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))

 

 

 

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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.

 

Date: February 20, 2013

 

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