Oil & Gas News

Devon Energy Posts Earnings, Raises Production Outlook

Devon Energy

Oklahoma City-based and U.S. oil and gas producer Devon Energy Corp (DVN.N) raised its annual production forecast on Tuesday, saying it expected total output to rise 16 percent from last year compared with an earlier forecast of 14 percent.

Devon produced 544,000 barrels of oil equivalent per day in the quarter ended March 31, compared with 563,000 boepd in the same period a year earlier. Results were near the high end of a February projection of between 530,000 and 554,000 boepd.

“Devon delivered oil production at the high end of guidance and accelerated efficiency gains across the portfolio in the first quarter,” said Dave Hager, president and CEO.“Our performance was highlighted by commencing production on the highest-rate wells in the 100-year history of the Delaware Basin and efficiencies at our STACK Showboat project, which resulted in savings of $1.5 million per well and first production 40 days ahead of plan.

“Based on our strong year-to-date results and the confidence we have in our Delaware and STACK focused capital programs, we are raising our full-year oil production outlook,” Hager said. “Importantly, we are delivering this incremental production with lower costs. We expect per-unit lease operating expense to decline 5 to 10 percent by year-end, and we are on pace to reduce G&A and interest costs by $175 million annually.

Net loss attributable to shareholders was $197 million, or 38 cents per share, compared with a profit of $303 million, or 58 cents per share, a year earlier. The loss reflected a $312 million charge to earnings to retire debt during the period.

Total revenue rose to $3.81 billion from $3.55 billion in the same period a year ago.

The company also said it reached an agreement with DowDupont(DWDP.N)in which the chemicals producer will pay $75 million over five years for a half interest in 116 undrilled locations in the Barnett shale region of Texas. Devon will drill and operate up to 24 wells per year as part of an agreement.

The company’s development programs across its U.S. resource plays had another strong quarter of performance. In the Delaware, new well activity was headlined by two massive Boundary Raider wells that achieved a combined 24-hour initial production rate of approximately 24,000 Boe per day(80percent oil). These are the highest-rate wells brought online in the history of the Delaware Basin.

In the STACK, Devon commenced production on 12 high-rate wells that averaged initial 30-day rates of 3,500 Boe per day(55percent oil). The most prolific STACK wells for the quarter belonged to the four wells from the Coyote development that delivered average 30-day rates of 4,400 Boe per day.

This quarterly earnings report coming just after having completed most of the company’s previously announced layoffs of about 300 employees, or 9 percent of the company’s workforce.

The cuts included about 240 employees in Oklahoma City, with the remainder in Canada and at Devon’s U.S. field offices.

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