10-QPeriod: Q3 FY2000

DEVON ENERGY CORP/DE Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 14, 2000For Securities:DVN

Summary

Devon Energy Corporation's (DVN) Q3 2000 10-Q filing reveals a period of significant growth and operational expansion, largely driven by strategic mergers and acquisitions. The company reported record revenues and net earnings for the third quarter and year-to-date periods of 2000. This performance was fueled by substantially higher oil and natural gas production, coupled with increased commodity prices. The financial statements reflect the pooling-of-interests accounting for the Santa Fe Snyder merger completed in August 2000, combining historical data. The company's balance sheet shows growth in assets, particularly in property and equipment, reflecting continued investment. Liquidity appears strong with substantial unused borrowing capacity under its credit facilities. Investors should note the significant impact of the Santa Fe Snyder, Snyder Oil Company, and PennzEnergy Company mergers on production volumes and financial results. While revenues and earnings have surged, so have costs and expenses, including lease operating expenses, depreciation, depletion, and amortization, and general and administrative expenses, largely due to the expanded operational footprint and merger-related costs.

Key Highlights

  • 1Record revenues and net earnings in Q3 2000 and for the nine months ended September 30, 2000, indicating strong operational and market performance.
  • 2Significant increase in oil and gas production volumes, primarily driven by the Santa Fe Snyder, Snyder Oil Company, and PennzEnergy Company mergers.
  • 3Higher average commodity prices for oil and natural gas positively impacted revenue generation.
  • 4Total assets grew to $6.57 billion as of September 30, 2000, up from $6.10 billion at the end of 1999, reflecting expansion.
  • 5Company has substantial liquidity with approximately $698 million of unused borrowing capacity under its $1 billion long-term credit facilities.
  • 6Net earnings applicable to common stockholders were $162.5 million for Q3 2000 and $416.1 million for the nine months ended September 30, 2000.
  • 7Merger-related expenses were recognized, impacting the cost structure but indicating a strategic push for scale and market position.

Frequently Asked Questions

The primary driver was a combination of significantly increased oil and natural gas production volumes, largely due to strategic mergers and acquisitions (Santa Fe Snyder, Snyder Oil Company, PennzEnergy Company), and higher average commodity prices for oil and natural gas.

Under the pooling-of-interests method, the financial data for all periods presented (three and nine months ended September 30, 2000 and 1999) reflect the combined results of Devon and Santa Fe Snyder as if they had always been merged. This means historical information has been restated, leading to significant changes compared to Devon's previously reported stand-alone data.

Devon Energy Corporation maintains a strong liquidity position. As of September 30, 2000, the company had approximately $698 million of unused borrowing capacity available under its $1 billion long-term credit facilities, which were expanded in August 2000.

The increase in operating expenses is largely attributed to the expanded operational footprint resulting from the mergers. This includes higher lease operating expenses, production taxes, and depreciation, depletion, and amortization, as well as merger-related expenses and increased general and administrative costs associated with a larger organization.