Devon Energy Corp.
) reported fourth-quarter 2011 adjusted EPS of $1.55 which
came above the Zacks Consensus Estimate of $1.48.
On a GAAP basis, the company reported an EPS of $1.25 versus
$1.29 in the year-ago quarter. The difference of operating and GAAP
earnings of 30 cents in the reported quarter resulted from the 46
cents gain from oil and gas derivatives and financial instrument
and 16 cents from loss from foreign exchange and insurance.
For full year 2011, Devon Energy posted earnings of $6.14 per
share, striding ahead of the Zacks Consensus Estimate of $6.05.
GAAP earnings for the full year were $11.25 per share compared
with a net loss of $10.31 per share in 2010.
Devon's quarterly revenues of $2,585 million surpassed the Zacks
Consensus Estimate of $2,532 million and the year-ago quarter
revenue of $2,135 million.
The full-year 2011 results came in at $11,454 million, exceeding
both Zacks Consensus Estimate of $10,618 million and the year-ago
revenue of $9,940 million.
The full-year performance was driven by increased oil and
natural gas liquids (
) production and sales volumes along with favorable prices
The favorable 2011 results reflect solid performance of the
company's North American drilling program for the year. The North
American onshore production increases 8% from the 2010 levels to
658,000 oil-equivalent barrels per day in 2011.
During the year, the company invested $1.5 billion on acreage
acquisitions, and its total drill-bit reserve additions during the
year surpassed the production rate. The liquids reserve replacement
rate was 230% in 2011.
Lease operating expenses of the company in 2011 increased to
$1.9 billion from $1.7 billion in 2010. The increase in cost was
due to higher Canadian exchange rate and higher overall service
However, overall, the cost efficiencies realized from Devon's
cost strategic repositioning paid off very well. As a percentage of
revenue total cost declined by 156 points from the 2010 levels.
Realized oil prices in the quarter improved significantly to
$78.47 per barrel, representing a 14.8% jump from the year-ago
quarter. Realized prices for natural gas liquids were up 21.7% to
$42.16 per barrel from $34.65 per barrel in the year-ago
The natural gas prices during the quarter remain at depressed
levels; the natural gas price realization were down by 18.3% year
over year to $3.79 per thousand cubic feet (Mcf) from $4.64 per Mcf
in the year-ago quarter.
At year-end 2011, Devon grew its proved reserves to an all-time
record of 3.0 billion equivalent barrels (BBoe). During the year
the company added 386 million Boe through extension and new
Devon's total proved reserves for 2011 included 2.2 BBoe of
proved developed reserves, making up 74% of total reserves. The
company's year-end proved reserves were composed of 705 million
barrels of crude oil, 10.48 trillion cubic feet of natural gas and
552 million barrels of natural gas liquids.
Devon maintains a healthy financial and liquidity position.
Devon's operating cash flow in 2011 increased 13.6% year over year
to $6.2 billion.
During the year the company completed its share repurchase
program announced in May 2010. The company repurchased 49.2 million
shares for $3.5 billion, with an average repurchase price of $71.14
As of December 31, 2011, the company's cash balances totaled
$5.5 billion versus $2.9 billion as of December 31,2010.
Chesapeake Energy Corporation
), which competes with Devon Energy is expected to report fourth
quarter earnings on February 21, 2012. The Zacks Consensus
estimates for its fourth quarter and fiscal 2011 earnings per share
is expected to be 60 cents and $2.81 respectively.
Devon Energy has surpassed our expectation riding on strong
production and realized prices. The few projects of the company
which came online during the last quarter of the fiscal will likely
to add to the strength of the company as we move forward.
Devon at the beginning of 2012 made a strategic move and
monetized a portion of its oil and gas holding for a total
consideration of $2.5 billion, out of which $1.6 billion will be
paid in phases by China based Sinopec International Petroleum
Exploration & Production Corporation ("SIPC"). We believe this
deal will help Devon to develop its resources in five shale plays
and further boost its topline in the long run.
Based in Oklahoma City, Oklahoma, Devon Energy Corporation, is
an independent energy company engaged primarily in exploration,
development and production of oil and natural gas. Devon Energy
currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating.
CHESAPEAKE ENGY (
): Free Stock Analysis Report
DEVON ENERGY (
): Free Stock Analysis Report
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