Devon Energy Corp. (NYSE: DVN) today reported operational and
financial results for the first quarter of 2016 and provided
guidance for the second quarter and full-year 2016.
Highlights
- Exceeded midpoint expectations for all
production products
- Raised full-year production guidance by
3 percent
- Reduced LOE costs by 21 percent year
over year
- Lowered 2016 operating cost outlook by
$50 million
- Improved balance sheet strength with
liquidity increasing to $4.6 billion
“In spite of the challenging industry conditions, Devon achieved
another high-quality operating performance in the first quarter as
we continued to take the appropriate steps to deliver significant
cost reductions and accelerate efficiency gains across our
portfolio,” said Dave Hager, president and CEO. “These successful
efforts resulted in production exceeding the midpoint of guidance
for all products and operating costs declining by more than 20
percent year over year. Additionally, G&A costs savings remain
on track to reduce overhead by up to $500 million on an annual
basis.”
“Looking ahead, our top priority is to maintain a strong balance
sheet,” said Hager. “We are balancing capital requirements with
cash flow and enhancing our financial strength by utilizing asset
sale proceeds to reduce debt. This disciplined financial strategy
positions us to take advantage of our world-class resource plays
when prices incentivize higher activity levels.”
Raising 2016 Production Guidance
Devon’s reported oil production averaged 285,000 barrels per day
in the first quarter of 2016. Of this amount, 255,000 barrels per
day were from the Company’s core assets, where investment will be
focused going forward. Oil production from these assets increased
10 percent year over year, exceeding the midpoint of guidance by
5,000 barrels per day.
Overall, net production from Devon’s core assets averaged
581,000 oil-equivalent barrels (Boe) per day during the first
quarter, surpassing the midpoint of guidance by 6,000 Boe per day.
With the strong growth in higher-margin production, oil is now the
largest component of Devon’s product mix at 44 percent of total
production.
Given the strong year-to-date production performance, Devon has
raised the midpoint of its 2016 guidance by 15,000 Boe per day, or
3 percent. This incremental production is expected to be delivered
without additional capital spending.
Strong Operating Costs Performance in Q1; Additional Savings
Expected
The Company has several cost-reduction initiatives underway that
positively impacted first-quarter results. The most significant
operating cost savings came from lease operating expenses (LOE),
which is Devon’s largest field-level cost. LOE declined 21 percent
compared to the first quarter of 2015 to $7.13 per Boe, and LOE was
$6 million below the bottom-end of guidance. The decrease in LOE
was primarily driven by improved power and water-handling
infrastructure, declining labor expense and lower supply chain
costs.
With these outstanding results in the first quarter and
additional cost savings expected throughout 2016, the Company is
lowering its full-year LOE outlook by $50 million to a range of
$1.75 billion to $1.85 billion. Due to these additional savings,
the Company expects field-level costs, which include both LOE and
production taxes, to decline by up to $400 million for the
full-year 2016.
G&A Cost Savings Initiatives Ahead of Schedule
Devon also realized significant general and administrative
(G&A) cost savings in the first quarter. G&A expenses
totaled $194 million, a 23 percent improvement compared to the
first quarter of 2015. This decrease was driven by lower
employee-related costs.
In the first quarter of 2016, the Company reduced its employee
count by approximately 20 percent, bringing the total workforce
reduction to more than 25 percent over the past 12 months. This
reorganization effort resulted in $234 million of non-recurring
charges, with minimal cash payments occurring in the first quarter.
Overall, approximately 75 percent of the reorganization charges
will result in cash payments, with the vast majority in subsequent
quarters.
As a result of the G&A cost-reduction initiatives, overhead
costs are projected to decline to approximately $160 million in the
second quarter, and the Company is on track to reduce G&A costs
by up to $500 million on an annual basis.
Disciplined Capital Program Yields Strong Results
Devon’s accrued E&P capital spending, which accounts for
activity that was incurred during the reporting period, amounted to
$363 million in the first quarter. This strong cost performance was
9 percent below the Company’s guidance midpoint.
The $363 million of accrued upstream capital activity in the
first quarter compares to $749 million reported on Devon’s
consolidated statement of cash flows. The difference primarily
relates to EnLink capital incurred and the timing of payables from
higher activity levels in late 2015.
First-Quarter 2016 Operations Report
For additional details on Devon’s E&P operations, please
refer to the Company’s first-quarter 2016 operations report at
www.devonenergy.com. Highlights from the report include:
- STACK delivering top-tier results
- Leonard Shale potential expands in the
Delaware Basin
- Eagle Ford generating substantial free
cash flow
- Powder River Basin delivers
best-in-class well results
- Jackfish 2 exceeds nameplate
capacity
EnLink Midstream Delivers Steady Cash Flow
Devon’s midstream business generated $202 million of operating
profit in the first quarter, driven entirely by Devon’s strategic
investment in EnLink Midstream. The Company has a 64 percent
ownership in the general partner (ENLC) and a 25 percent interest
in the limited partnership (ENLK). In aggregate, Devon’s ownership
in EnLink is valued at approximately $3 billion and is expected to
generate cash distributions of $270 million in 2016.
Balance Sheet and Liquidity Bolstered
Devon exited the first quarter with $4.6 billion of liquidity,
consisting of $1.6 billion of cash on hand and $3.0 billion of
capacity on its senior credit facility. Liquidity was bolstered
during the first quarter by a secondary stock offering.
Devon exited the quarter with net debt, excluding non-recourse
EnLink obligations, totaling $7.7 billion. The Company has managed
its debt-maturity schedule to provide maximum flexibility with
near-term liquidity and has no significant debt maturities until
December 2018. The weighted-average cost of Devon’s outstanding
debt is only 5 percent.
Asset Divestiture Programs Advance
To further enhance its financial strength, the Company is
targeting total divestiture proceeds of $2 billion to $3 billion.
In April, Devon took an important step toward that divestiture goal
by announcing the sale of its non-core Mississippian assets in
northern Oklahoma for $200 million, which is expected to close in
the second quarter.
The divestiture process for the Company’s remaining non-core
assets is ongoing. Devon is marketing its 50 percent interest in
the Access Pipeline in Canada and anticipates an announcement in
the first half of 2016. Efforts to monetize remaining non-core
upstream assets in the U.S. are also progressing. Data rooms have
been open since early March and bids are expected by the end of the
second quarter.
Core Earnings Results and Non-GAAP Reconciliations
Adjusting for items that securities analysts typically exclude
from their published estimates, Devon had a core loss of $249
million, or $0.53 per share in the first quarter of 2016. On a
reported basis, Devon had a net loss of $3.1 billion for the
first-quarter 2016.
For the quarter ended the Company had $149 million in net cash
from operating activities. This included a positive working capital
adjustment of $224 million and negative adjustments of $167 million
and $130 million for restructuring and foreign exchange derivative
settlements, respectively. These items are typically excluded from
analyst estimates of cash flow from operations.
Pursuant to regulatory disclosure requirements, Devon is
required to reconcile non-GAAP (generally accepted accounting
principles) financial measures to the related GAAP information.
Core earnings and net debt are non-GAAP financial measures
referenced within this release. Reconciliations of these non-GAAP
measures are provided later in this release.
Conference Call Webcast and Supplemental Earnings
Materials
Please note that as soon as practicable today, Devon will post
an operations report to its website at www.devonenergy.com. The
Company’s first-quarter conference call will be held at 10 a.m.
Central (11 a.m. Eastern) on Wednesday, May 4, 2016, and will serve
primarily as a forum for analyst and investor questions and
answers.
Forward-Looking Statements
This press release includes "forward-looking statements" as
defined by the Securities and Exchange Commission (SEC). Such
statements include those concerning strategic plans, expectations
and objectives for future operations, and are often identified by
use of the words “expects,” “believes,” “will,” “would,” “could,”
“forecasts,” “projections,” “estimates,” “plans,” “expectations,”
“targets,” “opportunities,” “potential,” “anticipates,” “outlook”
and other similar terminology. 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 our
business and operations 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: the volatility of oil, gas and NGL prices,
including the currently depressed commodity price environment;
uncertainties inherent in estimating oil, gas and NGL reserves; the
extent to which we are successful in acquiring and discovering
additional reserves; the uncertainties, costs and risks involved in
exploration and development activities; risks related to our
hedging activities; counterparty credit risks; regulatory
restrictions, compliance costs and other risks relating to
governmental regulation, including with respect to environmental
matters; risks relating to our indebtedness; our ability to
successfully complete mergers, acquisitions and divestitures; the
extent to which insurance covers any losses we may experience; our
limited control over third parties who operate our oil and gas
properties; midstream capacity constraints and potential
interruptions in production; competition for leases, materials,
people and capital; cyberattacks targeting our systems and
infrastructure; and any of the other risks and uncertainties
identified in our Form 10-K and our other filings with the SEC.
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 forward-looking statements in this press release
are made as of the date of this press release, even if subsequently
made available by Devon on its website or otherwise. Devon does not
undertake any obligation to update the forward-looking statements
as a result of new information, future events or otherwise.
The SEC permits oil and gas companies, in their filings with the
SEC, to disclose only proved, probable and possible reserves that
meet the SEC's definitions for such terms, and price and cost
sensitivities for such reserves, and prohibits disclosure of
resources that do not constitute such reserves. This release
may contain certain terms, such as resource potential
and exploration target size. These estimates are by their
nature more speculative than estimates of proved, probable and
possible reserves and accordingly are subject to substantially
greater risk of being actually realized. The SEC guidelines
strictly prohibit us from including these estimates in filings with
the SEC. Investors are urged to consider closely the disclosure in
our Form 10-K, available at www.devonenergy.com. You can also
obtain this form from the SEC by calling 1-800-SEC-0330 or from the
SEC’s website at www.sec.gov.
About Devon Energy
Devon Energy is a leading independent energy company engaged in
finding and producing oil and natural gas. Based in Oklahoma City
and included in the S&P 500, Devon operates in several of the
most prolific oil and natural gas plays in the U.S. and Canada with
an emphasis on a balanced portfolio. The Company is the
second-largest oil producer among North American onshore
independents. For more information, please visit
www.devonenergy.com.
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
Quarter
Ended PRODUCTION NET OF ROYALTIES March 31,
2016 2015 Oil and bitumen (MBbls/d) U.
S. - Core 129 127 Heavy Oil 126 104 Core assets 255 231 Other 30 41
Total 285 272
Natural gas liquids (MBbls/d) U. S. - Core 108
105 Other 29 34 Total 137 139
Gas (MMcf/d) U. S. - Core
1,295 1,304 Heavy Oil 15 28 Core assets 1,310 1,332 Other 271 313
Total 1,581 1,645
Oil equivalent (MBoe/d) U. S. - Core 452
449 Heavy Oil 129 109 Core assets 581 558 Other 104 127 Total 685
685
KEY OPERATING STATISTICS BY REGION Quarter Ended March
31, 2016 Avg. Production Gross Wells Rigs at
March 31, 2016 (MBoe/d) Drilled (including
partner rigs) STACK 91 17 4 Delaware Basin 63 21 - Eagle Ford
107 24 2 Rockies 23 8 - Heavy Oil 129 9 - Barnett Shale 168 - -
Core assets 581 79 6
PRODUCTION TREND 2015 2016 Quarter
1 Quarter 2 Quarter 3 Quarter 4 Quarter
1 Oil and bitumen (MBbls/d) STACK 6 6 6 7 14
Delaware Basin 33 41 41 42 38 Eagle Ford 75 67 62 60 59 Rockies 12
16 16 16 17 Heavy Oil 104 98 121 121 126 Barnett Shale 1
1 1 1
1 Core assets 231 229 247 247 255 Other 41
41 35
31 30 Total 272
270 282 278
285
Natural gas liquids (MBbls/d) STACK 22 16 22 23
29 Delaware Basin 8 10 8 11 12 Eagle Ford 23 24 26 27 24 Rockies 1
1 2 1 1 Barnett Shale 51 49
44 46 42 Core
assets 105 100 102 108 108 Other 34 34
32 31 29
Total 139 134 134
139 137
Gas (MMcf/d)
STACK 230 221 216 235 286 Delaware Basin 66 75 70 82 84 Eagle Ford
143 146 154 151 144 Rockies 38 41 41 38 32 Heavy Oil 28 20 16 24 15
Barnett Shale 827 805 788
768 749 Core assets 1,332
1,308 1,285 1,298 1,310 Other 313 319
301 285 271
Total 1,645 1,627 1,586
1,583 1,581
Oil
equivalent (MBoe/d) STACK 65 59 64 70 91 Delaware Basin 52 64
61 66 63 Eagle Ford 122 114 113 111 107 Rockies 19 24 25 23 23
Heavy Oil 109 101 124 126 129 Barnett Shale 191
185 176 175
168 Core assets 558 547 563 571 581 Other 127
127 117 110
104 Total 685 674
680 681 685
BENCHMARK PRICES (average prices)
Quarter 1 2016 2015 Oil
($/Bbl) - West Texas Intermediate (Cushing) $ 33.66 $ 48.87 Natural
Gas ($/Mcf) - Henry Hub $ 2.09 $ 2.99
REALIZED PRICES
Quarter Ended March 31, 2016 Oil /Bitumen NGL
Gas Total (Per Bbl) (Per Bbl) (Per
Mcf) (Per Boe) United States $ 28.74 $ 6.84 $ 1.53 $
14.22 Canada (1) $ 9.18
$
N/M
$
N/M
$ 8.95 Realized price without hedges $ 20.06 $ 6.84 $ 1.53 $ 13.23
Cash settlements $ - $ - $ 0.13 $ 0.30 Realized price, including
cash settlements $ 20.06 $ 6.84 $ 1.66 $ 13.53
Quarter
Ended March 31, 2015 Oil /Bitumen NGL Gas
Total (Per Bbl) (Per Bbl) (Per Mcf)
(Per Boe) United States $ 42.80 $ 9.40 $ 2.45 $ 21.66 Canada
(1) $ 22.87
$
N/M
$
N/M
$ 22.16 Realized price without hedges $ 35.17 $ 9.40 $ 2.45 $ 21.74
Cash settlements $ 21.12 $ - $ 0.51 $ 9.62 Realized price,
including cash settlements $ 56.29 $ 9.40 $ 2.96 $ 31.36 (1)
The reported Canadian gas volumes include volumes that are produced
from certain of our leases and then transported to our Jackfish
operations where the gas is used as fuel. However, the revenues and
expenses related to this consumed gas are eliminated in our
consolidated financials.
CONSOLIDATED STATEMENTS OF EARNINGS (in millions, except per
share amounts)
Quarter Ended March 31,
2016 2015 Oil, gas and NGL sales
$ 825 $ 1,339 Oil, gas and NGL derivatives 33 294 Marketing and
midstream revenues 1,268 1,632 Total
operating revenues 2,126 3,265 Lease
operating expenses 444 553 Marketing and midstream operating
expenses 1,066 1,439 General and administrative expenses 194 251
Production and property taxes 78 108 Depreciation, depletion and
amortization 542 930 Asset impairments 3,035 5,460 Restructuring
and transaction costs 247 - Other operating items 20
19 Total operating expenses 5,626
8,760 Operating loss (3,500 ) (5,495 ) Net financing
costs 164 117 Other nonoperating items 21 12
Loss before income taxes (3,685 ) (5,624 ) Income tax
benefit (217 ) (2,035 ) Net loss (3,468 ) (3,589 )
Net earnings (loss) attributable to noncontrolling interests
(412 ) 10 Net loss attributable to Devon $ (3,056 ) $
(3,599 ) Net loss per share attributable to Devon: Basic $
(6.44 ) $ (8.88 ) Diluted $ (6.44 ) $ (8.88 ) Weighted
average common shares outstanding: Basic 479 410 Diluted 479 410
CONSOLIDATED
STATEMENTS OF CASH FLOWS (in millions)
Quarter Ended
March 31, 2016 2015
Cash flows from operating activities: Net loss $ (3,468 ) $ (3,589
) Adjustments to reconcile net loss to net cash from operating
activities: Depreciation, depletion and amortization 542 930 Asset
impairments 3,035 5,460 Deferred income tax benefit (207 ) (2,047 )
Derivatives and other financial instruments 194 (430 ) Cash
settlements on derivatives and financial instruments (104 ) 719
Other noncash charges (67 ) 225 Net change in working capital 198
215 Change in long-term other assets 53 141 Change in long-term
other liabilities (27 ) 24 Net cash from
operating activities 149 1,648
Cash flows from investing activities: Capital expenditures (749 )
(1,717 ) Acquisitions of property, equipment and businesses (1,627
) (404 ) Divestitures of property and equipment 18 2 Other
(1 ) 3 Net cash from investing activities
(2,359 ) (2,116 ) Cash flows from financing
activities: Borrowings of long-term debt, net of issuance costs 396
957 Repayments of long-term debt (259 ) (487 ) Net short-term debt
borrowings (repayments) (626 ) 15 Issuance of common stock 1,469 -
Sale of subsidiary units - 569 Issuance of subsidiary units 727 2
Dividends paid on common stock (125 ) (99 ) Distributions to
noncontrolling interests (73 ) (53 ) Other -
(12 ) Net cash from financing activities 1,509
892 Effect of exchange rate changes on cash 26 (46 ) Net
change in cash and cash equivalents (675 ) 378 Cash and cash
equivalents at beginning of period 2,310 1,480
Cash and cash equivalents at end of period $ 1,635
$ 1,858
CONSOLIDATED BALANCE SHEETS (in millions)
March 31,
December 31, 2016 2015
Current assets: Cash and cash equivalents $ 1,635 $ 2,310
Accounts receivable 1,023 1,105 Derivatives, at fair value 54 43
Income taxes receivable 24 147 Other current assets 214
416 Total current assets 2,950
4,021 Property and equipment, at cost: Oil and gas,
based on full cost accounting: Subject to amortization 79,907
78,190 Not subject to amortization 3,901 2,584
Total oil and gas 83,808 80,774 Midstream and other
10,979 10,380 Total property and equipment, at
cost 94,787 91,154 Less accumulated depreciation, depletion and
amortization (75,523 ) (72,086 ) Property and
equipment, net 19,264 19,068 Goodwill
4,159 5,032 Other long-term assets 2,264 1,330
Total assets $ 28,637 $ 29,451 Current
liabilities: Accounts payable $ 640 $ 906 Revenues and royalties
payable 705 763 Short-term debt 350 976 Other current liabilities
905 650 Total current liabilities
2,600 3,295 Long-term debt 12,195
12,056 Asset retirement obligations 1,491 1,370 Other long-term
liabilities 1,112 853 Deferred income taxes 731 888 Stockholders'
equity: Common stock 52 42 Additional paid-in capital 7,501 4,996
Retained earnings (accumulated deficit) (1,400 ) 1,781 Accumulated
other comprehensive earnings 257 230
Total stockholders' equity attributable to Devon 6,410 7,049
Noncontrolling interests 4,098 3,940
Total stockholders' equity 10,508 10,989
Total liabilities and stockholders' equity $ 28,637 $
29,451 Common shares outstanding 524 418
CONSOLIDATING STATEMENTS OF OPERATIONS (in millions)
Quarter Ended March 31, 2016
Devon U.S.& Canada
EnLink Eliminations Total Oil, gas and NGL
sales $ 825 $ - $ - $ 825 Oil, gas and NGL derivatives 33 - - 33
Marketing and midstream revenues 561 890
(183 ) 1,268 Total operating revenues
1,419 890 (183 ) 2,126
Lease operating expenses 444 - - 444 Marketing and midstream
operating expenses 576 673 (183 ) 1,066 General and administrative
expenses 164 30 - 194 Production and property taxes 67 11 - 78
Depreciation, depletion and amortization 420 122 - 542 Asset
impairments 2,162 873 - 3,035 Restructuring and transaction costs
242 5 - 247 Other operating items 19 1
- 20 Total operating expenses
4,094 1,715 (183 ) 5,626
Operating loss (2,675 ) (825 ) - (3,500 ) Net financing costs 120
44 - 164 Other nonoperating items 19 2
- 21 Loss before income taxes (2,814 )
(871 ) - (3,685 ) Income tax benefit (213 ) (4 )
- (217 ) Net loss (2,601 ) (867 ) - (3,468 )
Net loss attributable to noncontrolling interests -
(412 ) - (412 ) Net loss attributable
to Devon $ (2,601 ) $ (455 ) $ - $ (3,056 )
OTHER KEY STATISTICS
(in millions)
Quarter Ended March 31, 2016
Devon U.S.& Canada
EnLink Eliminations Total Cash flow
statement related items: Operating cash flow $ (45 ) $ 194 $ -
$ 149 Capital expenditures $ (614 ) $ (135 ) $ - $ (749 )
Acquisitions of property, equipment and businesses $ (830 ) $ (797
) $ - $ (1,627 ) EnLink distributions received (paid) $ 66 $ (139 )
$ - $ (73 ) Issuance of subsidiary units $ - $ 727 $ - $ 727
Balance sheet statement items: Net debt(1) $ 7,712 $ 3,198 $
- $ 10,910 (1) Net debt is a non-GAAP measure. For a
reconciliation of the comparable GAAP measure, see "Non-GAAP
Financial Measures" later in this release.
CAPITAL EXPENDITURES (in millions)
Quarter Ended March
31, 2016 Exploration and development capital $ 363 Capitalized
G&A 73 Capitalized interest 14 Acquisitions 1,518 Midstream 2
Corporate and other 4 Devon capital expenditures (1) $ 1,974
(1) Excludes $545 million attributable to EnLink.
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.
CORE EARNINGS
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.
Accordingly, the Company also uses the measures of core earnings
and core earnings per diluted share. Devon believes these non-GAAP
measures facilitate comparisons of its performance to earnings
estimates published by securities analysts. Devon also believes
these non-GAAP measures can facilitate comparisons of its
performance between periods and to the performance of its peers.
The following table summarizes the effects of these items on
first-quarter 2016 earnings.
(in millions, except per
share amounts)
Quarter Ended March 31, 2016
Before-Tax After-Tax Net loss attributable to
Devon (GAAP) $ (3,056 ) Asset impairments 3,035 2,299 Deferred tax
asset valuation allowance 808
Restructuring and transaction costs (1)
SEE CASH FLOW FOOTNOTE BELOW
247 159
Changes in financial instruments and FX
(2) SEE CASH FLOW FOOTNOTE BELOW
12 (39 ) Core earnings before noncontrolling interest
(non-GAAP) 171 Noncontrolling interest 420 Core loss
attributable to Devon (non-GAAP) $ (249 ) Share count 479 Core loss
per share attributable to Devon (non-GAAP) $ (0.53 )
CASH FLOW
FOOTNOTES
(1) Includes a negative $167 million impact to cash flow before
balance sheet changes that is typically excluded from analyst
estimates.
(2) Includes a negative $130 million
impact to cash flow before balance sheet changes and operating cash
flow that is typically excluded from analyst estimates.
NET DEBT
Devon defines net debt as debt less cash and cash equivalents
and net debt attributable to the consolidation of EnLink Midstream
as presented in the following table. Devon believes that netting
these sources of cash against debt and adjusting for EnLink net
debt provides a clearer picture of the future demands on cash from
Devon to repay debt.
(in
millions)
March 31, 2016
Devon U.S. & Canada
EnLink Devon Consolidated Total debt (GAAP) $
9,341 $ 3,204 $ 12,545 Less cash and cash equivalents (1,629
) (6 ) (1,635 ) Net debt (non-GAAP) $ 7,712 $
3,198 $ 10,910
PRODUCTION GUIDANCE Quarter 2 Full Year
Low High Low
High Oil and bitumen (MBbls/d)
U. S. - core 103 108 105 110 Heavy Oil 122 127 128 133 Core assets
225 235 233 243 Other 24 29 20 25 Total 249 264 253 268
Natural
gas liquids (MBbls/d) U. S. - core 100 105 98 103 Other 25 30
22 27 Total 125 135 120 130
Gas (MMcf/d) U. S. - core 1,200
1,250 1,185 1,235 Heavy Oil 14 17 14 17 Core assets 1,214 1,267
1,199 1,252 Other 240 260 228 248 Total 1,454 1,527 1,427 1,500
Oil equivalent (MBoe/d) U. S. - core 403 421 401 419 Heavy
Oil 124 130 130 136 Core assets 527 551 531 555 Other 89 102 80 93
Total 616 653 611 648
PRICE REALIZATIONS
GUIDANCE Quarter 2 Full Year Low
High Low High Oil and bitumen - % of
WTI U. S. 83 % 93 % 83 % 93 % Canada 38 % 48 % 34 % 44 % NGL -
realized price $ 6 $ 10 $ 7 $ 11 Natural gas - % of Henry Hub 73 %
83 % 75 % 85 %
OTHER
GUIDANCE ITEMS Quarter 2 Full Year ($ millions,
except %)
Low High Low
High Marketing & midstream
operating profit $ 200 $ 225 $ 875 $ 925 Lease operating expenses $
440 $ 470 $ 1,750 $ 1,850 General & administrative expenses $
150 $ 170 $ 625 $ 675 Production and property taxes $ 70 $ 80 $ 285
$ 315 Depreciation, depletion and amortization $ 510 $ 560 $ 2,100
$ 2,300 Other operating items $ 15 $ 20 $ 50 $ 75 Net financing
costs (1) $ 160 $ 170 $ 650 $ 700 Current income tax rate 0.0 % 0.0
% 0.0 % 0.0 % Deferred income tax rate 35.0 % 45.0 %
35.0 % 45.0 % Total income tax rate 35.0 %
45.0 % 35.0 % 45.0 % Net earnings
attributable to noncontrolling interests $ — $ — $ — $ —
(1) Full year 2016 includes $50 million of non-cash accretion on
EnLink’s installment purchase obligations.
CAPITAL EXPENDITURES GUIDANCE Quarter 2 Full
Year (in millions)
Low High Low
High Exploration and development $ 250 $ 300 $ 900 $
1,100 Capitalized G&A 55 65 200 250 Capitalized interest 10 20
40 50 Midstream — 5 — 10 Corporate and other 10 15
30 35 Devon capital expenditures (2) $ 325 $ 405 $
1,170 $ 1,445 (2) Excludes capital expenditures related to
EnLink.
COMMODITY HEDGES
Oil Commodity
Hedges Price Swaps Price Collars
Oil Call Options Sold Period
Volume(Bbls/d)
WeightedAveragePrice ($/Bbl)
Volume(Bbls/d)
WeightedAverage FloorPrice ($/Bbl)
WeightedAverageCeiling Price($/Bbl)
Volume(Bbls/d)
WeightedAverage Price($/Bbl)
Q2-2016 30,000 $ 39.24 73,000 $ 33.85 $ 41.59 18,500 $ 60.99
Q3-2016 15,000 $ 45.63 65,000 $ 40.37 $ 46.91 18,500 $ 55.00
Q4-2016 15,000 $ 46.16 20,000 $ 40.85 $ 50.85 18,500 $ 55.00
Oil
Basis Swaps Period Index Volume (Bbls/d)
Weighted Average Differential toWTI
($/Bbl)
Q2-2016 Western Canadian Select 42,000 $ (13.31 ) Q3-2016 Western
Canadian Select 39,000 $ (13.38 ) Q4-2016 Western Canadian Select
33,000 $ (13.40 )
Natural Gas Commodity Hedges
Price Swaps Price Collars Call Options Sold
Period
Volume(MMBtu/d)
WeightedAverage Price($/MMBtu)
Volume(MMBtu/d)
WeightedAverage FloorPrice($/MMBtu)
WeightedAverageCeiling Price($/MMBtu)
Volume(MMBtu/d)
WeightedAverage Price($/MMBtu)
Q2-2016 481,400 $ 2.73 24,725 $ 1.97 $ 2.30 400,000 $ 2.80 Q3-2016
100,000 $ 2.84 - $ - $ - 400,000 $ 2.80 Q4-2016 - $ - 70,000 $ 2.56
$ 2.76 400,000 $ 2.80
Devon’s oil derivatives settle against the average of the prompt
month NYMEX West Texas Intermediate futures price. Devon’s natural
gas derivatives settle against the Inside FERC first of the month
Henry Hub index. Commodity hedge positions are shown as of April
29, 2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160503007038/en/
Investor ContactsHoward Thill, 405-552-3693Scott Coody,
405-552-4735Chris Carr, 405-228-2496Media ContactJohn
Porretto, 405-228-7506
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