Devon Energy's Third-Quarter 2007 Earnings Climb to $1.63 Per Share On 10 Percent Production Growth



    OKLAHOMA CITY, Nov. 7 /CNW/ -- Devon Energy Corporation (NYSE:   DVN) today
reported net earnings of $735 million, or $1.65 per common share ($1.63 per
diluted common share), for the quarter ended September 30, 2007. This compares
with third-quarter 2006 net earnings of $705 million, or $1.59 per common
share ($1.57 per diluted common share).
    For the nine months ended September 30, 2007, Devon reported net earnings
of $2.3 billion, or $5.13 per common share ($5.07 per diluted common share).
For the nine months ended September 30, 2006, Devon earned $2.3 billion, or
$5.11 per common share ($5.05 per diluted common share).
    Securities analysts typically exclude certain items from their published
estimates. In aggregate, these items increased Devon's third-quarter 2007 net
earnings by $35 million, or eight cents per diluted share.  The adjusting
items are discussed in detail later in this news release.
    
    Sixth Consecutive Quarter of Increased Production
    
    Oil and natural gas production from continuing operations increased in
the third quarter of 2007 to 56.8 million oil-equivalent barrels (Boe).  This
was a 10 percent increase over third quarter 2006 production and was driven by
organic production growth in each of the company's producing segments: the
United States, Canada and International.  The third quarter of 2007 marks the
sixth consecutive quarter that Devon has increased oil and gas production from
retained properties.
    
    Marketing and Midstream MLP Update
    
    Devon also announced today that it has decided not to proceed at this
time with its plans to form a publicly-traded master limited partnership
(MLP). The MLP was to own a minority interest in Devon's U.S. onshore
marketing and midstream business.  The company cited changing financial market
conditions for MLPs as the principal reason for the decision.
    
    Barnett Shale Milestones Lead Operating Highlights
    
    Devon drilled 599 wells in the third quarter of 2007 with an overall
success rate of 98 percent.  Following are highlights of third-quarter
operations.

    
    * Devon commenced drilling its 1,000th operated horizontal well in the
      Barnett Shale in north Texas during the third quarter.  Horizontal
      drilling, initiated by Devon about five years ago in the field, has
      played an important role in unlocking more of the vast potential of the
      company's 735,000 net acres in the Barnett Shale.
    

    
    * Devon's net production from the Barnett Shale averaged 856 million cubic
      feet of natural gas equivalent per day in the third quarter,
      representing a 32 percent increase over the third quarter of 2006.
    

    
    * Devon commenced production from the Merganser field in the deepwater
      Gulf of Mexico in August.  Combined initial production from the two
      Merganser wells was about 150 million cubic feet of gas per day.  Devon
      has a 50 percent working interest in the field, which produces into the
      Independence Hub.
    

    
    * Devon has sanctioned development of the Cascade project in the deepwater
      Lower Tertiary trend of the Gulf of Mexico.  Cascade is expected to be
      one of the first two development projects to establish production in the
      Gulf's Lower Tertiary trend.
    

    
    * Also in the Gulf of Mexico, Devon commenced drilling its first
      company-operated Lower Tertiary exploratory well in the third quarter.
      The Chuck well, in 6,500 feet of water, is drilling to a target depth of
      31,500 feet.  Devon has a 39.5 percent working interest in the Chuck
      prospect.
    

    
    * In east Texas, net production in the company's Carthage area climbed to
      a new high in the third quarter, averaging 260 million cubic feet of
      natural gas equivalent per day.  Based on the success of its vertical
      and horizontal programs, Devon has increased its rig count in Carthage
      to 13.
    

    
    * In Canada, Devon continued an active 5-rig program in the third quarter,
      drilling 125 new wells in the company's Lloydminster oil play.  The
      company's production in Lloydminster has increased by 50 percent over
      the past 12 months to 34,600 barrels per day.
    

    
    * In Brazil, the offshore Polvo project began first production in the
      third quarter.  Three of 10 planned producing wells have now been
      completed.  Gross combined production reached about 9,500 barrels of oil
      per day from the first three wells.  The project is expected to produce
      up to 50,000 barrels per day at its peak in 2008.  Devon has a
      60 percent working interest in Polvo.
    Oil and Gas Revenues Increase 12 Percent
    
    Sales of oil, natural gas and natural gas liquids were $2.3 billion in
the third quarter of 2007.  This was a 12 percent increase compared with the
third quarter of 2006.  The increase in sales was the result of greater
production and higher realized liquids prices, partially offset by lower
natural gas prices.
    The average realized price for natural gas decreased six percent in the
third quarter of 2007 to $5.31 per thousand cubic feet.  This compares with
$5.63 per thousand cubic feet in the third quarter of 2006.  Devon's average
realized oil price increased six percent to $67.41 per barrel in the third
quarter of 2007 compared with $63.77 per barrel in the prior-year period.
Devon's realized natural gas liquids price increased 10 percent to $38.34 per
barrel from $34.98 per barrel in the third quarter of 2006.
    Marketing and midstream operating profit was $133 million, compared with
$112 million in the third quarter of 2006.  The 19 percent increase resulted
primarily from higher gas processing margins.
    
    Higher Expenses Reflect High Activity Levels and Resulting Growth
    
    Driven by higher production and activity levels coupled with rising
industry costs, expenses in most categories increased in the third quarter of
2007.  With the exception of depreciation, depletion and amortization (DD&A)
expense, Devon's expenses in the third quarter of 2007 were generally in line
with expectations.  DD&A expense associated with oil and gas properties
increased to $12.41 per Boe in the third quarter.  The higher than expected
third quarter DD&A rate was attributable to the impact of unusually low
natural gas prices in the Rocky Mountain producing region at September 30,
2007.
    
    African Divestiture Update
    
    In October, Devon completed the sale of its operations in Egypt for an
adjusted sales price of $341 million as of the closing date.  The company is
also in the process of divesting its assets and terminating operations in West
Africa.  In accordance with accounting standards, Devon has reclassified the
assets, liabilities and results of its operations in Egypt and West Africa as
discontinued operations for all accounting periods presented in this release.
Although revenues and expenses for prior periods were reclassified, there was
no impact upon previously reported net earnings.  Included with the financial
information that follows is a table of revenues, expenses and production
categories and the amounts reclassified as discontinued operations for each
period presented.
    
    Cash Flow Before Balance Sheet Changes Increases 15 Percent to
    $1.8 Billion
    
    Third quarter cash flow before balance sheet changes rose 15 percent to
$1.8 billion in 2007. During the third quarter, Devon utilized cash flow to
fund $1.6 billion of capital expenditures and returned more than $180 million
to shareholders through share repurchases and dividends.  The company's
balance sheet continued to strengthen during the third quarter with net debt
to adjusted capitalization declining to 19 percent at September 30, 2007.
Reconciliations of cash flow before balance sheet changes, net debt and
adjusted capitalization, which are non-GAAP measures, are provided in this
release.
    
    Items Excluded from Published Earnings Estimates
    
    Devon's reported net earnings include items of income and expense that
are typically excluded by securities analysts in their published estimates of
the company's financial results.  These items and their effects upon
third-quarter 2007 reported earnings were as follows:

    
    * A change in fair value of financial instruments increased third-quarter
      2007 earnings by $22 million pre-tax ($14 million after tax).
    

    
    * An unrealized loss on natural gas derivative instruments decreased
      third-quarter 2007 earnings by $6 million pre-tax ($4 million after
      tax).
    

    
    * The decisions to exit Egypt and West Africa generated financial benefits
      that increased third-quarter 2007 earnings by $48 million pre-tax
      ($25 million after tax).
    
    The following table summarizes the effects of these items on
third-quarter 2007 earnings and income taxes.



    
    Summary of Items Typically Excluded by Securities Analysts -
     Third Quarter 2007
    (in millions)
                                                                   Cash Flow
                     Pre-tax    Income Tax Effect     After-tax     Before
                     Earnings ----------------------  Earnings   Balance Sheet
                      Effect  Current Deferred Total   Effect   Changes Effect
    Change in fair
     value of
     financial
     instruments        $22        -       8     8        14          -
    Unrealized loss
     on natural gas
     derivatives         (6)       -      (2)   (2)       (4)         -
    Financial
     benefits
     generated by
     decision to
     exit Africa         48        -      23    23        25          -
       Totals           $64        -      29    29        35          -
    
    In aggregate, these items increased third-quarter 2007 net earnings by
$35 million, or eight cents per common share (eight cents per diluted share).
    
    Conference Call to be Webcast Today
    
    Devon will discuss its third-quarter 2007 financial and operating results
and changes to its full-year 2007 outlook in a conference call webcast today.
The webcast will begin at 10 a.m. Central Time (11 a.m. Eastern Time).  The
webcast may be accessed from Devon's internet home page at
http://www.devonenergy.com.
    This press release includes "forward-looking statements" as defined by
the Securities and Exchange Commission.  Such statements are those concerning
strategic plans, expectations and objectives for future operations.  All
statements, other than statements of historical facts, included in this press
release that address activities, events or developments that the company
expects, believes or anticipates will or may occur in the future are
forward-looking statements.  Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the company. Statements regarding future drilling and production are subject
to all of the risks and uncertainties normally incident to the exploration for
and development and production of oil and gas.  These risks include, but are
not limited to, inflation or lack of availability of goods and services,
environmental risks, drilling risks and regulatory changes. Investors are
cautioned that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from those
projected in the forward-looking statements.
    The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to disclose only proved reserves
that a company has demonstrated by actual production or conclusive formation
tests to be economically and legally producible under existing economic and
operating conditions.  This release may contain certain terms, such as
resource potential, reserve potential, probable reserves, possible reserves
and exploration target size.  The SEC guidelines strictly prohibit us from
including these terms in filings with the SEC. U.S. investors are urged to
consider closely the disclosure in our Form 10-K, File No. 001-32318,
available from us at Devon Energy Corporation, Attn. Investor Relations, 20
North Broadway, Oklahoma City, OK 73102.  You can also obtain this form from
the SEC by calling 1-800-SEC-0330.
    Devon Energy Corporation is an Oklahoma City-based independent energy
company engaged in oil and gas exploration and production. Devon is one of the
world's leading independent oil and gas producers and is included in the S&P
500 Index.  For more information about Devon, please visit our website at
http://www.devonenergy.com.



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    

    
    PRODUCTION DATA (net of royalties)
     All periods exclude discontinued         Quarter Ended  Nine Months Ended
     operations from Egypt and West Africa    September 30,     September 30,
                                              2007     2006     2007     2006
    Total Period Production
    Natural Gas (Bcf)
      U.S. Onshore                            144.2    127.2    407.8    358.0
      U.S. Offshore                            19.9     22.2     57.3     57.2
      Total U.S.                              164.1    149.4    465.1    415.2
      Canada                                   57.9     60.9    170.3    182.7
      International                             0.5      0.3      1.3      1.5
      Total Natural Gas                       222.5    210.6    636.7    599.4
    Oil (MMBbls)
      U.S. Onshore                              2.8      2.8      8.4      8.4
      U.S. Offshore                             2.1      2.0      5.8      6.5
      Total U.S.                                4.9      4.8     14.2     14.9
      Canada                                    4.2      3.2     11.7      9.4
      International                             4.3      2.9     15.2      6.1
      Total Oil                                13.4     10.9     41.1     30.4
    Natural Gas Liquids (MMBbls)
      U.S. Onshore                              5.1      4.5     15.0     13.4
      U.S. Offshore                             0.2      0.1      0.6      0.4
      Total U.S.                                5.3      4.6     15.6     13.8
      Canada                                    1.0      1.2      3.2      3.6
      International                               -        -        -        -
      Total Natural Gas Liquids                 6.3      5.8     18.8     17.4
    Oil Equivalent (MMBoe)
      U.S. Onshore                             31.9     28.5     91.4     81.4
      U.S. Offshore                             5.7      5.9     16.0     16.4
      Total U.S.                               37.6     34.4    107.4     97.8
      Canada                                   14.8     14.5     43.2     43.5
      International                             4.4      2.9     15.4      6.4
      Total Oil Equivalent                     56.8     51.8    166.0    147.7
    

    
    Average Daily Production
    Natural Gas (MMcf)
      U.S. Onshore                          1,567.4  1,382.8  1,493.7  1,311.3
      U.S. Offshore                           215.8    241.0    210.0    209.5
      Total U.S.                            1,783.2  1,623.8  1,703.7  1,520.8
      Canada                                  629.5    662.1    623.6    669.2
      International                             5.4      3.1      4.7      5.8
      Total Natural Gas                     2,418.1  2,289.0  2,332.0  2,195.8
    Oil (MBbls)
      U.S. Onshore                             30.0     30.1     30.7     30.7
      U.S. Offshore                            23.3     22.3     21.5     23.8
      Total U.S.                               53.3     52.4     52.2     54.5
      Canada                                   45.5     34.4     42.9     34.6
      International                            47.1     31.8     55.5     22.2
      Total Oil                               145.9    118.6    150.6    111.3
    Natural Gas Liquids (MBbls)
      U.S. Onshore                             55.1     48.9     54.9     49.0
      U.S. Offshore                             2.9      1.7      2.2      1.4
      Total U.S.                               58.0     50.6     57.1     50.4
      Canada                                   10.7     12.7     11.6     13.2
      International                               -        -        -        -
      Total Natural Gas Liquids                68.7     63.3     68.7     63.6
    Oil Equivalent (MBoe)
      U.S. Onshore                            346.4    309.4    334.6    298.3
      U.S. Offshore                            62.1     64.2     58.6     60.1
      Total U.S.                              408.5    373.6    393.2    358.4
      Canada                                  161.2    157.4    158.4    159.3
      International                            48.0     32.4     56.3     23.2
      Total Oil Equivalent                    617.7    563.4    607.9    540.9
    



    
                                            Quarter Ended    Nine Months Ended
    REALIZED PRICE DATA                      September 30,     September 30,
     (average realized prices)               2007     2006     2007     2006
    Realized Prices
    Natural Gas ($/Mcf)
      U.S. Onshore                           $5.12    $5.53    $5.70    $6.01
      U.S. Offshore                          $6.43    $6.86    $7.14    $7.44
      Total U.S.                             $5.28    $5.73    $5.88    $6.21
      Canada                                 $5.40    $5.40    $6.16    $6.14
      International                          $6.61    $5.11    $5.73    $6.34
      Total Natural Gas                      $5.31    $5.63    $5.95    $6.19
    Oil ($/Bbl)
      U.S. Onshore                          $69.95   $65.83   $60.60   $62.74
      U.S. Offshore                         $77.36   $71.56   $66.45   $66.30
      Total U.S.                            $73.19   $68.27   $63.01   $64.30
      Canada                                $53.40   $54.85   $48.01   $49.06
      International                         $74.43   $66.00   $66.10   $63.59
      Total Oil                             $67.41   $63.77   $59.88   $59.43
    Natural Gas Liquids ($/Bbl)
      U.S. Onshore                          $36.77   $32.41   $32.65   $29.85
      U.S. Offshore                         $36.92   $32.39   $33.39   $37.52
      Total U.S.                            $36.78   $32.41   $32.68   $30.06
      Canada                                $46.77   $45.23   $42.36   $44.20
      International                         $    -   $    -   $    -   $    -
      Total Natural Gas Liquids             $38.34   $34.98   $34.31   $32.99
    Oil Equivalent ($/Boe)
      U.S. Onshore                          $35.08   $36.25   $36.36   $37.79
      U.S. Offshore                         $53.04   $51.49   $51.12   $53.03
      Total U.S.                            $37.81   $38.86   $38.56   $40.34
      Canada                                $39.28   $38.34   $40.33   $40.11
      International                         $73.77   $65.42   $65.66   $62.53
      Total Oil Equivalent                  $40.99   $40.24   $41.53   $41.23
    



    
                                           Quarter Ended     Nine Months Ended
    BENCHMARK PRICES                        September 30,     September 30,
     (average prices)                       2007     2006     2007     2006
    Benchmark Prices
    Natural Gas ($/Mcf) - Henry Hub         $6.16    $6.58    $6.83    $7.47
    Oil ($/Bbl) - West Texas Intermediate
     (Cushing)                             $75.21   $70.62   $66.21   $68.22
    



    
    PRICE DIFFERENTIALS, EXCLUDING
     EFFECTS OF HEDGES                       Quarter Ended   Nine Months Ended
    (average floating price                   September 30,    September 30,
     differentials from benchmark prices)    2007     2006     2007     2006
    Price Differentials
    Natural Gas ($/Mcf)
      U.S. Onshore                          $(1.09)  $(1.08)  $(1.13)  $(1.46)
      U.S. Offshore                         $ 0.27   $ 0.28   $ 0.31   $(0.03)
      Total U.S.                            $(0.92)  $(0.88)  $(0.95)  $(1.26)
      Canada                                $(0.64)  $(1.04)  $(0.50)  $(1.16)
      International                         $ 0.45   $(1.47)  $(1.10)  $(1.13)
      Total Natural Gas                     $(0.85)  $(0.92)  $(0.83)  $(1.23)
    Oil ($/Bbl)
      U.S. Onshore                          $(5.26)  $(4.79)  $(5.61)  $(5.48)
      U.S. Offshore                         $ 2.15   $ 0.94   $ 0.24   $(1.92)
      Total U.S.                            $(2.02)  $(2.35)  $(3.20)  $(3.92)
      Canada                               $(21.81) $(15.77) $(18.20) $(19.16)
      International                         $(0.78)  $(4.62)  $(0.11)  $(4.63)
      Total Oil                             $(7.80)  $(6.85)  $(6.33)  $(8.79)
    



    
                                            Quarter Ended   Nine Months Ended
    CONSOLIDATED STATEMENTS OF OPERATIONS    September 30,    September 30,
     (in millions, except per share data)    2007    2006    2007     2006
    Revenues
      Oil sales                              $905    $696   $2,461   $1,806
      Gas sales                             1,182   1,186    3,788    3,709
      Natural gas liquids sales               242     204      643      573
      Marketing & midstream revenues          434     413    1,273    1,261
      Total revenues                        2,763   2,499    8,165    7,349
    Expenses and other income, net
      Lease operating expenses                457     363    1,326    1,036
      Production taxes                         85      92      255      261
      Marketing & midstream operating
       costs and expenses                     301     301      912      924
      Depreciation, depletion and
       amortization of oil and gas
       properties                             705     547    1,937    1,480
      Depreciation and amortization of
       non-oil and gas properties              51      43      146      127
      Accretion of asset retirement
       obligation                              19      12       55       35
      General & administrative expenses       126     104      358      284
      Interest expense                        108     112      325      315
      Change in fair value of financial
       instruments                            (22)     22      (31)      81
      Reduction of carrying value of oil
       and gas properties                       -      20        -       36
      Other income, net                       (28)    (28)     (71)     (86)
      Total expenses and other income, net  1,802   1,588    5,212    4,493
    Earnings from continuing operations
     before income tax expense                961     911    2,953    2,856
    Income tax expense
      Current                                  96     147      459      471
      Deferred                                221     111      452      253
      Total income tax expense                317     258      911      724
    Earnings from continuing operations       644     653    2,042    2,132
    Discontinued operations
      Earnings from discontinued
       operations before income tax expense   177     112      442      337
      Income tax expense                       86      60      194      205
    Earnings from discontinuing operations     91      52      248      132
    Net earnings                              735     705    2,290    2,264
    Preferred stock dividends                   2       2        7        7
    Net earnings applicable to common
     stockholders                            $733    $703   $2,283   $2,257
    Net earnings per weighted average
     common shares outstanding
      Basic                                 $1.65   $1.59    $5.13    $5.11
      Diluted                               $1.63   $1.57    $5.07    $5.05
    Basic weighted average shares
     outstanding                              445     441      445      441
    Diluted weighted average shares
     outstanding                              450     447      450      447
    



    
    CONSOLIDATED BALANCE SHEETS                   September 30,   December 31,
     (in millions)                                    2007           2006
    Assets                                                         (Audited)
    Current assets
      Cash and cash equivalents                      $1,392           $692
      Short-term investments, at fair value             341            574
      Accounts receivable                             1,435          1,324
      Current assets held for sale                      176            232
      Other current assets                              340            390
      Total current assets                            3,684          3,212
    Property and equipment, at cost, based on the
     full cost method of accounting for oil and gas
     properties ($3,371 and $3,293 excluded from
     amortization in 2007 and 2006, respectively)    46,546         39,585
      Less accumulated depreciation,
       depletion and amortization                    19,561         16,429
      Net property and equipment                     26,985         23,156
    Investment in Chevron Corporation
     common stock, at fair value                      1,327          1,043
    Goodwill                                          6,150          5,706
    Assets held for sale                              1,707          1,619
    Other assets                                        418            327
    Total Assets                                    $40,271        $35,063
    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable - trade                       $1,268         $1,154
      Revenues and royalties due to others              529            522
      Income taxes payable                              187             82
      Short-term debt                                 2,076          2,205
      Accrued interest payable                          191            114
      Current liabilities associated with
       assets held for sale                             190            173
      Accrued expenses and other current liabilities    325            395
      Total current liabilities                       4,766          4,645
    Debentures exchangeable into shares
     of Chevron Corporation common stock                638            727
    Other long-term debt                              5,235          4,841
    Financial instruments, at fair value                495            302
    Asset retirement obligation, at fair value        1,246            804
    Liabilities associated with assets held for sale    445            429
    Other liabilities                                   622            583
    Deferred income taxes                             5,992          5,290
    Stockholders' equity
      Preferred stock                                     1              1
      Common stock                                       45             44
      Additional paid-in capital                      6,883          6,840
      Retained earnings                              11,564          9,114
      Accumulated other comprehensive income          2,339          1,444
      Treasury stock                                      -             (1)
    Stockholders' Equity                             20,832         17,442
    Total Liabilities & Stockholders' Equity        $40,271        $35,063
    Common Shares Outstanding                           445            444
    



    
    CONSOLIDATED STATEMENTS OF CASH FLOWS            Nine Months Ended
     (in millions)                                      September 30,
                                                   2007              2006
    Cash Flows From Operating Activities
      Net earnings                                $2,290            $2,264
      Earnings from discontinued
       operations, net of tax                       (248)             (132)
      Adjustments to reconcile net earnings
       from continuing operations to net cash
       provided by operating activities:
        Depreciation, depletion and amortization   2,083             1,607
        Deferred income tax expense                  452               253
        Net gain on sales of non-oil
         and gas property and equipment               (1)               (5)
        Reduction of carrying value of
         oil and gas properties                        -                36
        Other non-cash charges                       125               163
      Changes in assets and liabilities:
       (Increase) decrease in:
        Accounts receivable                          (12)              206
        Other current assets                         (65)              (45)
        Long-term other assets                       (53)              (37)
       Increase (decrease) in:
        Accounts payable                             111               (59)
        Income taxes payable                         139               (34)
        Other current liabilities                    (78)              197
        Long-term other liabilities                   (4)               (1)
      Cash provided by operating
       activities - continuing operations          4,739             4,413
      Cash provided by operating activities -
       discontinued operations                       370               469
    Net cash provided by operating activities      5,109             4,882
    

    
    Cash Flows From Investing Activities
      Proceeds from sales of property and
       equipment                                      39                36
      Capital expenditures, including
       acquisitions of businesses                 (4,477)           (5,959)
      Purchases of short-term investments           (659)           (1,868)
      Sales of short-term investments                892             2,424
      Cash used in investing activities -
       continuing operations                      (4,205)           (5,367)
      Cash used in investing activities -
       discontinued operations                      (153)             (187)
    Net cash used in investing activities         (4,358)           (5,554)
    

    
    Cash Flows From Financing Activities
      Net senior credit facility
       borrowings, net of issuance costs             400                 -
      Net commercial paper (repayments)
       borrowings, net of issuance costs            (129)            1,439
      Principal payments on debt,
       including current maturities                 (166)             (860)
      Proceeds from exercise of stock options         71                53
      Repurchase of common stock                    (133)             (253)
      Excess tax benefits related to
       share-based compensation                       20                14
      Dividends paid on common stock                (186)             (148)
      Dividends paid on preferred stock               (7)               (7)
    Net cash (used in) provided by
     financing activities                           (130)              238
    

    
    Effect of exchange rate changes on cash           44                24
    Net increase (decrease) in cash and
     cash equivalents                                665              (410)
    Cash and cash equivalents at beginning of
     period (including assets held for sale)         756             1,606
    Cash and cash equivalents at end of period
     (including assets held for sale)             $1,421            $1,196
    

    
    Supplementary cash flow data:
      Interest paid (net of capitalized interest)   $226              $349
      Income taxes paid                             $293              $581
    



    
    DRILLING ACTIVITY                       Quarter Ended   Nine Months Ended
                                             September 30,    September 30,
                                             2007    2006     2007     2006
    Exploration Wells Drilled
      U.S.                                      5      23       32       62
      Canada                                   19      13       83      109
      International                             -       -        1        2
      Total                                    24      36      116      173
    Exploration Wells Success Rate
      U.S.                                    60%     83%      78%      87%
      Canada                                 100%    100%      96%      99%
      International                             -       -       0%       0%
      Total                                   92%     89%      91%      93%
    Development Wells Drilled
      U.S.                                    422     458    1,046    1,113
      Canada                                  139     237      445      619
      International                            14       4       23       18
      Total                                   575     699    1,514    1,750
    Development Wells Success Rate
      U.S.                                    98%    100%      98%      99%
      Canada                                 100%     99%     100%      99%
      International                          100%    100%     100%     100%
      Total                                   98%     99%      98%      99%
    Total Wells Drilled
      U.S.                                    427     481    1,078    1,175
      Canada                                  158     250      528      728
      International                            14       4       24       20
      Total                                   599     735    1,630    1,923
    Total Wells Success Rate
      U.S.                                    97%     99%      97%      98%
      Canada                                 100%     99%      99%      99%
      International                          100%    100%      96%      90%
      Total                                   98%     99%      98%      98%
    



    
    COMPANY OPERATED RIGS                                  September 30,
                                                      2007              2006
    Number of Company Operated Rigs Running
      U.S.                                             76                60
      Canada                                           12                 7
      International                                     1                 -
      Total                                            89                67
    



    
    CAPITAL EXPENDITURES DATA (in millions)
    Quarter Ended September 30, 2007
                                   U.S.    U.S.                         Devon
                                 Onshore Offshore Canada International  Total
    Capital Expenditures
      Exploration                   $79     93      30        14         $216
      Development                   762     66     222        86        1,136
      Exploration and
       development capital         $841    159     252       100       $1,352
      Capitalized G&A                                                      84
      Capitalized interest                                                 16
      Discontinued operations                                              32
      Property acquisitions                                                 5
      Midstream capital                                                   105
      Other capital                                                        24
    Total capital expenditures                                         $1,618
    



    
    CAPITAL EXPENDITURES DATA (in millions)
    Nine Months Ended September 30, 2007
                                 U.S.    U.S.                           Devon
                               Onshore Offshore  Canada  International  Total
    Capital Expenditures
      Exploration                $178    211        95        59         $543
      Development               2,135    187       743       228        3,293
      Exploration and
       development capital     $2,313    398       838       287       $3,836
      Capitalized G&A                                                     230
      Capitalized interest                                                 47
      Discontinued operations                                             139
      Property acquisitions                                                17
      Midstream capital                                                   273
      Other capital                                                        82
    Total capital expenditures                                         $4,624
    



    
    DETAIL OF RECLASSIFICATION FOR
     DISCONTINUED OPERATIONS IN EGYPT         Quarter Ended  Nine Months Ended
     AND WEST AFRICA                          September 30,     September 30,
                                              2007     2006     2007     2006
    Production from Discontinued Operations
      Oil (MMBbls)                             2.6      3.3      8.9     10.7
      Natural Gas (Bcf)                        1.2      1.5      3.8      4.7
      Total Oil Equivalent (MMBoe)             2.9      3.5      9.6     11.4
    



    
    STATEMENTS OF DISCONTINUED OPERATIONS    Quarter Ended   Nine Months Ended
     DATA (in millions)                       September 30,     September 30,
                                              2007     2006     2007     2006
    Revenues
      Oil sales                               $196     $214     $571     $676
      Gas sales                                  4        5       12       16
      Marketing & midstream revenues             6        4       13       15
      Total revenues                           206      223      596      707
    Expenses and other income, net
      Lease operating expenses                  20       19       59       57
      Marketing & midstream operating
       costs and expenses                        2        2        5        6
      Depreciation, depletion and amortization
       of oil and gas properties                 2       57       20      187
      Depreciation, depletion and amortization
       of non-oil and gas properties             -        1        -        2
      Accretion of asset retirement obligation   1        1        3        2
      Reduction of carrying value of oil
       and gas properties                        4       31       67      116
      Total expenses and other income, net      29      111      154      370
    Earnings before income tax expense         177      112      442      337
    Income tax (benefit) expense
      Current                                   69       85      184      262
      Deferred                                  17      (25)      10      (57)
      Total income tax expense                  86       60      194      205
    Earnings from discontinued operations      $91      $52     $248     $132
    Non-GAAP Financial Measures
    
    The United States Securities and Exchange Commission has adopted
disclosure requirements for public companies such as Devon concerning Non-GAAP
financial measures. (GAAP refers to generally accepted accounting principles.)
The company must reconcile the Non-GAAP financial measure to related GAAP
information. Cash flow before balance sheet changes is a Non-GAAP financial
measure. Devon believes cash flow before balance sheet changes is relevant
because it is a measure of cash available to fund the company's capital
expenditures, dividends and to service its debt. Cash flow before balance
sheet changes is also used by certain securities analysts as a measure of
Devon's financial results.




    
    RECONCILIATION TO GAAP INFORMATION      Quarter Ended    Nine Months Ended
     (in millions)                           September 30,     September 30,
                                             2007     2006     2007     2006
    Net Cash Provided By Operating
     Activities (GAAP)                      $1,760   $2,064   $5,109   $4,882
      Changes in assets and liabilities -
       continuing operations                    65     (406)     (37)    (232)
      Changes in assets and liabilities -
       discontinued operations                 (59)    (121)     (23)     (88)
    Cash flow before balance sheet
     changes (Non-GAAP)                     $1,766   $1,537   $5,049   $4,562
    
    Devon believes that using net debt, defined as debt less cash, short-term
investments and the market value of Chevron common stock, for the calculation
of "net debt to adjusted capitalization" provides a better measure than using
debt. Devon believes that because cash and short-term investments can be used
to repay indebtedness, netting cash and short-term investments against debt
provides a clearer picture of the future demands on cash to repay debt.
Included in Devon's indebtedness are $638 million of debentures exchangeable
into shares of Chevron common stock owned outright by Devon. As of September
30, 2007, the market value of the shares ($1.3 billion) exceeded the related
debt obligation. Devon believes deducting the market value of the stock
provides a clearer picture of future demands on cash to repay debt. This
methodology is also utilized by various lenders, rating agencies and
securities analysts as a measure of Devon's indebtedness.



    
    RECONCILIATION TO GAAP INFORMATION
     (in millions)                                         September 30,
                                                      2007              2006
    Total debt (GAAP)                                $7,949            $7,401
    Adjustments:
      Cash and short-term investments                 1,733             1,279
      Market value of Chevron Corporation
       common stock                                   1,327               920
      Net Debt (Non-GAAP)                            $4,889            $5,202
    

    
    Total Capitalization
    Total debt                                       $7,949            $7,401
    Stockholders' equity                             20,832            17,217
      Total Capitalization (GAAP)                   $28,781           $24,618
    

    
    Adjusted Capitalization
    Net debt                                         $4,889            $5,202
    Stockholders' equity                             20,832            17,217
      Adjusted Capitalization (Non-GAAP)            $25,721           $22,419
    




For further information:

For further information: Investors, Zack Hager, +1-405-552-4526, or
Media,  Brian Engel, +1-405-228-7750, both of Devon Energy Corp. Web Site:
http://www.devonenergy.com

Organization Profile

DEVON ENERGY CORP.

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