DEVON ENERGY REPORTS PRODUCTION INCREASES, EXPENSE
DECREASE, BUT LOWER REVENUES AND EARNINGS FOR THIRD QUARTER
OKLAHOMA CITY, Nov. 12 /PRNewswire/ -- Devon Energy Corporation (AMEX: DVN and DVN.Pr) today reported earnings of $147,000 on total revenue of $6.2 million for the quarter ended Sept. 30, 1991. Although the company achieved a 20 percent increase in total production and an 11 percent decrease in expenses, lower oil and natural gas prices more than offset these improvements, causing revenues and net earnings to decrease from the same period in 1990.
Net earnings for the quarter were $147,000, or a loss of 5 cents per common share, compared with earnings of $757,000, or 2 cents per common share, for the same period last year. (Dividend payments of $567,000 in the 1991 period and $582,000 in 1990 account for the difference in absolute and per common share results.) Primarily as a result of lower oil and gas prices, total revenues decreased 22 percent to $6.2 million in the third quarter of 1991 from $8.0 million in 1990. An 11 percent decrease in total expenses, from $6.8 million to $6.1 million, was not sufficient to offset the revenue decline.
For the nine months ended Sept. 30, 1991, the company reported a 6 percent increase in total revenues to $21.8 million from $20.6 million. However, in the first quarter of 1991, the company recorded its first, and only anticipated, non-cash charge for a reduction in the carrying value of oil and gas properties. This resulted in a loss of $16.1 million, or $2.05 per share, for the first nine months of 1991, compared with net earnings of $1.1 million, or a loss of 8 cents per share, for the same period in 1990.
Gas Production Improves Significantly; Oil and Gas Prices are Lower For the third quarter of 1991, total production improved 19 percent to 4.1 equivalent billion cubic feet of gas (EBCF). The company's coal seam gas project in northwest New Mexico accounted for most of the increase, contributing 1.3 BCF more than in the 1990 period. For the first nine months of this year, total production nearly doubled to 13.2 EBCF. This gain was likewise primarily due to a 5.3 BCF increase in production from the coal seam project. Production gains for both 1991 periods were tempered by the company's voluntary curtailment of its coal seam gas production during July and August, due to low gas prices. Had production not been curtailed, total production for the third quarter and nine months would have been .8 BCF greater than reported.
Even with the large production gains, gas revenues were lower. Gas prices declined approximately 35 percent to reach 10-year lows during the second and third quarters. As a result, gas sales dropped by 15 percent for the third quarter of 1991 to $3.6 million. For the nine month period, gas sales rose by 10 percent, to $12.9 million. Oil sales were down 30 and 13 percent for the third quarter and nine months, respectively, due to normal production declines, property sales and lower oil prices.
Cash Expenses Held Flat; Per Unit Production Costs Continue Downward Trend.
Total cash expenses for the third quarter decreased 11 percent to $4.2 million for the third quarter, and remained essentially flat at $13.4 million for the nine months. "Although one would expect increases in operating expenses proportionate with the production gains we have posted, that has not been the case," remarked H. Allen Turner, vice- president of corporate development. "For the sixth consecutive quarter we have shown decreases in lifting costs per unit of production. This reflects the low operating costs of our coal seam gas project, as well as our ongoing effort to sell high cost properties and reinvest in more profitable ones."
Although the non-cash decrease in carrying value of properties hurt first quarter earnings, it actually has aided subsequent periods by lowering ongoing amortization expense per unit of production. The current rate of 40 cents per equivalent thousand cubic feet of production is significantly lower than the 58-cent rate applicable before the charge.
Gas Prices Improve for Fourth Quarter; Additional Production Increases Expected.
For the fourth quarter of 1991, the company expects additional increases in gas production, as more wells in its coal seam gas project have been placed on production. In addition, early fourth quarter gas prices have been higher than in the third quarter. The early cold winter weather across much of the U.S. appears to have increased demand for natural gas. However, gas prices still remain below year-ago levels.
Devon Energy Corporation is an independent energy company engaged primarily in oil and gas property acquisitions, exploration and production, and oil and natural gas remarketing. The company ranks in the top 25 percent of U.S. publicly held oil and gas firms, measured by oil and gas reserves. Devon Energy's common and preferred shares trade on the American Stock Exchange under the symbols "DVN" and "DVN.Pr," respectively.
Additional information can be obtained on Devon Energy Via FAX, no cost - dial 1-800-PRO-INFO, Code 047
DEVON ENERGY CORPORATION
Income Statement Data
(in thousands, except per share and percent change data)
Periods ended Three months Percent Nine months Percent
Sept. 30 1991 1990 Chge. 1991 1990 Chge.
Gas $3,639 4,255 -15 12,870 11,676 +10
Oil $2,361 3,381 -30 7,226 8,333 -13
Other $229 377 -39 1,671 550 +204
Cash expenses $4,176 4,684 -11 13,352 13,281 +1
Reduction of carrying
value of oil and
gas properties -- -- -- 25,000 -- NM
Net earnings (loss) $147 757 -81 (16,071) 1,091 NM
dividends $567 582 -3 1,702 1,746 -3
Net income (loss)
per common share ($.05) .02 NM (2.05) (.08) NM
shares outstanding 8,690 8,641 +1 8,685 8,630 +1
PRODUCTION DATA Three months Percent Nine months Percent
Sept. 30 1991 1990 Chge. 1991 1990 Chge.
Total production (in equiv.
billion cubic feet) 4.108 3.465 +19 13.207 8.900 +48
Gas (billion cubic feet) 3.391 2.618 +30 10.966 6.425 +71
Oil (thousands of barrels) 119 141 -15 373 412 -9
Average price (per equiv.
thousand cubic feet) $1.46 2.20 -34 1.52 2.25 -32
Average gas price (per
thousand cubic feet) $1.07 1.63 -34 1.17 1.82 -36
Average oil price
(per barrel) $19.76 23.93 -17 19.35 20.20 -4
BALANCE SHEET DATA (in thousands, except percent change data)
Sept. 30, 1991 Dec. 31, 1990 Change
Current assets $15,239 18,069 -16
Total assets $99,879 123,547 -19
Current liabilities $11,098 13,824 -20
Long-term debt $32,000 28,000 +14
Stockholders' equity $52,499 70,767 -26
/CONTACT: Marian Moon of Devon Energy, 405-235-3611; Lynne Franklin or Nick Farina (Chicago) 312-266-7800; or Kathy Phelan (New York), 212-661-8030, all of The Financial Relations Board/
(DVN) CO: Devon Energy Corporation ST: Oklahoma IN: OIL SU: ERN SH -- NY037 -- 3413 11/12/91 11:17 EST