Devon Energy Reports 16 Percent Production Growth in Second Quarter 2007 as Net Earnings Climb to $2.00 Per Share



    OKLAHOMA CITY, Aug. 1 /CNW/ -- Devon Energy Corporation (NYSE:   DVN) today
reported net earnings of $904 million, or $2.02 per common share, ($2.00 per
diluted common share), for the quarter ended June 30, 2007. In comparison,
second-quarter 2006 net earnings were $859 million, or $1.94 per common share
($1.92 per diluted common share).
    For the six months ended June 30, 2007, the company reported net earnings
of $1.6 billion, or $3.48 per common share ($3.44 per diluted common share).
For the six months ended June 30, 2006, Devon earned $1.6 billion, or $3.52
per common share ($3.47 per diluted common share).
    Securities analysts typically exclude certain items from their published
estimates. In aggregate, these items increased Devon's second-quarter 2007 net
earnings by $59 million, or 13 cents per diluted share. The adjusting items
are discussed in detail later in this news release.
    
    Fifth Consecutive Quarterly Production Increase Exceeds Expectations
    
    Devon increased oil and gas production from continuing operations in the
second quarter of 2007 to 56.2 million oil-equivalent barrels (Boe). This is a
16 percent increase compared with second-quarter 2006 production. Devon has
increased oil and gas production from retained properties for five consecutive
quarters.
    Second-quarter production benefited from better than expected performance
from several core properties including the Barnett Shale. Also contributing to
the production increase were minor favorable royalty adjustments in Canada,
the timing of oil sales in Azerbaijan and a delay in scheduled downtime at the
Panyu field in China.
    
    Record Barnett Shale Production Leads Operating Highlights
    
    Devon drilled 425 successful wells in the second quarter of 2007 with an
overall success rate of 98 percent. Following are highlights of operations
conducted in the second quarter of 2007.

    
    -- Devon's share of natural gas production from the Barnett Shale field in
       north Texas averaged 797 million cubic feet of gas equivalent per day
       in the second quarter of 2007. This was a new quarterly production
       record and 37 percent greater than the second quarter of 2006.
    -- The Independence Hub in the Gulf of Mexico was readied for production
       in the second quarter of 2007. The Merganser field, in which Devon has
       a 50 percent working interest, is expected to begin producing natural
       gas to the Independence Hub in August. Devon expects its net share of
       production from Merganser to be about 50 million cubic feet of gas per
       day.
    -- In May, the Ocean Endeavor deepwater drilling rig, which is under
       long-term contract to Devon, arrived in the Gulf of Mexico. In July,
       the Ocean Endeavor commenced drilling an exploratory well on the Chuck
       prospect. Chuck is the first well operated by Devon to target a Lower
       Tertiary objective. Chuck, in 6,500 feet of water, is expected to reach
       a total depth of about 31,500 feet in the fourth quarter of 2007. Devon
       has a 39.5 percent working interest in the Chuck prospect.
    -- In the offshore Polvo field in Brazil during the second quarter, Devon
       began drilling and completion of the first of 10 planned oil wells.
       Production from the first well commenced in late July. Additional wells
       will be drilled in 2007 and 2008. The company expects its net share of
       production from Polvo to reach about 26,000 barrels per day in 2008.
    -- In Canada in the second quarter, Devon was finalizing construction and
       commissioning of the Jackfish project in the Alberta oil sands. Steam
       injection at Jackfish commenced on July 16, 2007. The 100 percent
       Devon-owned project is sized to produce 35,000 barrels of oil per day
       when fully operational in late 2008.
    -- Also in Alberta, oil production from Devon's Iron River and Manatokan
       fields helped the Lloydminster area average 33,000 barrels per day in
       the second quarter of 2007. This was 48% higher than the same period a
       year ago. Devon plans to drill nearly 400 wells in Lloydminster during
       2007.
    Increased Production Fuels 26 Percent Sales Growth
    
    Combined oil, gas and natural gas liquids production from continuing
operations averaged 618 thousand Boe per day in the second quarter of 2007.
This was a 16 percent increase in daily production from continuing operations
compared with the second quarter in 2006. The production growth was
concentrated in onshore fields in the United States and in Azerbaijan.
    Second-quarter combined daily production from continuing operations
increased five percent compared with the first quarter of 2007. Devon now
expects full-year 2007 production from continuing operations at the high end
of a forecast range of 219 to 221 million Boe. This represents about a 10
percent increase when compared with 2006 annual production.
    Sales of oil, natural gas and natural gas liquids reached $2.5 billion in
the second quarter of 2007. This was a 26 percent increase compared with the
second quarter of 2006. The increase in sales was the result of greater
production and increased realized prices for natural gas and natural gas
liquids.
    The average realized price for natural gas increased 11 percent in the
second quarter of 2007 to $6.50 per thousand cubic feet. This compares with
$5.85 per thousand cubic feet in the second quarter of 2006. The company's
average realized oil price decreased four percent to $60.01 per barrel in the
second quarter of 2007 compared with $62.38 per barrel in the year-ago period.
Devon's realized natural gas liquids price increased four percent to $35.03
per barrel from $33.83 per barrel in the second quarter of 2006.
    Second-quarter 2007 marketing and midstream operating profit was $119
million, compared with $105 million in the second quarter of 2006. The 13
percent increase resulted primarily from an increase in marketed gas volumes
and higher natural gas and natural gas liquids prices.
    
    Cost Increases Supported by Greater Production and Revenues
    
    Devon's expenses in all categories are higher in 2007 than in 2006, but
generally in line with expectations. The expense increases are being driven by
industry-wide upward cost pressure and higher production and activity levels.
Higher costs in the second quarter of 2007 were more than offset by higher
revenues, leading to an increase in net earnings.
    
    African Results Reported as Discontinued Operations
    
    Devon is in the process of divesting its assets and terminating
operations in Egypt and 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 Reaches Record Levels
    
    Cash flow before balance sheet changes reached a record total of $1.8
billion in the second quarter of 2007. The company used cash flow and cash on
hand to fund $1.4 billion of capital expenditures during the second quarter.
    At June 30, 2007, net debt had been reduced to 20 percent of adjusted
capitalization, compared with 26 percent at June 30, 2006. 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
second-quarter 2007 reported earnings were as follows:

    
    -- A change in fair value of financial instruments increased
       second-quarter 2007 earnings by $10 million pre-tax ($6 million after
       tax).
    -- An unrealized gain on natural gas derivative instruments increased
       second-quarter 2007 earnings by $9 million pre-tax ($6 million after
       tax).
    -- A reduction in the Canadian statutory income tax rate increased
       after-tax earnings by $30 million.
    -- The decisions to exit Egypt and West Africa generated financial
       benefits that increased second-quarter 2007 earnings by $57 million
       pre-tax ($30 million after tax).
    -- A reduction in the carrying value of assets held for sale in West
       Africa reduced second-quarter earnings by $64 million pre-tax ($13
       million after tax).
    
    The following table summarizes the effects of these items on
second-quarter 2007 earnings and income taxes.



    
    Summary of Items Typically Excluded by Securities Analysts -
    Second Quarter 2007
    (in millions)
    

    
                                                                     Cash Flow
                                                                      Before
                                                             After-   Balance
                           Pretax                             tax      Sheet
                          Earnings     Income Tax Effect    Earnings  Changes
                           Effect  Current  Deferred  Total Effect    Effect
    Change in fair value
     of financial
     instruments             $10      -         4       4      6         -
    Unrealized gain on
     natural gas
     derivatives               9      -         3       3      6         -
    Change in Canadian
     income tax rate           -      -       (30)    (30)    30         -
    Financial benefits
     generated by
     decision to exit
     Africa                   57      -        27      27     30         -
    Reduction of
     carrying value in
     West Africa             (64)     -       (51)    (51)   (13)        -
      Totals                 $12      -       (47)    (47)    59         -
    
    In aggregate, these items increased second-quarter 2007 net earnings by
$59 million, or 13 cents per common share (13 cents per diluted share).
    
    Conference Call to be Webcast Today
    
    Devon will discuss its second-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  Six Months Ended
     operations from Egypt and West Africa       June 30,          June 30,
                                              2007     2006     2007     2006
    Total Period Production
    Natural Gas (Bcf)
     U.S. Onshore                            135.9    117.3    263.6    230.8
     U.S. Offshore                            18.9     18.6     37.5     35.0
     Total U.S.                              154.8    135.9    301.1    265.8
     Canada                                   57.0     62.7    112.3    121.8
     International                             0.5      0.7      0.8      1.3
     Total Natural Gas                       212.3    199.3    414.2    388.9
    Oil (MMBbls)
     U.S. Onshore                              2.9      2.8      5.7      5.6
     U.S. Offshore                             2.0      2.3      3.7      4.5
     Total U.S.                                4.9      5.1      9.4     10.1
     Canada                                    4.0      3.1      7.5      6.3
     International                             5.5      1.5     10.8      3.2
     Total Oil                                14.4      9.7     27.7     19.6
    Natural Gas Liquids (MMBbls)
     U.S. Onshore                              5.1      4.4      9.9      8.9
     U.S. Offshore                             0.2      0.1      0.3      0.2
     Total U.S.                                5.3      4.5     10.2      9.1
     Canada                                    1.1      1.2      2.2      2.4
     International                               -        -        -        -
     Total Natural Gas Liquids                 6.4      5.7     12.4     11.5
    Oil Equivalent (MMBoe)
     U.S. Onshore                             30.7     26.8     59.5     53.0
     U.S. Offshore                             5.3      5.4     10.3     10.5
     Total U.S.                               36.0     32.2     69.8     63.5
     Canada                                   14.6     14.7     28.4     29.0
     International                             5.6      1.7     10.9      3.3
     Total Oil Equivalent                     56.2     48.6    109.1     95.8
    

    
    Average Daily Production
    Natural Gas (MMcf)
     U.S. Onshore                          1,493.7  1,288.7  1,456.3  1,275.0
     U.S. Offshore                           207.6    204.0    207.0    193.5
     Total U.S.                            1,701.3  1,492.7  1,663.3  1,468.5
     Canada                                  626.2    689.0    620.7    672.8
     International                             5.6      7.2      4.3      7.1
     Total Natural Gas                     2,333.1  2,188.9  2,288.3  2,148.4
    Oil (MBbls)
     U.S. Onshore                             31.5     30.8     31.1     31.0
     U.S. Offshore                            22.0     24.7     20.5     24.5
     Total U.S.                               53.5     55.5     51.6     55.5
     Canada                                   44.0     33.6     41.5     34.7
     International                            60.9     16.9     59.8     17.4
     Total Oil                               158.4    106.0    152.9    107.6
    Natural Gas Liquids (MBbls)
     U.S. Onshore                             56.4     48.5     54.8     49.1
     U.S. Offshore                             2.2      1.0      1.8      1.3
     Total U.S.                               58.6     49.5     56.6     50.4
     Canada                                   11.7     13.2     12.0     13.4
     International                               -        -        -        -
     Total Natural Gas Liquids                70.3     62.7     68.6     63.8
    Oil Equivalent (MBoe)
     U.S. Onshore                            336.9    294.1    328.7    292.7
     U.S. Offshore                            58.8     59.8     56.8     58.0
     Total U.S.                              395.7    353.9    385.5    350.7
     Canada                                  160.1    161.6    157.0    160.2
     International                            61.8     18.1     60.5     18.6
     Total Oil Equivalent                    617.6    533.6    603.0    529.5
    



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    

    
    REALIZED PRICE DATA                     Quarter Ended    Six Months Ended
    (average realized prices)                  June 30,          June 30,
                                            2007     2006     2007     2006
    Realized Prices
    Natural Gas ($/Mcf)
     U.S. Onshore                           $6.25    $5.67    $6.01    $6.27
     U.S. Offshore                          $7.82    $7.39    $7.51    $7.80
     Total U.S.                             $6.44    $5.91    $6.20    $6.47
     Canada                                 $6.66    $5.70    $6.55    $6.51
     International                          $6.19    $7.13    $5.16    $6.61
     Total Natural Gas                      $6.50    $5.85    $6.29    $6.49
    Oil ($/Bbl)
     U.S. Onshore                          $60.82   $64.87   $56.02   $61.22
     U.S. Offshore                         $65.35   $67.51   $60.16   $63.87
     Total U.S.                            $62.68   $66.05   $57.67   $62.39
     Canada                                $46.32   $54.52   $45.01   $46.14
     International                         $67.57   $65.96   $62.76   $61.35
     Total Oil                             $60.01   $62.38   $56.22   $56.99
    Natural Gas Liquids ($/Bbl)
     U.S. Onshore                          $33.35   $30.53   $30.54   $28.55
     U.S. Offshore                         $31.14   $47.05   $30.52   $41.06
     Total U.S.                            $33.26   $30.88   $30.54   $28.86
     Canada                                $43.82   $44.87   $40.37   $43.70
     International                             $-       $-       $-       $-
     Total Natural Gas Liquids             $35.03   $33.83   $32.26   $31.98
    Oil Equivalent ($/Boe)
     U.S. Onshore                          $38.99   $36.69   $37.05   $38.61
     U.S. Offshore                         $53.24   $53.98   $50.05   $53.90
     Total U.S.                            $41.11   $39.61   $38.96   $41.14
     Canada                                $41.99   $39.31   $40.88   $40.99
     International                         $67.11   $64.45   $62.39   $59.98
     Total Oil Equivalent                  $43.94   $40.36   $41.81   $41.76
    



    
    BENCHMARK PRICES                        Quarter Ended    Six Months Ended
    (average prices)                           June 30,          June 30,
                                             2007     2006     2007     2006
    Benchmark Prices
    Natural Gas ($/Mcf) -
     Henry Hub                              $7.55    $6.80    $7.16    $7.91
    Oil ($/Bbl) -
     West Texas Intermediate
     (Cushing)                             $65.08   $70.64   $61.71   $67.03
    



    
    PRICE DIFFERENTIALS, EXCLUDING
     EFFECTS  OF HEDGES
    (average floating price
     differentials from                      Quarter Ended   Six Months Ended
     benchmark prices)                          June 30,          June 30,
                                             2007     2006     2007     2006
    Price Differentials
    Natural Gas ($/Mcf)
     U.S. Onshore                           $(1.39)  $(1.13)  $(1.11)  $(1.64)
     U.S. Offshore                           $0.27    $0.59    $0.35   $(0.11)
     Total U.S.                             $(1.19)  $(0.89)  $(0.93)  $(1.44)
     Canada                                 $(0.69)  $(0.99)  $(0.40)  $(1.22)
     International                          $(1.36)   $0.33   $(2.00)  $(1.30)
     Total Natural Gas                      $(1.06)  $(0.92)  $(0.79)  $(1.37)
    Oil ($/Bbl)
     U.S. Onshore                           $(4.26)  $(5.77)  $(5.69)  $(5.81)
     U.S. Offshore                           $0.27   $(3.13)  $(1.55)  $(3.16)
     Total U.S.                             $(2.40)  $(4.59)  $(4.04)  $(4.64)
     Canada                                $(18.76) $(16.12) $(16.70) $(20.89)
     International                           $2.49   $(4.68)   $1.05   $(5.68)
     Total Oil                              $(5.07)  $(8.26)  $(5.49) $(10.04)
    



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    

    
    CONSOLIDATED STATEMENTS
     OF OPERATIONS
    (in millions, except per               Quarter Ended   Six Months Ended
     share data)                              June 30,         June 30,
                                            2007    2006    2007     2006
    Revenues
     Oil sales                              $865    $602   $1,556   $1,110
     Gas sales                             1,380   1,165    2,606    2,523
     Natural gas liquids sales               224     193      401      369
     Marketing & midstream revenues          460     390      839      848
     Total revenues                        2,929   2,350    5,402    4,850
    Expenses and other income, net
     Lease operating expenses                439     342      869      673
     Production taxes                         90      86      170      169
     Marketing & midstream operating
      costs and expenses                     341     285      611      623
     Depreciation, depletion and
      amortization of oil and gas
      properties                             645     490    1,232      933
     Depreciation and amortization of
      non-oil and gas properties              49      43       95       84
     Accretion of asset retirement
      obligation                              18      13       36       23
     General & administrative expenses       113      90      232      180
     Interest expense                        107     102      217      203
     Change in fair value of financial
      instruments                            (10)     47       (9)      59
     Reduction of carrying value of oil
      and gas properties                       -      16        -       16
     Other income, net                       (17)    (29)     (43)     (58)
     Total expenses and other income, net  1,775   1,485    3,410    2,905
    Earnings from continuing operations
     before income tax expense             1,154     865    1,992    1,945
    Income tax expense
     Current                                 174     100      363      324
     Deferred                                156       2      231      142
     Total income tax expense                330     102      594      466
    Earnings from continuing operations      824     763    1,398    1,479
    Discontinued operations
     Earnings from discontinued
      operations before income tax
      expense                                128     178      265      225
     Income tax expense                       48      82      108      145
    Earnings from discontinuing
     operations                               80      96      157       80
    Net earnings                             904     859    1,555    1,559
    Preferred stock dividends                  3       3        5        5
    Net earnings applicable to common
     stockholders                           $901    $856   $1,550   $1,554
    Net earnings per weighted average
     common share outstanding
     Basic                                 $2.02   $1.94    $3.48    $3.52
     Diluted                               $2.00   $1.92    $3.44    $3.47
    Basic weighted average shares
     outstanding                             446     440      445      441
    Diluted weighted average shares
     outstanding                             450     446      450      447
    



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    

    
    CONSOLIDATED BALANCE SHEETS
    (in millions)                                  June 30,       December 31,
                                                     2007             2006
    Assets                                                          (Audited)
    Current assets
     Cash and cash equivalents                      $1,042             $692
     Short-term investments, at fair
      value                                            315              574
     Accounts receivable                             1,375            1,324
     Current assets held for sale                      175              232
     Other current assets                              259              390
     Total current assets                            3,166            3,212
    Property and equipment, at cost,
     based on the full cost method of
     accounting for oil and gas
     properties ($3,282 and $3,293
     excluded from amortization in 2007
     and 2006, respectively)                        43,992           39,585
     Less accumulated depreciation,
      depletion and amortization                    18,338           16,429
     Net property and equipment                     25,654           23,156
    Investment in Chevron Corporation
     common stock, at fair value                     1,195            1,043
    Goodwill                                         5,961            5,706
    Assets held for sale                             1,675            1,619
    Other assets                                       380              327
    Total Assets                                   $38,031          $35,063
    

    
    Liabilities and Stockholders' Equity
    Current liabilities
     Accounts payable - trade                       $1,139           $1,154
     Revenues and royalties due to others              509              522
     Income taxes payable                              171               82
     Short-term debt                                 2,022            2,205
     Accrued interest payable                          119              114
     Current portion of asset retirement
      obligation, at fair value                         45               53
     Current liabilities associated with
      assets held for sale                             138              173
     Accrued expenses and other current
      liabilities                                      273              342
     Total current liabilities                       4,416            4,645
    Debentures exchangeable into shares
     of Chevron Corporation common stock               737              727
    Other long-term debt                             4,837            4,841
    Financial instruments, at fair value               445              302
    Asset retirement obligation, at
     fair value                                      1,214              804
    Liabilities associated with assets
     held for sale                                     428              429
    Other liabilities                                  666              583
    Deferred income taxes                            5,602            5,290
    Stockholders' equity
     Preferred stock                                     1                1
     Common stock                                       45               44
     Additional paid-in capital                      6,956            6,840
     Retained earnings                              10,893            9,114
     Accumulated other comprehensive
      income                                         1,791            1,444
     Treasury stock                                    -                 (1)
    Stockholders' Equity                            19,686           17,442
    Total Liabilities &
     Stockholders' Equity                          $38,031          $35,063
    Common Shares Outstanding                          446              444
    



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    

    
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in millions)                                  Six Months Ended June 30,
                                                      2007              2006
    Cash Flows From Operating Activities
     Net earnings                                   $1,555            $1,559
     Earnings from discontinued
      operations, net of tax                          (157)              (80)
     Adjustments to reconcile net
      earnings from continuing operations
      to net cash provided by operating
      activities:
          Depreciation, depletion and
           amortization                              1,327             1,017
          Deferred income tax expense                  231               142
          Net gain on sales of non-oil
           and gas property and equipment               (1)               (5)
          Reduction of carrying value of
           oil and gas properties                        -                16
          Other non-cash charges                        95               112
     Changes in assets and liabilities:
        (Increase) decrease in:
          Accounts receivable                           32               247
          Other current assets                         (27)              (12)
          Long-term other assets                       (46)                9
        Increase (decrease) in:
          Accounts payable                              47              (166)
          Income taxes payable                         178              (123)
          Other current liabilities                    (96)             (108)
          Long-term other liabilities                   14               (21)
     Cash provided by operating
      activities - continuing operations             3,152             2,587
     Cash provided by operating
      activities - discontinued
      operations                                       197               231
    Net cash provided by operating
     activities                                      3,349             2,818
    

    
    Cash Flows From Investing Activities
     Proceeds from sales of property
      and equipment                                     37                26
     Capital expenditures, including
      acquisitions of businesses                    (2,990)           (4,584)
     Purchases of short-term investments              (589)           (1,698)
     Sales of short-term investments                   848             2,046
     Cash used in investing activities -
      continuing operations                         (2,694)           (4,210)
     Cash used in investing activities -
      discontinued operations                         (115)             (131)
    Net cash used in investing activities           (2,809)           (4,341)
    

    
    Cash Flows From Financing Activities
     Net commercial paper (repayments)
      borrowings, net of issuance costs               (183)            1,452
     Principal payments on debt,
      including current maturities                       -              (208)
     Proceeds from exercise of stock
      options                                           60                27
     Repurchase of common stock                        (10)             (253)
     Excess tax benefits related to
      share-based compensation                          17                 7
     Dividends paid on common stock                   (124)              (99)
     Dividends paid on preferred stock                  (5)               (5)
    Net cash (used in) provided by
     financing activities                            $(245)             $921
    

    
    Effect of exchange rate changes
     on cash                                           $16               $26
    Net increase (decrease) in cash and
     cash equivalents                                  311              (576)
    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)                                          $1,067            $1,030
    

    
    Supplementary cash flow data:
     Interest paid (net of capitalized
      interest)                                       $202              $195
     Income taxes paid                                $159              $499
    



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    

    
    DRILLING ACTIVITY                       Quarter Ended  Six Months Ended
                                               June 30,         June 30,
                                             2007    2006    2007     2006
    

    
    Exploration Wells Drilled
     U.S.                                      5      18       27       39
     Canada                                    9      30       64       96
     International                             -       2        1        2
     Total                                    14      50       92      138
    Exploration Wells Success Rate
     U.S.                                   100%     89%      81%      90%
     Canada                                  67%    100%      95%      99%
     International                             -      0%       0%       0%
     Total                                   79%     92%      90%      95%
    Development Wells Drilled
     U.S.                                    360     372      624      655
     Canada                                   54     109      306      382
     International                             6       7        9       14
     Total                                   420     488      939    1,051
    Development Wells Success Rate
     U.S.                                    98%     98%      98%      98%
     Canada                                 100%    100%     100%      99%
     International                          100%    100%     100%     100%
     Total                                   99%     98%      99%      99%
    Total Wells Drilled
     U.S.                                    365     390      651      694
     Canada                                   63     139      370      478
     International                             6       9       10       16
     Total                                   434     538    1,031    1,189
    Total Wells Success Rate
     U.S.                                    98%     97%      98%      98%
     Canada                                  95%    100%      99%      99%
     International                          100%     78%      90%      88%
     Total                                   98%     98%      98%      99%
    



    
    COMPANY OPERATED RIGS                                        June 30,
                                                              2007     2006
    Number of Company Operated Rigs Running
     U.S.                                                      77       60
     Canada                                                    10       11
     International                                              1        -
     Total                                                     88       71
    



    
    CAPITAL EXPENDITURES DATA (in millions)
    Quarter Ended June 30, 2007
    

    
                                  U.S.     U.S.    Canada     Inter-     Devon
                                Onshore  Offshore             national   Total
    Capital Expenditures
       Exploration                $57       48        25         12       $124
       Development                736       62       145         82      1,043
       Exploration and
        development
        capital                  $793      110       170         94     $1,167
       Capitalized G&A                                                      82
       Capitalized interest                                                 15
       Discontinued operations                                              48
       Property acquisitions                                                 9
       Midstream capital                                                    69
       Other capital                                                        38
    Total capital expenditures                                          $1,428
    



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    

    
    CAPITAL EXPENDITURES DATA (in millions)
    Six Months Ended June 30, 2007
                                  U.S.     U.S.    Canada     Inter-     Devon
                                Onshore  Offshore             national   Total
    

    
    Capital Expenditures
       Exploration                $99      119        64         45       $309
       Development              1,374      122       520        141      2,175
       Exploration and
        development
        capital                $1,473      241       584        186     $2,484
       Capitalized G&A                                                     146
       Capitalized interest                                                 30
       Discontinued operations                                             107
       Property acquisitions                                                12
       Midstream capital                                                   168
       Other capital                                                        58
    Total capital expenditures                                          $3,005
    


    
    DETAIL OF RECLASSIFICATION FOR
     DISCONTINUED OPERATIONS IN EGYPT       Quarter Ended    Six Months Ended
     AND WEST AFRICA                           June 30,           June 30,
                                             2007     2006     2007     2006
    Production from Discontinued
     Operations
     Oil (MMBbls)                             3.2      3.8      6.3      7.4
     Natural Gas (Bcf)                        1.2      1.6      2.6      3.2
     Total Oil Equivalent (MMBoe)             3.4      4.1      6.7      7.9
    


    
    STATEMENTS OF DISCONTINUED
     OPERATIONS DATA                        Quarter Ended    Six Months Ended
    (in millions)                              June 30,           June 30,
                                             2007     2006     2007     2006
    Revenues
     Oil sales                               $205     $255     $375     $462
     Gas sales                                  4        5        8       11
     Marketing & midstream revenues             6        7        7       11
     Total revenues                           215      267      390      484
    Expenses and other income, net
     Lease operating expenses                  19       20       39       38
     Marketing & midstream operating
      costs and expenses                        2        3        3        4
     Depreciation, depletion and
      amortization of oil and gas
      properties                                2       66       18      130
     Depreciation, depletion and
      amortization of non-oil and gas
      properties                                -        -        -        1
     Accretion of asset retirement
      obligation                                1        -        2        1
     Reduction of carrying value of
      assets held for sale                     63        -       63       85
     Total expenses and other income, net      87       89      125      259
    Earnings before income tax expense        128      178      265      225
    Income tax (benefit) expense
     Current                                   71       98      115      177
     Deferred                                 (23)     (16)      (7)     (32)
     Total income tax expense                  48       82      108      145
    Earnings from discontinued operations     $80      $96     $157      $80
    



    
                           DEVON ENERGY CORPORATION
               UNAUDITED FINANCIAL AND OPERATIONAL INFORMATION
    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    Six Months Ended
     (in millions)                             June 30,          June 30,
                                            2007     2006     2007     2006
    Net Cash Provided By Operating
     Activities (GAAP)                     $1,832   $1,296   $3,349   $2,818
     Changes in assets and liabilities -
      continuing operations                   (59)     161     (102)     174
     Changes in assets and liabilities -
      discontinuing operations                 43       76       37       33
    Cash flow before balance sheet
     changes (Non-GAAP)                    $1,816   $1,533   $3,284   $3,025
    
    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 $737 million of debentures exchangeable
into 14.2 million shares of Chevron common stock owned outright by Devon. As
of June 30, 2007, the market value of the shares ($1.2 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                         June 30,
    (in millions)                                         2007          2006
    

    
    Total debt (GAAP)                                    $7,596       $8,054
    Adjustments:
     Cash and short-term investments                      1,357        1,266
     Market value of Chevron Corporation
      common stock                                        1,195          880
     Net Debt (Non-GAAP)                                 $5,044       $5,908
    

    
    Total Capitalization
    Total debt                                           $7,596       $8,054
    Stockholders' equity                                 19,686       16,493
     Total Capitalization (GAAP)                        $27,282      $24,547
    

    
    Adjusted Capitalization
    Net debt                                             $5,044       $5,908
    Stockholders' equity                                 19,686       16,493
     Adjusted Capitalization (Non-GAAP)                 $24,730      $22,401
    




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 Corporation Web
Site: http://www.devonenergy.com

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DEVON ENERGY CORPORATION

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