Devon Energy Corp.
) reported second-quarter 2014 adjusted earnings per share of
$1.40, in line with the Zacks Consensus Estimate but ahead of the
year-ago number by 16%.
Devon Energy Corporation - Earnings Surprise |
On a GAAP basis, the company reported earnings of $1.64 per
share versus $1.68 per share in the year-ago quarter. The
difference between the operating and GAAP number in the reported
quarter was due to restructuring cost and fair value changes in
financial instruments of 45 cents and a one-time gain of 69 cents
from asset sales and related repatriation.
Devon's quarterly revenues of $4,510 million surpassed year-ago
revenues of $3,088 million by 46% and the Zacks Consensus Estimate
of $3,793 million by 18.9%.
The upside was due to a whopping 346% year-over-year increase in
marketing and midstream revenues to $2,230 million.
Highlights of the Release
Devon's total production of oil, natural gas and natural gas
liquids averaged 667,000 oil-equivalent barrels (Boe) per day in
the second quarter of 2014. Excluding assets earmarked for
divestiture, total production in the second quarter averaged
620,000 Boe per day, up 14% year over year.
The increase in oil production from the Permian Basin and Eagle
Ford assets helped boost overall production. Devon's domestic oil
production increased 79% year over year, which is the primary
reason behind the surge in total production.
In the reported quarter, Devon's marketing and midstream operating
profit was $224 million, which exceeded the company's guidance and
represented a 90% year-over-year increase.
Total operating expenses in second-quarter 2014 increased 37.6% to
$2,736 million from $1,988 million in second-quarter 2013.
in the quarter were $81.83 per barrel, up 6% from $77.17 per barrel
in the year-ago quarter. Realized prices for natural gas liquids
were down 4.8% to $25.13 per barrel from $26.39 per barrel in the
Natural gas price realization was up 17% year over year to $3.99
per thousand cubic feet (Mcf) from $3.41 per Mcf in the year-ago
On the whole, total realized prices in the second quarter were
$42.34 per boe, up 20.2% year over year.
As of Jun 30, 2014, the company's cash balance totaled $1.70
billion versus $6.06 billion as of Dec 31, 2013.
Long-term debt as of Jun 30, 2014, was $11.88 billion versus $7.96
billion as of Dec 31, 2013.
Capital expenditure in second-quarter 2014 was nearly $1.93
billion. Devon generated cash flow from operations of $2.0 billion
in the second quarter, a 47% increase compared to the second
quarter of 2013.
Other Company Releases
EOG Resources Inc.
) posted net earnings of $1.45 per share in second-quarter 2014,
surpassing the Zacks Consensus Estimate of $1.36 by 6.6%.
Pioneer Natural Resources Co.
) posted earnings of $1.36 per share in second-quarter 2014,
surpassing the Zacks Consensus Estimate by 7.1%.
) announced operating earnings per share of 23 cents, which failed
to beat the Zacks Consensus Estimate of 28 cents.
Devon's strategy to divest non-core assets in the U.S. and Canada
and focus on the reserve rich onshore U.S. assets is yielding
results. The retained North American assets of the company have
contributed to its strong second-quarter performance.
The sales proceeds, cash in hand and free cash flow have helped the
company to reduce its debt level by $3.2 billion in the reported
quarter. The company plans to cut outstanding debts further in the
third quarter. This will strengthen its financial position and
lower the interest burden going forward.
Devon Energy currently holds a Zacks Rank #3 (Hold).
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