10-QPeriod: Q3 FY2017

DEVON ENERGY CORP/DE Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 1, 2017For Securities:DVN

Summary

Devon Energy Corporation reported revenues of $3.16 billion for the third quarter of 2017, a decrease from $4.23 billion in the same period last year, primarily due to lower production volumes, partially offset by higher commodity prices. Net earnings attributable to Devon for the quarter were $228 million, or $0.43 per diluted share, a significant decrease from $993 million, or $1.89 per diluted share, in the third quarter of 2016, largely impacted by asset impairments in the prior year. For the nine months ended September 30, 2017, revenues increased to $9.98 billion from $8.85 billion in the prior year, driven by higher commodity prices. Net earnings attributable to Devon for the period were $1.22 billion, or $2.31 per diluted share, a substantial improvement from a net loss of $3.63 billion, or $(7.22) per diluted share, in the comparable period of 2016. This turnaround was mainly due to the absence of the significant asset impairments recorded in 2016. The company continues to focus on disciplined capital allocation, portfolio high-grading, and returning cash to shareholders.

Financial Highlights

45 data points
Beta

Revenue

$1.93B

Net Income

$193.00M

10.0% Net Margin

EPS (Diluted)

$0.37

Total Assets

$27.56B

Cash & Equivalents

$2.64B

Free Cash Flow

$495.00M

Financial Statements
Beta
Revenue$1.93B
Operating Expenses$2.83B
Operating Income$326.00M
Interest Expense$97.00M
Net Income$193.00M
EPS (Basic)$0.37
EPS (Diluted)$0.37
Shares Outstanding (Basic)520.00M
Shares Outstanding (Diluted)523.00M

Key Highlights

  • 1Total revenues for Q3 2017 were $3.16 billion, down from $4.23 billion in Q3 2016, attributed to lower production volumes despite higher commodity prices.
  • 2Net earnings attributable to Devon for Q3 2017 were $228 million ($0.43/share), a decrease from $993 million ($1.89/share) in Q3 2016.
  • 3For the nine months ended September 30, 2017, revenues increased to $9.98 billion from $8.85 billion in 2016, driven by higher commodity prices.
  • 4Net earnings for the nine months ended September 30, 2017, were $1.22 billion ($2.31/share), a significant improvement from a net loss of $3.63 billion ($(7.22)/share) in the prior year, primarily due to the absence of large asset impairments.
  • 5Operating cash flow for the nine months ended September 30, 2017, increased 96% to $2.42 billion from $1.24 billion in the prior year, driven by higher commodity prices.
  • 6Capital expenditures for the nine months ended September 30, 2017, decreased by 31% to $2.37 billion, reflecting a disciplined capital allocation strategy.
  • 7Devon is executing a $1 billion asset divestiture program, having completed approximately $400 million in transactions by September 30, 2017.

Frequently Asked Questions

In the third quarter of 2017, Devon Energy reported total revenues of $3.16 billion, a decrease from $4.23 billion in the same period of 2016. This was primarily due to lower production volumes, although higher commodity prices partially offset this decline. Net earnings attributable to Devon were $228 million ($0.43 per diluted share) in Q3 2017, down from $993 million ($1.89 per diluted share) in Q3 2016. The prior year's results were significantly boosted by asset dispositions, while the current quarter's performance was impacted by various operating factors.

For the nine months ended September 30, 2017, Devon Energy's revenues increased to $9.98 billion from $8.85 billion in 2016, driven by higher commodity prices. The company achieved net earnings of $1.22 billion ($2.31 per diluted share) for this period, a substantial improvement from a net loss of $3.63 billion ($(7.22) per diluted share) in the comparable period of 2016. This turnaround was largely due to the absence of significant asset impairments that heavily impacted the prior year's results.

Devon Energy is focused on a disciplined capital allocation strategy, emphasizing investments in its core resource plays like the STACK and Delaware Basin. The company aims to maximize returns by growing higher-value liquids production and lowering operating expenses through technology adoption. A key part of its strategy is portfolio high-grading through the divestiture of non-core assets, aiming to monetize several billion dollars of assets. The company also prioritizes reducing debt balances and returning cash to shareholders.

Devon Energy announced a program to divest approximately $1 billion of upstream assets, focusing on non-core areas like select portions of the Barnett Shale. By September 30, 2017, the company had completed divestiture transactions totaling approximately $400 million. The remaining significant asset in this program is leasehold in the Barnett Shale, with initial bids expected in the fourth quarter of 2017.