Devon Energy Corporation (NYSE:DVN) today reported net earnings of $429 million or $1.06 per common share ($1.05 per diluted share) for the quarter ended September 30, 2013. This compares with a third-quarter 2012 net loss of $719 million or $1.80 per common share ($1.80 per diluted share).
Adjusting for items securities analysts typically exclude from their published estimates, the company earned $526 million or $1.29 per diluted share in the third quarter. This represents a 47 percent increase in adjusted earnings compared to the third quarter of 2012.
Strong Oil Growth Driven by U.S. Operations
Devon continued to deliver strong oil production growth in the third quarter. In aggregate, oil production averaged 165,000 barrels per day, a 16 percent increase compared to the third quarter of 2012. The most significant growth came from the company’s U.S. operations, where third-quarter oil production increased 38 percent year over year. This dramatic increase in U.S. oil production is largely attributable to growth from Devon’s Permian Basin and Mississippian-Woodford Trend projects.
Total production of oil, natural gas and natural gas liquids averaged 691,000 oil-equivalent barrels (Boe) per day in the third quarter, exceeding the mid-point of the company’s guidance range by approximately 3,000 barrels per day. The company’s highest margin products, oil and natural gas liquids, now account for 43 percent of total production.
“Devon delivered another quarter of solid results, both operationally and financially,” said John Richels, president and chief executive officer. “Once again we significantly increased light oil production in the U.S., reflecting our continued success in the Permian Basin and emerging oil plays. Additionally, Devon’s disciplined pursuit of high-margin production has improved cash margins by 16 percent year over year to our highest level in the past eight quarters.”
Key Operating Highlights
- Production averaged a record 82,000 Boe per day in the third quarter. Oil production increased 29 percent compared to the third quarter of 2012 and accounts for 60 percent of Devon’s total Permian production.
The most significant contributor to the company’s Permian oil growth was the Bone Spring play in the Delaware Basin. Devon added 24 new Bone Spring wells to production in the third quarter, with initial 30-day rates averaging 690 Boe per day, of which 72 percent was oil. These wells exceeded Devon’s type curve in the Bone Spring by 20 percent.