10-KPeriod: FY2015

DEVON ENERGY CORP/DE Annual Report, Year Ended Dec 31, 2015

Filed February 17, 2016For Securities:DVN

Summary

Devon Energy Corp. (DVN) faced a challenging year in 2015, heavily impacted by the significant decline in oil and natural gas prices. This resulted in substantial non-cash asset impairments totaling $20.8 billion. Despite these headwinds, the company achieved record crude oil and bitumen production and grew its U.S. oil production by 28%. Strategic acquisitions in the STACK and Powder River Basin areas were completed to bolster its asset portfolio. In response to the depressed commodity price environment, Devon announced significant capital expenditure reductions for 2016 (down approximately 75% from 2015 levels) and a 75% cut to its quarterly common stock dividend. The company is focused on protecting its balance sheet and managing costs, aiming for a $700 million to $900 million reduction in operating and G&A expenses. Liquidity remains strong, with $3.9 billion in available liquidity at the beginning of 2016, further supported by planned asset monetizations.

Financial Highlights

46 data points
Beta

Revenue

$13.14B

Net Income

-$12.90B

-98.1% Net Margin

EPS (Diluted)

$-31.72

Total Assets

$29.67B

Cash & Equivalents

$2.31B

Free Cash Flow

$3.79B

Financial Statements
Beta
Revenue$13.14B
Operating Expenses$33.87B
Operating Income-$20.73B
Interest Expense$565.00M
Net Income-$12.90B
EPS (Basic)$-31.72
EPS (Diluted)$-31.72
Shares Outstanding (Basic)407.00M
Shares Outstanding (Diluted)407.00M

Key Highlights

  • 1Significant decline in commodity prices led to a $20.8 billion non-cash asset impairment in 2015.
  • 2Record crude oil and bitumen production achieved, with U.S. oil production up 28% year-over-year.
  • 3Strategic acquisitions in STACK and Powder River Basin strengthened the asset base.
  • 4Capital expenditures for 2016 are reduced by approximately 75% compared to 2015 in response to market conditions.
  • 5Quarterly common stock dividend was reduced by 75% in February 2016.
  • 6Strong liquidity position with $3.9 billion available at the start of 2016, supplemented by planned asset sales.
  • 7Focus on cost reduction, targeting $700-$900 million in annualized savings for operating and G&A expenses.

Frequently Asked Questions

The significant decline in oil and natural gas prices throughout 2015 led to substantial non-cash asset impairments totaling $20.8 billion, negatively impacting the company's reported earnings. This price environment also resulted in reduced operating cash flow compared to the prior year.

Devon is significantly reducing its capital expenditures by approximately 75% for 2016, planning to invest between $900 million to $1.1 billion. The company is also cutting operating and G&A costs, targeting a reduction of $700 million to $900 million on an annualized basis. Additionally, the quarterly dividend was cut by 75%, and plans are in place to monetize non-core assets and its interest in Access Pipeline to strengthen its financial position.

Devon's total proved reserves decreased by 21% to 2,182 MMBoe by the end of 2015. This reduction was largely driven by price revisions, with lower commodity prices making some reserves uneconomical to produce. Proved undeveloped reserves also saw a significant decrease.

Devon controls EnLink, a midstream business. While EnLink's operations are consolidated, Devon has been actively managing its stake, including the sale of EnLink units in 2015 to generate cash. EnLink itself continues to invest in growth projects within its midstream segment.