Much of the net loss was from noncash charges, including a $366 million fee related to oil and natural gas prices.
“We think overall it is a very good quarter,” CEO
Total production companywide was up about 1 percent to 541,000 barrels of oil equivalent per day.
“We had good success at a number of key developments at both the
Adjusting on the fly
But not all production is exceeding expectations. Underwhelming results at the Showboat development in the STACK has caused executives to adjust future drilling plans.
“The key thing is we recognized early what the most likely issues are, and we are changing our development plans in the future based on those results,” Hager said.
Devon and other operators in the region are testing how close they should drill horizontal wells to best develop the area.
“In this case, we spaced wells closer together than is economically optimal,” Hager said. “We’re going to be adjusting that. We still have 90 percent of the development of the STACK play in front of us. It will let us adjust our plans going forward.”
Devon executives also provided updated information on the company’s ongoing effort to buy back $4 billion in common stock, or about 20 percent of the company’s outstanding shares. Devon executives said Tuesday the company bought back 24 million shares, or almost 5 percent of its stock, for about $1 billion by the end of July.
The company is expected to complete the other $3 billion in buybacks during the first half of 2019.
Devon in July completed its sale of its stake in
“These are assets that either are very mature and don’t have development projects associated with them or can’t complete with other developments in our portfolio,” he said. “In that case, it makes sense for us to sell these assets to someone who may choose to develop that opportunity. This is a portfolio cleanup exercise for us.”
Facts and figures
The second-quarter loss of $425 million translates to 83 cents a share and compares to a profit of $219 million, or 41 cents a share, one year ago.
Revenues increased to $2.25 billion, up from $2.17 billion one year ago.
The net loss includes a $366 million noncash charge related to Devon’s hedging position. The company locked in much of its second-quarter oil sales with prices in the high $50 range. Benchmark domestic oil prices then surged as high as $74 a barrel. The noncash charge reflects the difference between the price Devon received with the hedges and the price the company would have received without the contracts.
Adjusted for one-time items, Devon recorded a profit of $177 million, or 34 cents a share, less than analysts’ expectations of 36 cents a share. Adjusted earnings before interest, taxes, depreciation and amortization, was $1 billion.
Devon shares were down $1.76, or 3.9 percent, to $43.75 late Tuesday in aftermarket trading.
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