01—Abstract
Summary
Summary of the 10-K filed February 27, 2009. Cited figures are marked; the original filing is the authoritative source.
Devon Energy Corp. for the fiscal year ending December 31, 2008, reported a net loss of $2.1 billiona, 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 billionb, 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.
02—Key points
Key Highlights
- Drilled a record 2,441 gross wells with a 98% success rate, replacing approximately 245% of 2008 production.
- Achieved a 6% increase in production year-over-year, reaching 238 million Boe.
- Barnett Shale production increased by 31%, exiting the year at 1.2 Bcf/d net.
- Marketing and midstream operations delivered a record operating profit of $668 million, a 31% increase.
- Recorded 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.
- Generated $9.4 billion in operating cash flow, a 41% increase from 2007.
- Substantially completed the divestiture of African properties, generating $2.2 billion in net proceeds and an $0.8 billion after-tax gain.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 27, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $13.86B$9.97B | +38.9% |
| Operating Expenses | $18.02B$6.65B | +171.0% |
| Operating Income | -$3.04B$2.48B | −222.3% |
| Interest Expense | $426.00M— | — |
| Net Income | -$2.15B$3.61B | −159.6% |
| EPS (Basic) | $-4.85$8.08 | −160.0% |
| EPS (Diluted) | $-4.85$8.00 | −160.6% |
05—Questions
Frequently Asked Questions
What was Devon Energy's financial performance in 2008?
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%.
What were the key operational achievements in 2008?
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.
How did the company manage its capital and liquidity amidst the economic downturn?
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.
06—Continue