8-KOther Events

DEVON ENERGY CORP/DE 8-K Report (Apr 14, 2003)

Filed April 14, 2003For Securities:DVN

Summary

This 8-K filing from Devon Energy Corp./DE (DVN) on April 14, 2003, primarily provides an update regarding the proposed merger with Ocean Energy, Inc. A supplement to the proxy statement/prospectus has been issued, detailing a change in Ocean Energy's method for estimating proved reserves for periods after December 31, 2002. This adjustment is made to align with the SEC's interpretation of guidelines concerning reserves located below the lowest known hydrocarbon where production data is not available. While Ocean Energy believed its prior method was sound and in line with industry standards, the change is being implemented post-SEC review for consistency. Devon Energy intends to adopt this revised accounting method post-merger. The supplement illustrates the potential financial impact of this change, showing a slight reduction in total proved reserves and a minor increase in depreciation, depletion, and amortization expense, leading to a modest decrease in pro forma net earnings for the combined entity in 2002, should this method have been applied retrospectively.

Key Highlights

  • 1Supplement to proxy statement/prospectus issued for the Devon Energy and Ocean Energy merger.
  • 2Ocean Energy is changing its method for estimating proved reserves for periods ending after December 31, 2002.
  • 3The change aligns Ocean Energy's reserve estimation with the SEC's interpretation of guidelines for certain hydrocarbon deposits.
  • 4Devon Energy will adopt this revised reserve estimation method post-merger.
  • 5Illustrative pro forma impact shows a 3% reduction in Ocean Energy's proved reserves for 2002 if the new method was applied.
  • 6Illustrative pro forma impact shows a 0.7% reduction in combined company proved reserves for 2002.
  • 7Illustrative pro forma impact indicates a $12 million increase in D&A and an $8 million decrease in net earnings for the combined company for 2002.

Frequently Asked Questions

The main purpose of this 8-K filing is to report a supplement to the proxy statement/prospectus related to the proposed merger between Devon Energy and Ocean Energy, Inc., and to provide an update on accounting for proved reserves.

Ocean Energy is changing its method for estimating proved reserves for periods ending after December 31, 2002. This change is to align with the SEC's interpretation of guidelines regarding reserves below the lowest known hydrocarbon that are not supported by production data.

Yes, Devon Energy intends to follow this changed method of accounting for proved reserves after the merger with Ocean Energy is completed.

For illustrative purposes, if this changed method had applied to Ocean Energy's fiscal year ended December 31, 2002, the combined company's total proved reserves would have been approximately 0.7% lower. Pro forma net earnings for the year ended December 31, 2002, would have been $8 million lower, and depreciation, depletion, and amortization expense would have been $12 million higher.