Summary
Devon Energy Corporation's third-quarter 2016 10-Q filing reveals a significant turnaround in profitability compared to the same period in the prior year, driven by strategic asset divestitures and cost-saving measures. The company reported net earnings attributable to Devon of $993 million for the three months ended September 30, 2016, a substantial improvement from a net loss of $3,507 million in the prior year's quarter. This positive shift was largely fueled by a $1.351 billion gain on asset sales, coupled with a reduction in operating expenses, including lease operating expenses and general and administrative costs. The nine-month period also showed a narrowing of losses, with net loss attributable to Devon at $3,633 million compared to $9,922 million in the prior year. The company actively managed its balance sheet by reducing long-term debt by $1.2 billion using proceeds from asset divestitures and maintained significant liquidity with $5.3 billion in available resources. Despite the positive earnings trend in the current quarter, the company continued to grapple with asset impairments totaling $4.9 billion year-to-date, a consequence of lower commodity prices.
Financial Highlights
47 data points| Revenue | $4.23B |
| Operating Expenses | $2.77B |
| Operating Income | $1.47B |
| Interest Expense | $157.00M |
| Net Income | $993.00M |
| EPS (Basic) | $1.90 |
| EPS (Diluted) | $1.89 |
| Shares Outstanding (Basic) | 518.00M |
| Shares Outstanding (Diluted) | 521.00M |
Key Highlights
- 1Significant improvement in net earnings for Q3 2016 ($993 million) compared to Q3 2015 ($3,507 million loss) due to asset divestiture gains and cost controls.
- 2Total debt reduced by $1.2 billion in the first nine months of 2016, primarily using proceeds from asset divestitures.
- 3Company achieved substantial reductions in Lease Operating Expenses (LOE) by $410 million and General & Administrative (G&A) expenses by $308 million year-to-date through cost-saving initiatives and workforce reductions.
- 4Acquisition of approximately 80,000 net acres in the STACK play for $1.5 billion in early 2016 to expand its position in a key resource play.
- 5Capital expenditures were reduced significantly, down 61% in Q3 2016 and 23% year-to-date compared to the prior year periods, reflecting a disciplined approach to investment in a low commodity price environment.
- 6Year-to-date asset impairments totaled $4.9 billion, primarily related to U.S. and Canadian oil and gas assets, reflecting the impact of depressed commodity prices on asset valuations.
- 7Ended the third quarter with $5.3 billion in liquidity, comprising $2.4 billion in cash and $2.9 billion of available capacity on its Senior Credit Facility, with no significant long-term debt maturities until July 2021.