8-K/AOther Events

DEVON ENERGY CORP/DE 8-K/A Report (May 8, 2003)

Filed May 8, 2003For Securities:DVN

Summary

This Form 8-K/A filing from Devon Energy Corporation, dated May 8, 2003, serves as an amendment to a previous filing and primarily provides forward-looking estimates for the year 2003. A significant event highlighted is the acquisition of Ocean Energy, Inc. (Ocean), which closed on April 25, 2003. The company details expected production volumes for oil, natural gas, and NGLs across the United States, Canada, and International regions. It also outlines various hedging strategies, including fixed-price contracts, price swaps, and costless collars, employed to manage price volatility for both oil and gas. Financial projections for 2003 cover marketing and midstream revenues and expenses, production and operating expenses, depreciation, depletion, and amortization (DD&A), and general and administrative (G&A) expenses. The company also details its capital expenditure budget, focusing on drilling and development, as well as marketing and midstream assets. Liquidity and capital resources are expected to be sufficient, primarily funded by operating cash flow and working capital, with available credit facilities to cover any shortfalls or unplanned needs. A new accounting standard, SFAS No. 143, related to asset retirement obligations, is also being adopted.

Key Highlights

  • 1Devon Energy completed the acquisition of Ocean Energy, Inc. on April 25, 2003, and its financial estimates for the remainder of 2003 include Ocean's operations.
  • 2The company projects combined oil, gas, and NGL production for 2003 to be between 224 and 229 MMBoe, with approximately 93% from proved reserves.
  • 3Devon utilizes various hedging instruments, including fixed-price contracts, price swaps, and collars, to mitigate price volatility for its oil and natural gas production across different regions.
  • 4Estimated 2003 capital expenditures for drilling and development are projected to be between $2.0 billion and $2.2 billion.
  • 5Marketing and midstream revenues are expected to range from $1.19 billion to $1.23 billion, with expenses between $960 million and $1.0 billion.
  • 6The company anticipates 2003 depreciation, depletion, and amortization (DD&A) expenses related to oil and gas properties to be between $1.5 billion and $1.6 billion.
  • 7Devon expects its consolidated 2003 G&A expenses to be between $270 million and $300 million, with potential variability due to the integration of Ocean Energy.

Frequently Asked Questions

This filing is an amendment to a previous Form 8-K and primarily serves to provide updated forward-looking estimates and operational information for Devon Energy Corporation for the year 2003, notably including the impact of the recently completed acquisition of Ocean Energy, Inc.

Devon Energy employs a range of hedging strategies to manage commodity price risk. These include fixed-price contracts, price swaps, and costless price collars for both oil and natural gas production across its operating regions. These instruments aim to lock in prices or set price floors and ceilings to reduce exposure to market volatility.

Key financial projections include an estimated total production of 224-229 MMBoe, marketing and midstream revenues between $1.19 billion and $1.23 billion, production and operating expenses between $1.0 billion and $1.05 billion, DD&A of $1.5-$1.6 billion for oil and gas properties, and G&A expenses between $270 million and $300 million. Capital expenditures for drilling and development are budgeted between $2.0 billion and $2.2 billion.

The acquisition of Ocean Energy, which closed just before the reporting period for the majority of 2003 (April 25, 2003), is integrated into Devon's forward-looking estimates. This includes its impact on production volumes, capital expenditures, G&A expenses, and the assumption of certain financial obligations and hedging instruments.