Mexico.
Additional Reserve Growth Anticipated in 2007
The company expects to post strong reserve growth again in 2007. Devon
forecasts proved reserve additions of 350 million to 370 million Boe in the
coming year. Drill-bit capital for 2007 is forecast at $5.6 billion to $5.8
billion.
Summary Forecasts
$ Billions Millions of Oil Equivalent Barrels (MMBoe)
Year Drill-Bit Reserve Divestiture Retained
(1) Capital (3) Additions Production (4) Production
2006 (2) 6.3 - 6.5 415 - 425 2 214
2007 5.6 - 5.8 350 - 370 230 - 232
2008 251 - 258
2009 270 - 285
Notes to the table above:
(1) Drill-bit Capital includes exploration and development expenditures,
plugging and abandonment charges and capitalized interest and general
and administrative costs. Marketing and midstream and corporate
capital are excluded.
(2) The 2006 drill-bit capital estimate also includes $1.2 billion
allocated to unproven properties included in the acquisition of Chief
Holdings LLC.
(3) Reserve Additions include performance revisions but exclude revisions
due to changes in oil, natural gas and natural gas liquids prices.
(4) Retained Production in 2006 excludes production from Egyptian
properties selected for divestiture.
Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration, production and property
acquisitions. Devon is one of the world's leading independent oil and gas
producers and is included in the S&P 500 Index. For additional information,
visit http://www.devonenergy.com.
This press release includes "forward-looking statements" as defined by
the Securities and Exchange Commission. Such statements are those
concerning forecasts, estimates, expectations and objectives for future
operations. 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 production, reserve additions and capital
expenditures 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.
SOURCE Devon Energy Corporation
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Related links:
http://www.devonenergy.com
http://www.prnewswire.com/comp/118040.html /
CONTACT:
Investor: Zack Hager, +1-405-552-4526, or
Media: Brian Engel, +1-405-228-7750, both of Devon Energy
Corporation
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