Devon highlights production growth in first quarter results
Devon Energy Corp.’s light-oil production during the first three months of this year was the highlight of its first-quarter operational and financial results released Tuesday.
The company stated its light oil production during the period from assets it intends to keep increased to 138,000 barrels per day, up 24% compared to the same quarter in 2018. Total production for those assets averaged 308,000 barrels of oil equivalent daily, exceeding the company’s midpoint guidance by 27,000 barrels.
Of that, officials said oil and liquids production from those wells accounted for nearly 70 percent of total volumes.
Financially, the company reported a net loss for the period of $317 million, or 74 cents per share, on total revenues of about $1.5 billion. That compares to a loss of $197 million, or 38 cents a share, on revenue of $2.2 billion in the year-ago quarter.
Devon officials attributed the most recent quarter's loss to a $670 million non-cash charge the company had to take because markets prices were higher than the company's contracted sales prices. Pushing that charge aside, officials said the company earned $158 million after taxes, equating to 36 cents per share.
The company’s earnings before interest, taxes, depreciation, amortization and exploration and production costs in the first quarter was $779 million, compared to $620 million the same period the year before.
Devon spent $457 million on capital expenditures during the first quarter, or about 24% of its expected annual expenditure of between $1.8 billion and $2 billion.
“With these strong first-quarter results, we are raising the full-year growth outlook for our U.S. oil business,” CEO Dave Hager stated in the earnings release.
“Importantly, we are delivering this incremental production growth without any increase in capital spending,” Hager continued, noting the company also is ahead of schedule on cost-saving initiatives that also aim to help the company’s bottom line.
Devon announced it February it planned to either to sell or spin off its Canadian and Barnett Shale assets as it works to focus primarily on boosting produced oil from wells it is drilling in U.S. shale fields.
Hager said Tuesday the company is reviewing several offers that have been made by other firms to acquire Devon’s Canadian assets. He said the company is close to finishing needed preliminary steps so that it can begin taking offers on its holdings in the Barnett field.
Previously, Hager said Devon’s goal behind the plan was to “accelerate value creation for our shareholders by further simplifying our resource-rich asset portfolio.”
Devon has been active in Canada since it acquired Northstar Energy Corp. in 1998. The company entered the Barnett Shale field in 2002 when it acquired Mitchell Energy, a Texas-based firm that had pioneered the use of hydraulic fracturing to produce natural gas from shale.
Devon officials also previously announced plans to buy back $5 billion in shares this year. They said Tuesday the company so far has spent $4 billion on that project to acquire 114 million, more than 20% of outstanding shares.
As for ongoing efforts to reduce general and administrative expenses, Hager said Tuesday Devon had targeted annual savings in that area of $300 million by the end of 2021.
“We already have realized about $110 million of those savings, and we will get about $100 million more when we divest Canada and Barnett,” he said. “Our goal for this year was $200 million.”
Hager said the company also evaluating whether additional corporate layoffs will occur, on a limited basis.
As for those, Hager said “the bulk of it is done.”
Meanwhile, Devon remains focused on developing oil-producing assets it holds in the Delaware Basin, the STACK in northwest Oklahoma, the Powder River Basin in Wyoming and the Eagle Ford Shale field in south Texas.
Hager said he was interested to see the bidding war that developed between Chevron and Occidental Petroleum to acquire Anadarko Petroleum.
But Hager said that’s not keeping him up at night.
“We focus on what we can control, which is how we run our business, conduct our operations and deliver strong results,” he said. “That’s what we did this quarter — run this business the best that we can.”