Independent oil and natural gas exploration and production
Devon Energy Corporation
) increased its 2012 capital budget to $6.4 billion from its
previous expectation of $5.1 billion - $5.5 billion. Devon will
utilize the additional capital outlay for exploration and further
oil and gas leasehold acquisitions.
In 2012, Devon Energy is expected to spend an additional $1.07
billion for the development of its wide array of domestic
inventories; $1.6 billion will be allotted for exploration and
acquisition purposes, $350 million for increasing acreage in the
Cline Shale in the Permian Basin and $500 million for an
undisclosed onshore project in the U.S. Apart from that, the
company will also utilize a portion of the budget for its $35.4
billion five-year capital plan for exploration and production.
Devon Energy will deploy a major portion of its 2012 capital in
oil and liquids-rich projects, including additions in Canadian
Jackfish 3 and US-based Permian Basin acreage. As of December 31
2011, Jackfish and Permian Basin projects had total proved reserves
of 457 and 189 million barrels of oil equivalent ("MMBoe"),
respectively. In the fourth quarter of 2011, Jackfish 1 and
Jackfish 2 projects generated record production, with an average of
43,000 barrels per day.
The company also expects oil and natural gas liquids-rich parts
of the Cana operations to generate an average of 16,000 barrels per
day in 2012. We think that the company is currently trying to
leverage its oil-focused opportunities to expand its footprint and
establish new positions in the existing operations. The additional
investments in existing assets will increase the company's total
production, which is likely to average approximately 50,000 barrels
per day in 2012.
Devon Energy's earlier announced 2012 capital budget allocated
90% of the total amount for the company's domestic inventory
development purposes while the remaining 10% was allocated for
leasehold acquisitions and explorations.
In 2011, Devon Energy's capital expenditure of approximately
$7.5 billion was directed at acquisitions of new acreage, costs
related to the Pike oil sands acquisition, and higher exploration
and development activities. The expenses in midstream activities
were largely the result of intensive oil and gas drilling
activities, primarily construction and the addition of natural gas
processing plants and pipeline extension.
As of December 31 2011, Devon Energy had 13,371,000 of net acres
spanning its U.S. and Canadian operations. The company plans to
further increase acreage acquisitions through 2012 incurring
reasonable expenses. The company has already acquired 250,000 net
acres for its new projects this year and aims to acquire 500,000
net acres by year-end.
We believe that Devon Energy's continuous acreage acquisitions
program along with related drilling and development activities and
higher midstream capital activities will act as important near-term
growth indicators. The company's diversified portfolio, with
significant oil and natural gas liquids-rich projects, is also
likely to generate better risk-adjusted profit.
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. The company
Chesapeake Energy Corporation
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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