8-KOther Events

DEVON ENERGY CORP/DE 8-K Report (Dec 12, 2001)

Filed December 12, 2001For Securities:DVN

Summary

Devon Energy Corp./DE (DVN) filed an 8-K on December 12, 2001, providing forward-looking estimates for operational and financial items in 2002. A significant event anticipated is the acquisition of Mitchell Energy & Development Corp., projected to close on January 31, 2002. This acquisition is expected to impact production, reserves, and financial statements, and its completion is subject to shareholder approval and other conditions. The report details anticipated 2002 production volumes for oil, natural gas, and natural gas liquids (NGLs) across its U.S., Canadian, and international segments. It also outlines extensive hedging strategies for both commodity prices and interest rates, aiming to mitigate volatility. Capital expenditure plans and liquidity forecasts are also provided, with the company expecting to fund its 2002 activities primarily through operating cash flow and working capital, supplemented by credit facilities if necessary.

Key Highlights

  • 1The company is providing detailed 2002 production estimates for oil, natural gas, and NGLs across its U.S., Canadian, and International segments.
  • 2The acquisition of Mitchell Energy & Development Corp. is projected to close on January 31, 2002, and is incorporated into the 2002 estimates.
  • 3Devon has implemented a significant number of price hedging strategies for oil and gas to manage price volatility, including fixed-price sales, swaps, and costless collars.
  • 4The company anticipates total 2002 capital expenditures for drilling and development to be between $1.2 billion and $1.4 billion.
  • 5Interest rate hedging is also in place for a portion of its debt, including swap agreements to fix rates on both Canadian and U.S. dollar denominated debt.
  • 6The full cost accounting method is used for oil and gas properties, with a note on the increased likelihood of a full cost write-down due to current commodity prices and recent acquisitions.
  • 7The company expects its combined capital resources to be adequate to fund anticipated 2002 capital expenditures and other cash uses, with $0.9 billion available under credit facilities as of November 30, 2001.

Frequently Asked Questions

This 8-K filing primarily provides forward-looking estimates for Devon Energy's operational and financial performance for the year 2002. It includes details on expected production, pricing strategies, capital expenditures, and the anticipated impact of the pending acquisition of Mitchell Energy & Development Corp.

Devon Energy has implemented various hedging strategies to manage commodity price volatility. These include fixed-price forward sales, price swaps, and costless price collars for both oil and natural gas production across its different geographic segments. This aims to provide a more predictable revenue stream.

The acquisition of Mitchell Energy & Development Corp. is a key event for 2002, expected to close on January 31, 2002. While the exact allocation of acquisition costs will be finalized post-closing, preliminary pro forma figures suggest significant allocation to proved and unproved oil and gas properties, as well as gas services facilities. The acquisition is integrated into the 2002 estimates for production and financials.

Yes, the filing mentions that Devon follows the full cost accounting method for its oil and gas properties. Due to current volatile oil and gas prices and the impact of recent and pending acquisitions (Anderson Exploration Ltd. and Mitchell Energy), there is an increased likelihood that Devon may incur a full cost write-down of its oil and gas properties at the end of 2001 or in subsequent periods.