Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 20, 2013

 

 

DEVON ENERGY CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

 

DELAWARE   001-32318   73-1567067

(State or Other Jurisdiction of

Incorporation or Organization)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

333 West Sheridan Avenue, Oklahoma City, Oklahoma   73102-5015
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (405) 235-3611

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 8.01. Other Events

Information Regarding Forward-Looking Estimates

This report includes our 2013 forward-looking estimates and associated forward-looking statements regarding our expectations and plans, as well as future events or conditions. Such forward-looking statements are based on our examination of historical operating trends, the information used to prepare our December 31, 2012 reserve reports and other data in our possession or available from third parties. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Consequently, actual future results could differ materially from our expectations due to a number of factors, such as changes in the supply of and demand for oil, natural gas and NGLs and related products and services; exploration or drilling programs; political or regulatory events; general economic and financial market conditions; and other risk factors we discuss in our Annual Report on Form 10-K. All subsequent written and oral forward-looking statements attributable to Devon, or persons acting on its behalf, are expressly qualified in their entirety by these cautionary statements. We assume no duty to update or revise our forward-looking statements based on new information, future events or otherwise.

In this report, financial amounts related to our Canadian operations have been converted to U.S. dollars using estimated average exchange rates of $1.00 U.S. dollar to $1.00 Canadian dollar.

Production and Prices

Set forth below are our daily production and price realization estimates for the first quarter and full year 2013. The price realizations for oil, bitumen and NGLs are determined using the monthly average of NYMEX settled prices on each trading day for the benchmark West Texas Intermediate crude oil price at Cushing, Oklahoma. The price realizations for natural gas are determined using the first-of-month South Louisiana Henry Hub price index as published in Inside FERC.

 

     Quarter 1     Full Year  
     Low     High     Low     High  

Daily Production

        

Oil and bitumen (MBbls/d)

        

United States

     65.0        70.0        80.0        85.0   

Canada

     88.0        93.0        84.0        89.0   

Natural gas (MMcf/d)

        

United States

     1,935.0        1,965.0        1,920.0        1,960.0   

Canada

     410.0        440.0        385.0        415.0   

Natural gas liquids (MBbls/d)

        

United States

     105.0        111.0        112.0        118.0   

Canada

     8.0        10.0        7.0        9.0   

Price Realizations

        

Oil and bitumen—% of WTI

        

United States

     84     94     88     98

Canada

     36     46     48     58

Natural gas—% of Henry Hub

        

United States

     81     91     80     90

Canada

     88     98     86     96

Natural gas liquids—% of WTI

        

United States

     25     35     26     36

Canada

     48     58     47     57

Commodity Price Risk Management

As of February 15, 2013, we had the following oil derivative positions associated with 2013 production. Our oil price swaps and collars settle against the average of the prompt month NYMEX West Texas Intermediate futures price.

 

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     Price Swaps      Price Collars      Call Options Sold  

Period

   Volume
(Bbls/d)
     Weighted
Average  Price
($/Bbl)
     Volume
(Bbls/d)
     Weighted
Average Floor  Price
($/Bbl)
     Weighted
Average Ceiling  Price
($/Bbl)
     Volume
(Bbls/d)
     Weighted
Average  Price
($/Bbl)
 

Q1-Q4 2013

     55,110       $ 101.22         60,068       $ 90.34       $ 112.70         10,000       $ 120.00   

 

Basis Swaps  

Period

   Index    Volume
(Bbls/d)
     Weighted Average
Differential  to WTI
($/Bbl)
 

Q1-Q2 2013

   Western Canadian Select      3,000       $ (19.58

As of February 15, 2013, we had the following open natural gas derivative positions associated with 2013 production. The first table presents our natural gas contracts that settle against the Inside FERC first-of-the-month Henry Hub index. The second table presents our natural gas contracts that settle against the AECO index.

 

     Price Swaps      Price Collars      Call Options Sold  

Period

   Volume
(MMBtu/d)
     Weighted
Average
Price

($/MMBtu)
     Volume
(MMBtu/d)
     Weighted
Average Floor  Price
($/MMBtu)
     Weighted
Average Ceiling  Price
($/MMBtu)
     Volume
(MMBtu/d)
     Weighted
Average  Price
($/MMBtu)
 

Q1-Q4 2013

     764,366       $ 4.14         576,959       $ 3.52       $ 4.22         —           —     

 

Price Swaps  

Period

   Volume
(MMBtu/d)
     Weighted
Average  Price
($/MMBtu)
 

Q1-Q4 2013

     28,435       $ 3.64   

 

Basis Swaps  

Period

   Index    Volume
(MMBtu/d)
     Weighted Average
Differential  to Henry Hub
($/MMBtu)
 

Q1-Q4 2013

   El Paso Natural Gas      20,000       $ (0.12

Q1-Q4 2013

   Panhandle Eastern Pipeline      20,000       $ (0.17

Other Operating Items

The following table includes full year estimates of other revenue and expense items associated with our operations.

 

     Full Year  
     Low     High  
    

($ in millions,

except per Boe)

 

Marketing & midstream operating profit

   $ 425      $ 475   

Lease operating expenses per Boe

   $ 8.60      $ 9.00   

Depreciation, depletion and amortization per Boe

   $ 11.50      $ 12.50   

General & administrative expenses per Boe

   $ 2.70      $ 2.90   

Taxes other than income taxes as % of wellhead revenue

     5.8     6.8

Interest expense

   $ 420      $ 460   

Other expense, net

   $ 50      $ 70   

Current income tax rate

     2     8

Deferred income tax rate

     28     32
  

 

 

   

 

 

 

Total income tax rate

     30     40
  

 

 

   

 

 

 

 

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Capital Expenditures

Set forth below are our capital expenditure estimates for the first quarter and full year 2013.

 

     Quarter 1      Full Year  
     Low      High      Low      High  
     (In millions)  

Development

   $ 1,100       $ 1,250       $ 4,450       $ 4,750   

Exploration

     265         315         490         590   
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal

     1,365         1,565         4,940         5,340   

Capitalized G&A and interest

     95         105         385         415   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total oil and gas

     1,460         1,670         5,325         5,755   
  

 

 

    

 

 

    

 

 

    

 

 

 

Midstream

     250         300         975         1,045   

Corporate and other

     50         70         125         175   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other

     300         370         1,100         1,220   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total capital expenditures

   $ 1,760       $ 2,040       $ 6,425       $ 6,975   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized.

 

DEVON ENERGY CORPORATION
By:   /s/ Jeffrey A. Agosta
 

Jeffrey A. Agosta

Executive Vice President and Chief Financial Officer

Date: February 20, 2013

 

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