Devon Energy (DVN)
Q2 2010 Earnings Call
August 04, 2010 11:00 am ET
Vincent White - Senior Vice President of Investor Relations
Darryl Smette - Executive Vice President of Marketing & Midstream
David Hager - Executive Vice President of Exploration & Production
Jeffrey Agosta - Chief Financial Officer and Executive Vice President
John Richels - Chief Executive Officer, President and Director
Philip Dodge - Stanford Group Company
Brian Singer - Goldman Sachs Group Inc.
Raymond Deacon - Pritchard Capital Partners, LLC
Mark Gilman - The Benchmark Company, LLC
Douglas Leggate - BofA Merrill Lynch
David Heikkinen - Tudor, Pickering & Co. Securities, Inc.
Scott Wilmoth - Simmons
Previous Statements by DVN
» Devon Energy Q1 2010 Earnings Call Transcript
» Devon Energy Corporation Q4 2009 Earnings Call Transcript
» Devon Energy Corporation Q3 2009 Earnings Call Transcript
Welcome to Devon Energy's Second Quarter 2010 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Vince White, Senior Vice President of Investor Relations. Sir, you may begin.
Thank you and good morning, everyone. Welcome to Devon's Second Quarter 2010 Earnings Conference Call and Webcast. I will begin with some housekeeping items as usual and then I'll turn the call over to our President and CEO, John Richels for his overview. Following John's remarks, Dave Hager, our Head of Exploration and Production will provide an operations update. And then finally, after Dave's comment, Jeff Agosta, our Chief Financial Officer, will review Devon's financial results and our outlook. At that point, we'll open it up to Q&A.
I want to point out that our Chairman, Larry Nichols, and other seniors members of the management team are with us today as well for the Q&A session. And as a reminder, we will ask each of you in the Q&A session to limit your questions to one and one follow-up. We'll keep the call to an hour, so if we don't get to your question, we'll be around the rest of the day to answer any questions you may have remaining.
A replay of this call will be available today through a link on Devon's homepage. During the call today, we will update some of our forward-looking estimates based on the actual results for the first half of the year and our revised outlook for the second half of 2010. In addition to the updates that we're going to provide in the call, we will find an 8-K later today that will have the details of our updated 2010 guidance. And the Guidance section of our Web site at devonenergy.com will also have the updated forward-looking information. That information is under the Guidance link found within the Investor Relations section of the Web site.
Before we get to the discussion of the quarter, we're obligated to remind you that this discussion will contain information of our expectations, plans, forecasts, estimates; all of this is considered forward-looking statements under U.S. securities law. And while we strive to give you the very best estimates possible, there are many factors that could cause our actual results to differ from the guidance that we're going to provide. And so we would encourage you to review the discussion of risk factors that can be found in the 8-K that we are filing today.
One other compliance item: We will refer to various non-GAAP performance measures in today's call. When we use these measures, we're required to provide additional disclosures under U.S. securities law. If you would like to review those disclosures, they are available on our Web site. I also want to remind everybody that the strategic repositioning that we are currently in the midst of affects the financial and operational data for all periods reported. Our decision to divest the international operations resulted in the related production being excluded from our reported production volumes for all periods presented. The revenues and expenses associated with those international operations are collapsed into a single line item at the end of our statement of operations labeled discontinued operations.
Conversely, while we have divested all of our assets and operations in the Gulf of Mexico, oddly enough, the Gulf results are required to be reported in our results from continuing operations through the close of the sales. Said another way, the results from continuing operations reported today include both our North American Onshore assets that we are retaining and the results from our divested Gulf of Mexico operations through the date of the closing of those sales.
Most of our comments today on the call will focus on the results from continuing operations but we will also provide some additional commentary, specifically referencing our North American Onshore results and we provided the information on the press release that enables you to isolate those results so that you can see what our go-forward business will look like.
For those interested in a more detailed review of our international results, we've also provided information in today's press release regarding that. As far as the straight earnings forecast go, most analysts reporting estimates to First Call have excluded discontinued operations. The mean estimate of those analysts, that is the mean estimate for earnings excluding discontinued operations, was $1.39 for the quarter. Our adjusted earnings came in $0.05 lower at $1.34 per share. Main driver was higher-than-expected deferred tax rate in the second quarter. Second quarter included a true up in deferred taxes for the first six months of the year.
This non-cash deferred tax expense did not affect our cash flow in the second quarter. And after the adjusting items, cash flow from continuing operations came in at $3.02 per share, which was above the First Call estimate of $2.80 per share. With those items out of the way, I'm going to turn the call over to John Richels.