10-KPeriod: FY2008

DEVON ENERGY CORP/DE Annual Report, Year Ended Dec 31, 2008

Filed February 27, 2009For Securities:DVN

Summary

Devon Energy Corp. for the fiscal year ending December 31, 2008, reported a net loss of $2.1 billion, significantly impacted by a $7.1 billion after-tax impairment charge on oil and gas properties due to declining commodity prices in the fourth quarter. Despite this loss, the company highlighted strong operational performance throughout the year, including a record number of wells drilled with a 98% success rate, leading to a 245% reserve replacement ratio. Production increased by 6% year-over-year, driven by significant growth in U.S. onshore operations, particularly in the Barnett Shale. Financially, the company generated substantial operating cash flow of $9.4 billion, a 41% increase from the prior year, and strengthened its balance sheet by reducing debt and returning capital to shareholders through dividends and share repurchases, although share repurchase programs were subsequently suspended due to economic conditions. The company's strategy focuses on low-risk development projects supplemented by long-cycle investments, cost control, and midstream operations to drive per-share value growth. Looking ahead, Devon anticipated lower capital expenditures and production levels in 2009 due to the challenging commodity price environment.

Financial Highlights

42 data points
Beta

Revenue

$13.86B

Net Income

-$2.15B

-15.5% Net Margin

EPS (Diluted)

$-4.85

Total Assets

$31.91B

Cash & Equivalents

$384.00M

Free Cash Flow

$565.00M

Financial Statements
Beta
Revenue$13.86B
Operating Expenses$18.02B
Operating Income-$3.04B
Interest Expense$426.00M
Net Income-$2.15B
EPS (Basic)$-4.85
EPS (Diluted)$-4.85

Key Highlights

  • 1Drilled a record 2,441 gross wells with a 98% success rate, replacing approximately 245% of 2008 production.
  • 2Achieved a 6% increase in production year-over-year, reaching 238 million Boe.
  • 3Barnett Shale production increased by 31%, exiting the year at 1.2 Bcf/d net.
  • 4Marketing and midstream operations delivered a record operating profit of $668 million, a 31% increase.
  • 5Recorded a significant $7.1 billion (net of tax) impairment charge in Q4 2008 due to declining oil and gas prices, resulting in a net loss of $2.1 billion for the year.
  • 6Generated $9.4 billion in operating cash flow, a 41% increase from 2007.
  • 7Substantially completed the divestiture of African properties, generating $2.2 billion in net proceeds and an $0.8 billion after-tax gain.

Frequently Asked Questions

Devon Energy reported a net loss of $2.1 billion for 2008. This was heavily influenced by a non-cash impairment charge of $7.1 billion (net of taxes) taken in the fourth quarter due to a sharp decline in oil and gas prices. However, the company generated strong operating cash flow of $9.4 billion, a 41% increase from 2007, and saw production grow by 6%.

Operationally, 2008 was a strong year. Devon drilled a record 2,441 gross wells with a 98% success rate, replacing 245% of its production and adding significant reserves. The Barnett Shale area saw a 31% production increase, and the marketing and midstream segment achieved a record operating profit. Additionally, the company successfully divested its African assets.

In response to the economic downturn and declining commodity prices, Devon significantly reduced its planned capital expenditures for 2009 to a range of $4.7 billion to $5.4 billion, less than half of the 2008 investment. The company also indefinitely suspended its share repurchase programs. Despite these measures, Devon anticipated deficit spending in 2009 and maintained a strong liquidity position with significant availability under its credit facilities.