Devon Energy Reports Second-Quarter 2009 Results
PRODUCTION (net of
royalties) Quarter Ended Six Months Ended
Excludes discontinued June 30, June 30,
operations ------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
Total Period Production
-----------------------
Natural Gas (Bcf)
U.S. Onshore 183.2 162.3 364.2 314.8
U.S. Offshore 10.5 14.2 21.3 32.5
---- ---- ---- ----
Total U.S. 193.7 176.5 385.5 347.3
Canada 60.1 53.0 112.8 104.7
International 0.3 0.4 0.6 1.0
------------- --- --- --- ---
Total Natural Gas 254.1 229.9 498.9 453.0
----------------- ----- ----- ----- -----
Oil (MMBbls)
U.S. Onshore 2.9 2.8 5.9 5.7
U.S. Offshore 1.2 1.8 2.3 3.6
--- --- --- ---
Total U.S. 4.1 4.6 8.2 9.3
Canada 6.6 5.3 12.9 9.9
International 4.7 3.3 7.9 8.1
------------- --- --- --- ---
Total Oil 15.4 13.2 29.0 27.3
------------- ---- ---- ---- ----
Natural Gas Liquids (MMBbls)
U.S. Onshore 6.4 5.8 12.6 11.6
U.S. Offshore 0.2 0.2 0.4 0.4
--- --- --- ---
Total U.S. 6.6 6.0 13.0 12.0
Canada 1.0 1.0 2.0 1.9
International - - - -
------------- --- --- --- ---
Total Natural Gas
Liquids 7.6 7.0 15.0 13.9
----------------- --- --- ---- ----
Oil Equivalent (MMBoe)
U.S. Onshore 39.9 35.7 79.2 69.7
U.S. Offshore 3.1 4.4 6.2 9.4
--- --- --- ---
Total U.S. 43.0 40.1 85.4 79.1
Canada 17.6 15.1 33.7 29.4
International 4.8 3.3 8.0 8.3
------------- --- --- --- ---
Total Oil
Equivalent 65.4 58.5 127.1 116.8
------------- ---- ---- ----- -----
Average Daily Production
------------------------
Natural Gas (MMcf)
U.S. Onshore 2,013.1 1,783.0 2,012.4 1,729.7
U.S. Offshore 115.5 156.1 117.4 178.7
----- ----- ----- -----
Total U.S. 2,128.6 1,939.1 2,129.8 1,908.4
Canada 660.2 582.6 623.0 575.0
International 3.2 4.8 3.3 5.4
------------- --- --- --- ---
Total Natural Gas 2,792.0 2,526.5 2,756.1 2,488.8
----------------- ------- ------- ------- -------
Oil (MBbls)
U.S. Onshore 32.0 30.9 32.5 31.0
U.S. Offshore 13.0 19.9 12.5 19.9
---- ---- ---- ----
Total U.S. 45.0 50.8 45.0 50.9
Canada 72.1 58.0 71.3 54.7
International 52.3 35.8 43.4 44.6
------------- ---- ---- ---- ----
Total Oil 169.4 144.6 159.7 150.2
--------- ----- ----- ----- -----
Natural Gas Liquids
(MBbls)
U.S. Onshore 70.8 64.1 69.7 63.7
U.S. Offshore 2.0 2.1 2.2 2.0
--- --- --- ---
Total U.S. 72.8 66.2 71.9 65.7
Canada 11.1 10.7 10.8 10.8
International - - - -
------------- --- --- --- ---
Total Natural Gas
Liquids 83.9 76.9 82.7 76.5
----------------- ---- ---- ---- ----
Oil Equivalent (MBoe)
U.S. Onshore 438.2 392.2 437.6 382.9
U.S. Offshore 34.2 48.0 34.3 51.7
---- ---- ---- ----
Total U.S. 472.4 440.2 471.9 434.6
Canada 193.3 165.8 185.9 161.3
International 52.8 36.6 43.9 45.6
------------- ---- ---- ---- ----
Total Oil Equivalent 718.5 642.6 701.7 641.5
----------------- ----- ----- ----- -----
BENCHMARK PRICES Quarter Ended Six Months Ended
(average prices) June 30, June 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Natural Gas ($/Mcf) -
Henry Hub $3.51 $10.94 $4.21 $9.49
Oil ($/Bbl) - West Texas
Intermediate
(Cushing) $59.83 $124.28 $51.51 $110.98
-------------------------------- ----- ------- ------ -------
REALIZED PRICES
(excludes the effects of
unrealized gains and
losses from hedging)
Quarter Ended June 30, 2009 Oil Gas NGLs Total
(Per (Per (Per (Per
Bbl) Mcf) Bbl) Boe)
------ ------ ------ ------
U.S. Onshore $54.66 $2.75 $20.81 $19.98
U.S. Offshore $56.44 $3.76 $23.69 $35.49
Total U.S. $55.18 $2.81 $20.89 $21.10
Canada $48.14 $3.25 $30.99 $30.85
International $56.03 $4.24 $- $55.71
------------- ------ ----- --- ------
Realized price without hedges $52.44 $2.91 $22.24 $26.27
Cash settlements $- $0.45 $- $1.75
---------------- --- ----- --- -----
Realized price, including cash
settlements $52.44 $3.36 $22.24 $28.02
------------------------------ ------ ----- ------ ------
Quarter Ended June 30, 2008 Oil Gas NGLs Total
(Per (Per (Per (Per
Bbl) Mcf) Bbl) Boe)
------- ------- ------- -------
U.S. Onshore $120.69 $9.40 $50.56 $60.51
U.S. Offshore $125.24 $11.43 $53.63 $91.38
Total U.S. $122.47 $9.56 $50.66 $63.88
Canada $94.35 $9.76 $75.10 $72.14
International $119.87 $11.00 $- $118.70
------------------ ------- ------ --- -------
Realized price without hedges $110.56 $9.61 $54.08 $69.14
Cash settlements $(0.01) $(1.32) $- $(5.18)
---------------- ------- ------- --- -------
Realized price, including cash
settlements $110.55 $8.29 $54.08 $63.96
------------------------------ ------- ----- ------ ------
Six Months Ended June 30, 2009 Oil Gas NGLs Total
(Per (Per (Per (Per
Bbl) Mcf) Bbl) Boe)
------ ------ ------ ------
U.S. Onshore $44.67 $3.09 $19.16 $20.57
U.S. Offshore $49.69 $4.46 $21.96 $34.85
Total U.S. $46.07 $3.16 $19.24 $21.61
Canada $38.19 $3.82 $28.52 $29.11
International $50.10 $3.85 $- $49.76
------------------------------- ------ ----- -- ------
Realized price without hedges $43.65 $3.31 $20.45 $25.36
Cash settlements $- $0.47 $- $1.83
---------------- --- ----- --- -----
Realized price, including cash
settlements $43.65 $3.78 $20.45 $27.19
------------------------------ ------ ----- ------ ------
Six Months Ended June 30, 2008 Oil Gas NGLs Total
(Per (Per (Per (Per
Bbl) Mcf) Bbl) Boe)
----- ----- ------ ------
U.S. Onshore $107.15 $8.26 $47.65 $53.91
U.S. Offshore $112.07 $9.94 $51.77 $79.52
Total U.S. $109.08 $8.42 $47.78 $56.95
Canada $84.16 $8.66 $68.86 $64.01
International $105.63 $9.56 $- $104.68
--------------- ------- ----- --- -------
Realized price without hedges $98.98 $8.48 $50.76 $62.12
Cash settlements $- $(0.69) $- $(2.67)
---------------- --- ------ --- ------
Realized price, including cash
settlements $98.98 $7.79 $50.76 $59.45
------------------------------ ------ ----- ------ ------
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in millions, except per Quarter Ended Six Months Ended
share amounts) June 30, June 30,
----------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues
--------
Oil sales $808 $1,455 $1,262 $2,705
Gas sales 740 2,210 1,653 3,840
NGL sales 170 379 306 707
Net gain (loss) on oil and gas
derivative financial
instruments 13 (1,215) 167 (2,003)
Marketing and midstream
revenues 359 719 730 1,274
----------------------- --- --- --- -----
Total revenues 2,090 3,548 4,118 6,523
----------------------- ----- ----- ----- -----
Expenses and other income, net
------------------------------
Lease operating expenses 510 537 1,034 1,043
Production taxes 47 176 89 310
Marketing and midstream
operating costs and expenses 234 515 463 897
Depreciation, depletion and
amortization of oil and gas
properties 494 762 1,093 1,499
Depreciation and amortization
of non-oil and gas properties 74 62 144 119
Accretion of asset retirement
obligation 24 22 48 44
General and administrative
expenses 182 180 348 328
Interest expense 90 90 173 192
Change in fair value of other
financial instruments (10) (40) (15) (24)
Reduction of carrying value of
oil and gas properties - - 6,516 -
Other expense (income), net 20 (17) 27 (38)
--------------------------- --- --- --- ---
Total expenses and other
income, net 1,665 2,287 9,920 4,370
----------------------------- ----- ----- ----- -----
Earnings (loss) from continuing
operations before income taxes 425 1,261 (5,802) 2,153
------------------------------- --- ----- ------- -----
Income tax expense (benefit)
---------------------------
Current 51 414 53 517
Deferred 77 253 (2,194) 391
-------- -- --- ------- ---
Total income tax expense
(benefit) 128 667 (2,141) 908
----------------------------- --- --- ------- ---
Earnings (loss) from continuing
operations 297 594 (3,661) 1,245
------------------------------- --- --- ------- -----
Discontinued operations
-----------------------
Earnings from discontinued
operations before income taxes 17 851 16 1,040
Income tax expense - 144 - 235
------------------ --- --- --- ---
Earnings from discontinuing
operations 17 707 16 805
-------------------------------- --- --- --- ---
Net earnings (loss) 314 1,301 (3,645) 2,050
Preferred stock dividends - 3 - 5
------------------------- --- --- --- ---
Net earnings (loss) applicable
to common stockholders $314 $1,298 $(3,645) $2,045
------------------------------ ---- ------ ------- ------
Basic net earnings (loss) per
share
Earnings (loss) from continuing
operations $0.67 $1.33 $(8.25) $2.80
Earnings from discontinued
operations $0.04 $1.58 $0.04 $1.80
-------------------------- ----- ----- ----- -----
Net earnings (loss) $0.71 $2.91 $(8.21) $4.60
------------------ ----- ----- ------- -----
Diluted net earnings (loss) per
share
Earnings (loss) from continuing
operations $0.66 $1.31 $(8.25) $2.76
Earnings from discontinued
operations $0.04 $1.57 $0.04 $1.79
-------------------------- ----- ----- ----- -----
Net earnings (loss) $0.70 $2.88 $(8.21) $4.55
------------------ ----- ----- ------- -----
CONSOLIDATED BALANCE SHEETS
(in millions) June 30, December 31,
2009 2008
---- ----
Assets (Audited)
------ ---------
Current assets
--------------
Cash and cash equivalents $648 $379
Accounts receivable 1,318 1,412
Income taxes receivable 27 334
Derivative financial instruments, at fair
value 226 282
Other current assets 358 277
----------------------- --- ---
Total current assets 2,577 2,684
----------------------- ----- -----
Property and equipment, at cost, based on
the full cost method of accounting for oil
and gas properties ($4,298 and $4,551
excluded from amortization in 2009 and 2008,
respectively) 59,086 55,664
Less accumulated depreciation, depletion
and amortization 40,999 32,683
---------------------------------------- ------ ------
Property and equipment, net 18,087 22,981
--------------------------- ------ ------
Goodwill 5,710 5,579
Other long-term assets, including $180
million and $199 million at fair value
in 2009 and 2008, respectively 683 664
------------------------------ --- ---
Total Assets $27,057 $31,908
------------ ------- -------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities
-------------------
Accounts payable - trade $1,074 $1,825
Revenues and royalties due to others 377 496
Short-term debt 1,508 180
Current portion of asset retirement
obligation, at fair value 175 138
Accrued expenses and other current
liabilities 358 496
---------------------------------- --- ---
Total current liabilities 3,492 3,135
---------------------------------- ----- -----
Long-term debt 5,849 5,661
Asset retirement obligation, at fair value 1,411 1,347
Other long-term liabilities 1,036 1,026
Deferred income taxes 1,587 3,679
--------------------- ----- -----
Stockholders' equity
--------------------
Common stock 44 44
Additional paid-in capital 6,363 6,257
Retained earnings 6,589 10,376
Accumulated other comprehensive income 686 383
-------------------------------------- --- ---
Total Stockholders' Equity 13,682 17,060
-------------------------- ------ ------
Total Liabilities and Stockholders' Equity $27,057 $31,908
------------------------------------------ ------- -------
Common Shares Outstanding 444 444
------------------------- --- ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) Six Months Ended June 30,
-------------------------
2009 2008
Cash Flows From Operating Activities ---- ----
------------------------------------
Net (loss) earnings $(3,645) $2,050
Earnings from discontinued
operations, net of tax (16) (805)
Adjustments to reconcile (loss)
earnings from continuing
operations to net cash provided by
operating activities:
Depreciation, depletion and
amortization 1,237 1,618
Deferred income tax (benefit)
expense (2,194) 391
Reduction of carrying value of oil
and gas properties 6,516 -
Net unrealized loss on oil and gas
derivative financial instruments 65 1,692
Other noncash charges 134 122
Net increase in working capital (89) (132)
Decrease (increase) in long-term
other assets 43 (37)
Increase in long-term other
liabilities 19 181
-------------------------------- --- ---
Cash provided by operating
activities - continuing operations 2,070 5,080
Cash provided by operating
activities - discontinued
operations 7 106
-------------------------- --- ---
Net cash provided by operating
activities $2,077 $5,186
------------------------------ ------ ------
Cash Flows From Investing Activities
------------------------------------
Proceeds from sales of property and
equipment 2 108
Capital expenditures (3,201) (3,870)
Purchases of short-term investments - (50)
Sales of long-term and short-term
investments 4 295
----------------------------------- --- ---
Cash used in investing activities -
continuing operations (3,195) (3,517)
Cash provided by investing
activities - discontinued
operations 2 1,712
-------------------------- --- -----
Net cash used in investing activities $(3,193) $(1,805)
------------------------------------- ------- -------
Cash Flows From Financing Activities
------------------------------------
Proceeds from borrowing of
long-term debt, net of issuance
costs 1,187 -
Credit facility repayments - (3,070)
Credit facility borrowings - 1,620
Net commercial paper borrowings
(repayments) 325 (1,004)
Debt repayments (1) (47)
Redemption of preferred stock - (150)
Proceeds from stock option
exercises 9 104
Repurchases of common stock - (252)
Dividends paid on common and
preferred stock (142) (146)
Excess tax benefits related to
share-based compensation 5 55
------------------------------ --- ---
Net cash provided by (used in)
financing activities $1,383 $(2,890)
------------------------------- ------ -------
Effect of exchange rate changes on cash 5 (19)
------------------------------- --- ---
Net increase in cash and cash
equivalents 272 472
Cash and cash equivalents at beginning
of period (including assets held for sale) 384 1,373
------------------------------- --- -----
Cash and cash equivalents at end of
period (including assets held for
sale) $656 $1,845
=================================== ==== ======
DRILLING ACTIVITY Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2009 2008 2009 2008
---- ---- ---- ----
Exploration Wells Drilled
-------------------------
U.S. 2 8 9 17
Canada 7 7 29 58
International - 1 1 7
------------- --- --- --- ---
Total 9 16 39 82
----- --- --- --- ---
Exploration Wells Success Rate
------------------------------
U.S. 50% 88% 78% 71%
Canada 100% 86% 100% 95%
International - 0% 0% 0%
------------- --- --- --- ---
Total 89% 81% 92% 82%
----- --- --- --- ---
Development Wells Drilled
-------------------------
U.S. 160 405 454 777
Canada 22 61 143 259
International 7 12 13 22
------------- --- --- --- ---
Total 189 478 610 1,058
----- --- --- --- -----
Development Wells Success Rate
------------------------------
U.S. 100% 98% 99% 98%
Canada 100% 100% 99% 100%
International 100% 92% 100% 91%
------------- --- --- --- ---
Total 100% 98% 99% 98%
----- --- --- --- ---
Total Wells Drilled
-------------------
U.S. 162 413 463 794
Canada 29 68 172 317
International 7 13 14 29
------------- --- --- --- ---
Total 198 494 649 1,140
----- --- --- --- -----
Total Wells Success Rate
------------------------
U.S. 99% 98% 99% 98%
Canada 100% 99% 99% 99%
International 100% 85% 93% 69%
------------- --- --- --- ---
Total 99% 98% 99% 97%
----- --- --- --- ---
June 30,
-------------
2009 2008
---- ----
Number of Company Operated Rigs Running
---------------------------------------
U.S. 23 79
Canada 1 12
International - 1
------------- --- ---
Total 24 92
----- --- ---
CAPITAL EXPENDITURES (in millions)
Quarter Ended June 30,
2009
U.S. U.S.
Onshore Offshore Canada International Total
--------- --------- ------ ------------- -----
Capital Expenditures
--------------------
Exploration $25 31 19 53 $128
Development 409 119 149 43 720
----------- --- --- --- -- ---
Exploration and
development capital $434 150 168 96 $848
Capitalized G&A 104
Capitalized interest 21
Discontinued
operations -
Midstream capital 62
Other capital 24
------------- --
Total Capital
Expenditures $1,059
------------- ------
CAPITAL EXPENDITURES (in millions)
Six Months Ended June 30,
2009
U.S. U.S.
Onshore Offshore Canada International Total
--------- --------- ------ ------------- -----
Capital Expenditures
--------------------
Exploration $50 114 69 109 $342
Development 1,130 238 379 60 1,807
----------- ----- --- --- -- -----
Exploration and
development capital $1,180 352 448 169 $2,149
Capitalized G&A 208
Capitalized interest 46
Discontinued
operations 4
Midstream capital 150
Other capital 44
------------- --
Total Capital
Expenditures $2,601
------------- ------
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
(in millions) Quarter Ended Six Months Ended
June 30, June 30,
---------------- ------------
2009 2008 2009 2008
---- ---- ---- ----
Net Cash Provided By Operating
Activities (GAAP) $1,030 $2,931 $2,077 $5,186
------------------------------ ------ ------ ------ ------
Changes in assets and liabilities -
continuing operations 81 (365) 27 2
Changes in assets and liabilities -
discontinued operations (2) 124 (7) 61
----------------------------------- --- --- --- ---
Cash flow before balance sheet changes
(Non-GAAP) $1,109 $2,690 $2,097 $5,249
-------------------------------------- ------ ------ ------ ------
Devon believes that using net debt for the calculation of "net debt to
adjusted capitalization" provides a better measure than using debt. Devon
defines net debt as debt less cash and cash equivalents. Devon believes
that because cash can be used to repay indebtedness, netting cash and cash
equivalents against debt provides a clearer picture of the future demands
on cash to repay debt.
RECONCILIATION TO GAAP INFORMATION
(in millions) June 30,
------------------
2009 2008
---- ----
Total debt (GAAP) $7,357 $5,450
Adjustments:
Cash and cash equivalents 648 1,838
-------------------------- --- -----
Net Debt (Non-GAAP) $6,709 $3,612
-------------------------- ------ ------
Total debt $7,357 $5,450
Stockholders' equity 13,682 23,433
-------------------------- ------ ------
Total Capitalization (GAAP) $21,039 $28,883
-------------------------- ------- -------
Net debt $6,709 $3,612
Stockholders' equity 13,682 23,433
-------------------------- ------ ------
Adjusted Capitalization (Non-GAAP) $20,391 $27,045
-------------------------- ------- -------
SOURCE Devon Energy Corporation
