8-KOther Events

DEVON ENERGY CORP/DE 8-K Report (Oct 3, 2002)

Filed October 3, 2002For Securities:DVN

Summary

This 8-K filing from Devon Energy Corporation, dated October 3, 2002, primarily details the reclassification of its Indonesian operations as discontinued operations following the adoption of SFAS No. 144 and its sale to PetroChina Company Limited. The sale, for $262 million in total cash consideration, generated approximately $250 million upon closing, with potential for an additional $12 million. This strategic divestiture allowed Devon to focus on its core domestic and international assets. The filing also includes extensive selected financial data for the years ending December 31, 1997 through 2001. Key financial trends show significant revenue growth from 1997 to 2001, driven by increases in oil and gas sales. While 2001 saw a substantial reduction in carrying value of oil and gas properties, the company reported net earnings of $103 million for the year, an improvement from the net loss in 1999 and 1997, though lower than the $730 million net earnings in 2000. Total assets grew considerably, reaching $13.18 billion by the end of 2001, primarily due to significant debt and equity financing activities.

Key Highlights

  • 1Devon Energy sold its Indonesian operations to PetroChina Company Limited for $262 million in cash.
  • 2The Indonesian operations have been reclassified as discontinued operations due to the adoption of SFAS No. 144.
  • 3Total revenues grew from $637 million in 1998 to $2.93 billion in 2001.
  • 4Net earnings for 2001 were $103 million, a decrease from $730 million in 2000, but an improvement from losses in prior years.
  • 5Total assets significantly increased, reaching $13.18 billion by December 31, 2001, reflecting substantial acquisitions and financing.
  • 6Significant long-term debt was taken on, increasing from $1.29 billion in 2000 to $5.94 billion by the end of 2001.
  • 7The company's cash dividends per common share have shown a consistent upward trend from $0.09 in 1997 to $0.20 in 2001.

Frequently Asked Questions

The reclassification of Indonesian operations as discontinued operations is due to their sale to PetroChina and the adoption of SFAS No. 144, which governs accounting for the impairment or disposal of long-lived assets. This means the financial results of these operations are now reported separately from continuing operations, providing a clearer view of the ongoing business performance and the impact of the divestiture.

The selected financial data shows a significant increase in total revenues from 1997 to 2001, driven by higher oil and gas sales. Despite a substantial reduction in the carrying value of oil and gas properties in 2001, the company reported net earnings for the year. Total assets saw substantial growth, reaching $13.18 billion by the end of 2001, supported by significant debt and equity financing. However, this growth was accompanied by a considerable increase in long-term debt.

Devon Energy's financial leverage increased significantly. Long-term debt rose sharply from $1.29 billion at the end of 2000 to $5.94 billion by December 31, 2001. This increase in debt was likely used to fund acquisitions or other strategic initiatives, as reflected in the substantial growth in total assets during the same period.

The adoption of SFAS No. 144 led to the reclassification of Indonesian operations as discontinued operations. Additionally, the company adopted SFAS No. 141 and SFAS No. 142 related to business combinations and goodwill, and SFAS No. 133 and 138 for derivative instruments. These adoptions required adjustments to financial reporting, including the fair value accounting for derivatives and the non-amortization of goodwill acquired after June 30, 2001.