Devon Energy Earnings Expand on Cost Reductions

Energy

Published: November 4, 2014 5:11 pm

Last Updated: April 27, 2020 8:10 pm

Devon Energy Corp. (NYSE: DVN) reported third quarter 2014 results after markets closed on Tuesday. For the quarter, the independent oil & gas company posted adjusted diluted earnings per share (EPS) of $1.34 on revenues of $5.34 billion. In the same period a year ago, the company reported EPS of $1.29 on revenues of $2.71 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $1.23 and $4.15 billion in revenues.

Adjusted earnings exclude a gain of $466 million in fair value changes in financial instruments and foreign currency. Marketing and midstream revenues rose from $514 million in the year-ago quarter to $2 billion, while sales of derivatives rose from a loss $141 million a year ago to $748 million this year.

Revenues from sales of oil, gas, and NGLs rose $247 million to $2.59 billion. Devon attribute the strong revenue growth to a significant increase in oil production, partially offset by the sale of gas-weighted divestiture assets in the U.S. and Canada. Oil sales accounted for 63% of upstream revenues in the quarter.

Devon raised the midpoint of its production guidance for the fourth quarter by 3% to about 617,000 barrels of oil equivalent a day, essentially flat with the third quarter. The increase comes from the company’s retained assets and will not require any increase in capital spending.

Devon’s oil/bitumen production is up from 177,000 barrels a day in 2013 to 219,000 barrels and natural gas production is down from 2.33 billion cubic feet a day to 1.85 billion. Production from retained assets averaged 640,000 barrels of oil equivalent per day in the third quarter.

The company’s pre-tax cash costs per barrel of oil equivalent production was $16.06, down 3% sequentially. Devon’s pre-tax cash margin rose 20% year-over-year to $29.42. Realized prices per barrel of oil/bitumen dropped from $86.51 a year ago to $80.31, and natural gas prices rose from $3.24 per thousand cubic feet to $3.72. NGL prices fell $0.34 a barrel year-over-year to $25.91.

Shares were up 1.8 in after-hours trading, at $57.00 in a 52-week range of $53.34 to $80.63. Thomson Reuters had a consensus analyst price target of around $81.90 before today’s report.

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