News Column

Devon boosts oil production more than one-third in second quarter

August 6, 2014

By Jay F. Marks, The Oklahoman, Oklahoma City



Aug. 06--Devon Energy Corp. boosted its oil production more than one-third in the second quarter amid a strategic transformation, company officials said Wednesday.

Devon reported net earnings of $675 million, or $1.65 a share, for the quarter. That is down slightly from the same period of last year, when the company earned $683 million, or $1.69 a share.

Devon's adjusted earnings of $574 million, or $1.40 a share, were in line with analysts' estimates and up 16 percent over last year.

"The second quarter was another outstanding one for Devon, both operationally and financially, as we continued to successfully execute on our strategic plan," Devon CEO John Richels said in a conference call with analysts.

He said Devon reconfigured its portfolio by acquiring acreage in south Texas' oil-rich Eagle Ford Shale, moving its pipeline assets to Enlink Midstream and selling its non-core assets.

"Our drilling program has delivered impressive oil production growth through our focus on our reconfigured portfolio," Richels said.

He said Devon was able to increase oil production from its retained assets by 34 percent, reaching an average of more than 200,000 barrels a day. The growth was driven by a 79 percent increase from the company's light oil assets in the U.S., notably its "world-class operations" in Texas.

Richels said Devon's oil-rich holdings in the Eagle Ford and Permian Basin should push the company's total liquids production to near 60 percent by the end of the year. That figure had been just more than 30 percent a few years ago.

"This portfolio repositioning provides Devon all the necessary attributes to deliver superior per-share growth," Richels said. "Our go-forward assets are generating excellent full-cycle returns, we have a strong investment-grade balance sheet, and we have a deep inventory of highly economic, low-risk development projects in some of the most attractive basins in North America."

Dave Hager, Devon's chief operating officer, said the company is "laser focused" on improving its operational performance. Teams are looking to reduce drilling times, optimize completion designs and make production operations more efficient.

"Continuous improvement in each of these areas, and others, will provide incremental value in each of our operating areas," Hager said.

He said Devon set a production record in western Oklahoma'sAnadarko Basin in the second quarter with redesigned completions and an ongoing acid treatment program.

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(c)2014 The Oklahoman

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Source: Daily Oklahoman (Oklahoma City)


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