8-KOther Events

DEVON ENERGY CORP/DE 8-K Report, Corporate Update (Aug 1, 2012)

Filed August 1, 2012For Securities:DVN

Summary

Devon Energy Corporation (DVN) filed this Form 8-K on August 1, 2012, to provide updated forward-looking estimates for the remainder of fiscal year 2012. The report revises the company's production, pricing, operational expenses, and capital expenditure outlooks. Key updates include refined production forecasts for oil, gas, and NGLs, along with revised expectations for commodity prices relative to NYMEX benchmarks across U.S. and Canadian operations. Investors should note the company's strategies for managing commodity price risk through hedging instruments, detailed for both oil and natural gas. Financial operational metrics such as lease operating expenses, DD&A, and G&A per Boe are also provided with updated ranges. The company also reiterated its commitment to shareholder returns with a stated quarterly dividend rate.

Key Highlights

  • 1Updated 2012 production forecast: 253 to 257 MMBoe (690 to 700 MBoepd) combined oil, gas, and NGL production.
  • 2Revised commodity price expectations: Oil prices expected at 68%-78% of NYMEX, gas at 78%-88% of NYMEX, and NGLs at 32%-37% of NYMEX on average.
  • 3Commodity price risk management: Details on oil and natural gas derivative positions (swaps, collars, call options sold) covering Q1-Q4 2012.
  • 4Updated operating expense estimates: Lease operating expenses per Boe ($8.00-$8.40), DD&A per Boe ($11.00-$11.20), and G&A per Boe ($2.50-$2.70).
  • 5Significant capital expenditure guidance: Total oil and gas capital expenditures projected between $6.53 billion and $6.96 billion.
  • 6Marketing & midstream operating profit forecast: Estimated between $360 million and $410 million.
  • 7Quarterly dividend rate confirmed: $0.20 per share.

Frequently Asked Questions

Devon Energy updated its total oil, gas, and NGL production estimate for 2012 to be between 253 to 257 Million barrels of oil equivalent (MMBoe), which translates to 690 to 700 Million barrels of oil equivalent per day (MBoepd).

For 2012, Devon anticipates its average realized prices to be approximately 68% to 78% of the NYMEX price for oil, 78% to 88% of the NYMEX price for natural gas, and 32% to 37% of the NYMEX price for NGLs, with variations between U.S. and Canadian operations.

Devon Energy utilizes price swaps, price collars, and sold call options to manage commodity price risk. As of July 30, 2012, the company had significant derivative positions for both oil and natural gas covering various periods throughout 2012, with details provided on volumes and weighted average prices.

Devon Energy projects total capital expenditures for 2012 to range from $7.30 billion to $7.90 billion, with oil and gas capital expenditures estimated between $6.53 billion and $6.96 billion.