Devon Energy Reports Fourth-Quarter And Full-Year 2013 Results

Devon Energy Corporation (NYSE:DVN) today reported net earnings of $207 million or $0.51 per common share ($0.51 per diluted share) for the quarter ended December 31, 2013. This compares with a fourth-quarter 2012 net loss of $357 million or $0.89 per common share ($0.89 per diluted share).

Adjusting for items securities analysts typically exclude from their published estimates, the company earned $447 million or $1.10 per diluted share in the fourth quarter. This represents a 49 percent increase in adjusted earnings compared to the fourth quarter of 2012.

Operating cash flow in the fourth quarter of 2013 totaled $1.4 billion, a 26 percent increase compared to the year-ago period. For the year ended December 31, 2013, Devon generated operating cash flow of $5.4 billion. Including $419 million of cash received from asset sales, the company’s total cash inflows reached $5.9 billion for 2013.

“2013 was a year of strong execution and exciting change for Devon,” said John Richels, president and chief executive officer. “Our drilling programs not only drove impressive oil production growth, but also expanded margins and improved operating cash flow. Additionally, we high-graded our portfolio through an accretive Eagle Ford Shale acquisition, an innovative midstream combination, and initiated an asset divestiture program. These actions provide a platform for Devon to achieve attractive high-margin growth in 2014 and for many years to come.”

Key Operating Highlights

Permian Basin – Production averaged a record 86,000 oil-equivalent barrels (Boe) per day in the fourth quarter, a 29 percent increase compared to the fourth quarter of 2012. Light oil production accounted for approximately 60 percent of Devon’s total Permian production.

The Bone Spring oil play in the Delaware Basin was a significant contributor to the company’s growth in the Permian. Devon added 21 new Bone Spring wells to production in the fourth quarter, with initial 30-day rates averaging 800 Boe per day, of which 70 percent was light oil. These outstanding initial production rates exceeded the company’s Bone Spring type curve by about 40 percent.

Also in the Delaware Basin, Devon commenced production on its first horizontal Wolfcamp well in Ward County, Texas. Initial 30-day production from the Martinsville 120-4H averaged 950 Boe per day, including 800 barrels of light oil per day. The company has identified more than 100,000 net acres prospective for the Wolfcamp within its Delaware Basin position and will continue to derisk this emerging oil opportunity in 2014.

In the Southern Midland Basin, Devon delivered strong results from its oil development program in the Wolfcamp Shale. During the fourth quarter, the company brought 24 Wolfcamp Shale wells online with initial 30-day rates averaging 410 Boe per day.

Canadian Thermal Oil – Gross production from Devon’s Jackfish 1 and Jackfish 2 thermal oil projects averaged 58,000 barrels of oil per day in the fourth quarter, or 53,000 barrels per day after royalties. This represents a 16 percent increase in net production compared to the third quarter of 2013. The growth in fourth-quarter production was attributable to the resumption of operations at Jackfish 2 after scheduled maintenance downtime during the third quarter.

Construction of the company’s Jackfish 3 thermal oil project is now nearly complete. Plant startup at Jackfish 3 is expected in the third quarter of this year. At peak production, Devon’s three 100 percent-owned Jackfish projects are expected to generate nearly $1 billion of free cash flow annually for the company.

Barnett Shale – Net production averaged 1.4 billion cubic feet of natural gas equivalent per day in 2013. Barnett liquids production increased to an average of 57,000 barrels per day in 2013, a 17 percent increase compared to 2012.

Anadarko Basin – Fourth-quarter Anadarko Basin production averaged a record 85,000 Boe per day. Growth from Devon’s Cana-Woodford Shale and Granite Wash plays drove a 10 percent year-over-year increase in net production. With drilling focused in the most liquids-prone acreage, oil and natural gas liquids production increased to more than 40 percent of total production in the Anadarko Basin.

Mississippian-Woodford Trend – Net production from Devon’s emerging Mississippian-Woodford Trend averaged 16,000 Boe per day in December, representing a 47 percent increase from the September average and exceeding the company’s projected exit rate.

Record Oil Production Driven by Permian Basin

Devon delivered strong oil production growth in the fourth quarter of 2013. Companywide oil production set a new quarterly record averaging 177,000 barrels per day, exceeding the top end of the company’s guidance range. This represents a 17 percent increase in oil production compared to the fourth quarter of 2012 and a 7 percent increase over the third quarter of 2013. Led by the Permian Basin, the most significant growth came from the company’s U.S. operations, where oil production increased 32 percent year over year. Total production increased to an average of 696,000 Boe per day in the fourth quarter of 2013, surpassing the midpoint of the company’s previous forecast by 6,000 Boe per day.

In November, the company announced an initiative to monetize non-core assets in both the U.S. and Canada, sharpening its focus on high-growth retained properties. The assets identified for divestiture averaged 144,000 Boe per day in the fourth quarter, of which almost 80 percent was natural gas. Excluding production associated with these non-core assets, top-line production in the fourth quarter from Devon’s retained asset base increased 7 percent compared to the fourth quarter of 2012. Reconciliations of retained and non-core asset production are provided later in this release.

Upstream Revenue Increases 19 Percent; Cash Margins Expand

Revenue from oil, natural gas and natural gas liquids sales totaled $8.5 billion in 2013, a 19 percent increase compared to 2012. The significant growth in revenue was attributable to higher oil production and improved natural gas realizations. In 2013, oil sales accounted for more than 50 percent of Devon’s total upstream revenues.

Devon’s marketing and midstream operating profit reached $513 million in 2013. This result represents a 25 percent increase compared to the previous year. The increase in operating profit was attributable to higher natural gas prices and strong cost management.

The company’s pre-tax cash costs totaled $14.96 per Boe in 2013, a 4 percent increase compared to 2012. The higher unit cost is attributable to Devon’s dramatic increase in oil production. In general, oil wells have higher operating costs than gas wells, but also have higher margins in the current commodity price environment. In the fourth quarter, the company’s cash margin per Boe increased 15 percent year over year, reflecting the benefits of the increase in higher-margin oil production.

Foreign Cash Repatriated; Balance Sheet Remains Strong

During the fourth quarter, Devon repatriated $2.3 billion of foreign cash to the U.S. For the full-year 2013, the company repatriated $4.3 billion of foreign cash to the U.S. at an estimated effective tax rate of 4 percent. At December 31, 2013, the company’s cash balances totaled $6.1 billion, and its investment-grade balance sheet had a net debt to adjusted capitalization ratio of only 23 percent.

In December, Devon issued $2.25 billion of senior notes through a combination of two-, three- and five-year offerings and entered into an undrawn $2 billion senior term loan facility. Proceeds from the senior notes, the term loan facility, and a portion of the company’s cash on hand will fund Devon’s recently announced Eagle Ford acquisition.

Oil Reserves Climb to Record Levels

At December 31, 2013, Devon increased its proved oil reserves to a record 837 million barrels. During the year, the company’s oil-focused drilling program added 112 million barrels of oil reserves through successful drilling (extensions, discoveries and revisions other than price). This represents a replacement rate of approximately 180 percent of the oil produced during 2013.

In aggregate, Devon’s estimated proved reserves of oil, natural gas and natural gas liquids were 3.0 billion oil-equivalent barrels at year end. Extensions and discoveries through successful drilling, combined with price revisions related to higher natural gas prices, increased proved reserves by 355 million Boe compared to year-end 2012. Divestitures and revisions other than price decreased proved reserves by 103 million Boe in 2013. Revisions other than price were primarily attributable to proved undeveloped gas-weighted locations no longer expected to be drilled given the commodity price environment.

Overall, the company’s reserve life index (proved reserves divided by annual production) remained at approximately 12 years, and its proved undeveloped reserves accounted for only 24 percent of proved reserves. Proved reserves associated with assets identified for divestiture totaled 381 million Boe at December 31, 2013, of which approximately 70 percent were natural gas.

Eagle Ford and EnLink Midstream Update

In November, Devon announced the acquisition of GeoSouthern Energy’s assets in the Eagle Ford oil play. The acquired Eagle Ford acreage includes 82,000 net acres located in DeWitt and Lavaca counties. This acreage is located in the best part of the Eagle Ford, consistently yielding some of the highest initial production rates and estimated ultimate recoveries in the entire play.

The Eagle Ford transaction is on track to close by the end of the first quarter of 2014. Net production is expected to grow at a compound annual growth rate of 25 percent over the next several years, reaching a peak production rate of approximately 140,000 Boe per day. Devon’s development program in 2014 is self-funding and expected to generate significant free cash flow beginning in 2015. The risked recoverable resource associated with this position is estimated at 400 million barrels of oil equivalent, of which more than 60 percent is classified as proved reserves.

Also in 2013, Devon announced the strategic combination of its U.S. midstream assets with Crosstex to form EnLink Midstream. EnLink Midstream will consist of two publicly traded entities: the master limited partnership, EnLink Midstream Partners LP, and a publicly traded general partner entity, EnLink Midstream LLC. This transaction is expected to close in the first quarter of 2014. The common units of both EnLink Midstream Partners LP and EnLink Midstream LLC will trade on the New York Stock Exchange under the symbols “ENLK” and “ENLC”, respectively.

Non-GAAP Reconciliations

Pursuant to regulatory disclosure requirements, Devon is required to reconcile non-GAAP financial measures to the related GAAP information (GAAP refers to generally accepted accounting principles). Adjusted earnings, net debt and adjusted capitalization are non-GAAP financial measures referenced within this release. Reconciliations of these non-GAAP measures are provided later in this release.

Conference Call to be Webcast Today

Devon will discuss its fourth-quarter and full-year 2013 financial and operating results in a conference call webcast today. The webcast will begin at 10 a.m. Central (11 a.m. Eastern ) and may be accessed from Devon’s home page at www.devonenergy.com.

This press release includes "forward-looking statements" as defined by the Securities and Exchange Commission (SEC). Such statements are those concerning strategic plans, expectations and objectives for future operations. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; the extent to which we are successful in acquiring and discovering additional reserves; unforeseen changes in the rate of production from our oil and gas properties; uncertainties in future exploration and drilling results; uncertainties inherent in estimating the cost of drilling and completing wells; drilling risks; competition for leases, materials, people and capital; midstream capacity constraints and potential interruptions in production; risk related to our hedging activities; environmental risks; political changes; changes in laws or regulations; our limited control over third parties who operate our oil and gas properties; our ability to successfully complete mergers, acquisitions and divestitures; and other risks identified in our Form 10-K and our other filings with the SEC. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by Devon on its website or otherwise. Devon does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves that meet the SEC's definitions for such terms, and price and cost sensitivities for such reserves, and prohibits disclosure of resources that do not constitute such reserves. This release may contain certain terms, such as resource potential and exploration target size. These estimates are by their nature more speculative than estimates of proved, probable and possible reserves and accordingly are subject to substantially greater risk of being actually realized. The SEC guidelines strictly prohibit us from including these estimates in filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 10-K, available at www.devonenergy.com . You can also obtain this form from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov .

Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and gas exploration and production. Devon is a leading U.S.-based independent oil and gas producer and is included in the S&P 500 Index. For more information about Devon, please visit our website at www.devonenergy.com.
           
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
PRODUCTION (net of royalties) Quarter Ended Year Ended
  December 31, December 31,

Total Period Production:
2013       2012 2013       2012
Natural Gas (Bcf)
United States 174.3 186.7 708.7 751.9
Canada 39.9 43.3 164.9 186.1
Total Natural Gas 214.2 230.0 873.6 938.0
Oil / Bitumen (MMBbls)

 
United States 7.9 6.0 28.3 21.5

 
Canada 8.4 7.9 33.1 32.0
Total Oil / Bitumen 16.3 13.9 61.4 53.5
Natural Gas Liquids (MMBbls)

 
United States 11.3 9.3 42.3 36.1

 
Canada 0.8 0.9 3.6 3.8
Total Natural Gas Liquids 12.1 10.2 45.9 39.9
Oil Equivalent (MMBoe)

 
United States 48.2 46.4 188.8 182.9

 
Canada 15.9 16.0 64.1 66.8
Total Oil Equivalent 64.1 62.4 252.9 249.7
 
 
Quarter Ended Year Ended
December 31, December 31,

Average Daily Production:
2013 2012 2013 2012
Natural Gas (MMcf)
United States 1,894.7 2,029.0 1,941.8 2,054.5
Canada 433.3 471.2 451.6 508.3
Total Natural Gas 2,328.0 2,500.2 2,393.4 2,562.8
Oil / Bitumen (MBbls)
United States 85.3 64.8 77.7 58.7
Canada 91.4 86.2 90.6 87.4
Total Oil / Bitumen 176.7 151.0 168.3 146.1
Natural Gas Liquids (MBbls)
United States 122.4 101.4 116.0 98.6
Canada 9.1 9.5 9.7 10.5
Total Natural Gas Liquids 131.5 110.9 125.7 109.1
Oil Equivalent (MBoe)
United States 523.4 504.4 517.3 499.7
Canada 172.8 174.2 175.6 182.6
Total Oil Equivalent 696.2 678.6 692.9 682.3
                 
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
KEY OPERATING STATISTICS BY REGION
Quarter Ended December 31, 2013
Avg. Production Gross Wells Operated Rigs at
(MBOED) Drilled December 31, 2013
Permian Basin 85.7 73 24
Canadian Heavy Oil 84.5 58 2
Barnett Shale 223.9 31 5
Anadarko Basin 85.3 22 11
Mississippian-Woodford Trend 14.1 88 15
Rockies 21.2 8 3
Other Assets 37.3 5 -
Core & Emerging Assets - Total 552.0 285 60
Canadian Conventional (Non-Core) 88.2 31 4
Rockies (None-Core) 29.7 - 2
Gulf Coast (Non-Core) 18.6 3 1
Mid-Continent (Non-Core) 7.7 - -
Devon - Total 696.2 319 67
 
 
Year Ended December 31, 2013
Avg. Production Gross Wells
(MBOED) Drilled
Permian Basin 78.0 348
Canadian Heavy Oil 83.1 186
Barnett Shale 227.7 172
Anadarko Basin 81.7 184
Mississippian-Woodford Trend 7.9 232
Rockies 21.5 37
Other Assets 39.6 5
Core & Emerging Assets - Total 539.5 1,164
Canadian Conventional (Non-Core) 92.5 82
Rockies (None-Core) 32.1 13
Gulf Coast (Non-Core) 20.4 16
Mid-Continent (Non-Core) 8.4 -
Devon - Total 692.9 1,275
                       
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
BENCHMARK PRICES Quarter Ended Year Ended
(average prices) December 31, December 31,
2013 2012 2013 2012
Natural Gas ($/Mcf) – Henry Hub $ 3.60 $ 3.41 $ 3.65 $ 2.79
Oil ($/Bbl) – West Texas Intermediate (Cushing) $ 97.53 $ 88.16 $ 98.02 $ 94.21
 
 
REALIZED PRICES Quarter Ended December 31, 2013
Oil / Bitumen Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
United States $ 96.04 $ 3.01 $ 27.51 $ 32.96
Canada $ 48.50 $ 3.07 $ 45.00   $ 35.74
Realized price without hedges $ 71.45 $ 3.02 $ 28.73 $ 33.65
Cash settlements $ 3.33 $ 0.23 $ (0.19 ) $ 1.59
Realized price, including cash settlements $ 74.78 $ 3.25 $ 28.54   $ 35.24
 
 
Quarter Ended December 31, 2012
Oil / Bitumen Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
United States $ 83.18 $ 2.93 $ 26.12 $ 27.72
Canada $ 52.31 $ 3.26 $ 47.64   $ 37.28
Realized price without hedges $ 65.56 $ 2.99 $ 27.96 $ 30.17
Cash settlements $ 8.76 $ 0.34 $ 0.07   $ 3.24
Realized price, including cash settlements $ 74.32 $ 3.33 $ 28.03   $ 33.41
 
 
Year Ended December 31, 2013
Oil / Bitumen Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
United States $ 94.52 $ 3.10 $ 25.75 $ 31.59
Canada $ 57.18 $ 3.05 $ 46.17   $ 39.91
Realized price without hedges $ 74.41 $ 3.09 $ 27.33 $ 33.70
Cash settlements $ 0.90 $ 0.16 $ 0.01   $ 0.77
Realized price, including cash settlements $ 75.31 $ 3.25 $ 27.34   $ 34.47
 
 
Year Ended December 31, 2012
Oil / Bitumen Gas NGLs Total
(Per Bbl) (Per Mcf) (Per Bbl) (Per Boe)
United States $ 88.68 $ 2.32 $ 28.49 $ 25.59
Canada $ 57.01 $ 2.49 $ 48.63   $ 37.01
Realized price without hedges $ 69.73 $ 2.36 $ 30.42 $ 28.65
Cash settlements $ 4.84 $ 0.65 $ 0.04   $ 3.48
Realized price, including cash settlements $ 74.57 $ 3.01 $ 30.46   $ 32.13
                 
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended Year Ended
(in millions, except per share amounts) December 31, December 31,
2013       2012 2013 2012
Revenues:
Oil, gas and NGL sales $ 2,155 $ 1,883 $ 8,522 $ 7,153
Oil, gas and NGL derivatives (96 ) 178 (191 ) 693
Marketing and midstream revenues   565     519     2,066     1,655  
Total operating revenues   2,624     2,580     10,397     9,501  
Expenses and other:
Lease operating expenses 584 534 2,268 2,074
Marketing and midstream operating expenses 425 399 1,553 1,246
General and administrative expenses 157 198 617 692
Production and property taxes 108 108 461 414
Depreciation, depletion and amortization 711 731 2,780 2,811
Asset impairments 16 896 1,976 2,024
Other operating items   28     39     121     92  
Total operating expenses   2,029     2,905     9,776     9,353  
Operating income 595 (325 ) 621 148
Net financing costs 111 98 417 370
Restructuring costs 4 74 54 74
Other nonoperating items   4     4     1     21  
Earnings (loss) from continuing operations before income taxes 475 (501 ) 149 (317 )
Income tax expense (benefit)   268     (144 )   169     (132 )
Earnings (loss) from continuing operations 207 (357 ) (20 ) (185 )
Earnings (loss) from discontinued operations, net of tax   -     -     -     (21 )
Net earnings (loss) $ 207   $ (357 ) $ (20 ) $ (206 )
 
Basic net earnings (loss) per share
Basic earnings (loss) from continuing operations per share $ 0.51 $ (0.89 ) $ (0.06 ) $ (0.47 )
Basic loss from discontinued operations per share   -     -     -     (0.05 )
Basic net earnings (loss) per share $ 0.51   $ (0.89 ) $ (0.06 ) $ (0.52 )
 
Diluted net earnings (loss) per share
Diluted earnings (loss) from continuing operations per share $ 0.51 $ (0.89 ) $ (0.06 ) $ (0.47 )
Diluted loss from discontinued operations per share   -     -     -     (0.05 )
Diluted net earnings (loss) per share $ 0.51   $ (0.89 ) $ (0.06 ) $ (0.52 )
 
Weighted average common shares outstanding:
Basic 406 405 406 404
Diluted 407 405 406 404
                       
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) Quarter Ended Year Ended
      December 31, December 31,
2013 2012 2013 2012
Cash flows from operating activities:
Net earnings (loss) $ 207 $ (357 ) $ (20 ) $ (206 )
Loss from discontinued operations, net of tax - - - 21

Adjustments to reconcile earnings (loss) from continuing operations to net cash from operating activities:
Depreciation, depletion and amortization 711 731 2,780 2,811
Asset impairments 16 896 1,976 2,024
Deferred income tax expense (benefit) 278 (188 ) 97 (184 )
Derivatives and other financial instruments 70 (185 ) 135 (660 )
Cash settlements on derivatives and financial instruments 130 217 277 865
Other noncash charges   112     104     318     240  

Net cash from operating activities before balance sheet changes
1,524 1,218 5,563 4,911
Net change in working capital (194 ) (98 ) (298 ) (50 )
Change in long-term other assets 38 (14 ) 10 (36 )
Change in long-term other liabilities   69     37     161     105  
Cash from operating activities - continuing operations 1,437 1,143 5,436 4,930
Cash from operating activities - discontinued operations   -     -     -     26  
Net cash from operating activities   1,437     1,143     5,436     4,956  
 
Cash flows from investing activities:
Capital expenditures (1,539 ) (1,997 ) (6,758 ) (8,225 )
Proceeds from property and equipment divestitures 103 71 419 1,468
Purchases of short-term investments - (1,137 ) (1,076 ) (4,106 )
Redemptions of short-term investments - 958 3,419 3,266
Other   (86 )   (4 )   (3 )   14  
Cash from investing activities - continuing operations (1,522 ) (2,109 ) (3,999 ) (7,583 )
Cash from investing activities - discontinued operations   -     (1 )   -     57  
Net cash from investing activities   (1,522 )   (2,110 )   (3,999 )   (7,526 )
 
Cash flows from financing activities:
Proceeds from borrowings of long-term debt, net of issuance costs 2,233 (7 ) 2,233 2,458
Net short-term debt borrowings (repayments) (295 ) 361 (1,872 ) (537 )
Credit facility borrowings - - - 750
Credit facility repayments - - - (750 )
Proceeds from stock option exercises 2 2 3 27
Dividends paid on common stock (89 ) (82 ) (348 ) (324 )
Excess tax benefits related to share-based compensation   (1 )   -     4     5  
Net cash from financing activities   1,850     274     20     1,629  
Effect of exchange rate changes on cash   (19 )   (8 )   (28 )   23  
Net change in cash and cash equivalents 1,746 (701 ) 1,429 (918 )
 
Cash and cash equivalents at beginning of period   4,320     5,338     4,637     5,555  
Cash and cash equivalents at end of period $ 6,066   $ 4,637   $ 6,066   $ 4,637  
           
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
CONSOLIDATED BALANCE SHEETS
(in millions) December 31, December 31,
      2013 2012
Current assets:
Cash and cash equivalents $ 6,066 $ 4,637
Short-term investments - 2,343
Accounts receivable 1,520 1,245
Other current assets   419     746  
Total current assets   8,005     8,971  
Property and equipment, at cost:
Oil and gas, based on full cost accounting:
Subject to amortization 73,995 69,410
Not subject to amortization   2,791     3,308  
Total oil and gas 76,786 72,718
Other   6,195     5,630  
Total property and equipment, at cost 82,981 78,348
Less accumulated depreciation, depletion and amortization   (54,534 )   (51,032 )
Property and equipment, net   28,447     27,316  
Goodwill 5,858 6,079
Other long-term assets   567     960  
Total assets $ 42,877   $ 43,326  
 
Current liabilities:
Accounts payable $ 1,229 $ 1,451
Revenues and royalties payable 786 750
Short-term debt 4,066 3,189
Other current liabilities   574     613  
Total current liabilities   6,655     6,003  
Long-term debt 7,956 8,455
Asset retirement obligations 2,140 1,996
Other long-term liabilities 834 901
Deferred income taxes 4,793 4,693
Stockholders' equity:
Common stock 41 41
Additional paid-in capital 3,780 3,688
Retained earnings 15,410 15,778
Accumulated other comprehensive earnings   1,268     1,771  
Total stockholders' equity   20,499     21,278  
Total liabilities and stockholders' equity $ 42,877   $ 43,326  
Common shares outstanding 406 406
                 
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
CAPITAL EXPENDITURES
(in millions) Quarter Ended December 31, 2013
  United States Canada Total
Exploration $ 158 $ 13 $ 171
Development   816   296   1,112
Exploration and development capital (1) $ 974 $ 309 $ 1,283
Capitalized G&A 96
Capitalized interest 12
Midstream capital (2) 174
Other capital   51
Total Operations $ 1,616
 
(1) Includes $124 million attributable to assets identified for divestiture.
(2) Includes $42 million attributable to assets that will reside within EnLink Midstream.
 
 
Year Ended December 31, 2013
United States Canada Total
Exploration $ 626 $ 128 $ 754
Development   3,541   1,114   4,655
Exploration and development capital (1) $ 4,167 $ 1,242 $ 5,409
Capitalized G&A 368
Capitalized interest 42
Midstream capital (2) 703
Other capital   121
Total Operations $ 6,643
 
(1) Includes $483 million attributable to assets identified for divestiture.
(2) Includes $215 million attributable to assets that will reside within EnLink Midstream.
           
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
COSTS INCURRED
(in millions) Total
      Year Ended December 31,
  2013   2012
Property acquisition costs:
Proved properties $ 22 $ 73
Unproved properties 216 1,167
Exploration costs 595 666
Development costs   5,089   6,099
Costs Incurred $ 5,922 $ 8,005
 
United States
Year Ended December 31,
  2013   2012
Property acquisition costs:
Proved properties $ 19 $ 2
Unproved properties 213 1,135
Exploration costs 443 351
Development costs   3,838   4,408
Costs Incurred $ 4,513 $ 5,896
 
Canada
Year Ended December 31,
  2013   2012
Property acquisition costs:
Proved properties $ 3 $ 71
Unproved properties 3 32
Exploration costs 152 315
Development costs   1,251   1,691
Costs Incurred $ 1,409 $ 2,109
                       
 
 

DEVON ENERGY CORPORATION

FINANCIAL AND OPERATIONAL INFORMATION
 
RESERVES RECONCILIATION
      Total
Oil / Bitumen Gas NGLs Total
(MMBbls)       (Bcf)       (MMBbls)       (MMBoe)
As of December 31, 2012:                          
Proved developed 327 8,070 451 2,123
Proved undeveloped 471         1,376         140         840  
Total Proved 798         9,446         591         2,963  
Revisions due to prices (11 ) 566 11 94
Revisions other than price (2 ) (232 ) (47 ) (88 )
Extensions and discoveries 114 490 65 261
Purchase of reserves 1 1 - 1
Production (62 ) (874 ) (45 ) (253 )
Sale of reserves (1 ) (89 ) - (15 )
As of December 31, 2013:                          
Proved developed 361 8,459 491 2,262
Proved undeveloped 476         849         84         701  
Total Proved 837         9,308         575         2,963  
 
 
United States
Oil Gas NGLs Total
(MMBbls)       (Bcf)       (MMBbls)       (MMBoe)
As of December 31, 2012:                          
Proved developed 166 7,391 431 1,829
Proved undeveloped 39         1,371         140         407  
Total Proved 205         8,762         571         2,236  
Revisions due to prices 1 405 8 76
Revisions other than price (18 ) (299 ) (50 ) (117 )
Extensions and discoveries 69 471 64 212
Purchase of reserves 1 1 - 1
Production (28 ) (709 ) (41 ) (189 )
Sale of reserves (1 ) (81 ) - (14 )
As of December 31, 2013:                          
Proved developed 194 7,707 468 1,947
Proved undeveloped 35         843         84         258  
Total Proved 229         8,550         552         2,205  
 
 
Canada
Oil / Bitumen Gas NGLs Total
(MMBbls)       (Bcf)       (MMBbls)       (MMBoe)
As of December 31, 2012:                          
Proved developed 161 679 20 294
Proved undeveloped 432         5         -         433  
Total Proved 593         684         20         727  
Revisions due to prices (12 ) 161 3 18
Revisions other than price 16 67 3 29
Extensions and discoveries 45 19 1 49
Purchase of reserves - - - -
Production (34 ) (165 ) (4 ) (64 )
Sale of reserves - (8 ) - (1 )
As of December 31, 2013:                          
Proved developed 167 752 23 315
Proved undeveloped 441         6         -         443  
Total Proved 608         758         23         758  
 

NON-GAAP FINANCIAL MEASURES

The United States Securities and Exchange Commission has adopted disclosure requirements for public companies such as Devon concerning Non-GAAP financial measures. (GAAP refers to generally accepted accounting principles). The company must reconcile the Non-GAAP financial measure to related GAAP information. Devon's reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company's financial results. The following tables summarize the effects of these items on fourth-quarter 2013 earnings.
           
RECONCILIATION TO GAAP INFORMATION
(in millions)
Quarter Ended December 31, 2013
Before-Tax After-Tax
Net earnings (GAAP) $ 207
Derivatives and other financial instruments 105 67
Cash settlements on derivatives and financial instruments 101 64
Cash repatriation - 97
Asset impairments 16 10
Restructuring costs 4   2
Adjusted earnings (Non-GAAP) $ 447
Diluted share count 407
Adjusted diluted earnings per share (Non-GAAP) $ 1.10
 
 

NON-GAAP FINANCIAL MEASURES

Devon believes that using net debt for the calculation of “net debt to adjusted capitalization” provides a better measure than using debt. Devon defines net debt as debt less cash, cash equivalents and short-term investments. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash to repay debt.
           
RECONCILIATION TO GAAP INFORMATION
(in millions)
December 31,
  2013   2012
Total debt (GAAP) $ 12,022 $ 11,644
Adjustments:
Cash and short-term investments   6,066   6,980
Net debt (Non-GAAP) $ 5,956 $ 4,664
 
Total debt $ 12,022 $ 11,644
Stockholders' equity   20,499   21,278
Total capitalization (GAAP) $ 32,521 $ 32,922
 
Net debt $ 5,956 $ 4,664
Stockholders' equity   20,499   21,278
Adjusted capitalization (Non-GAAP) $ 26,455 $ 25,942

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