Due to a $1.1 billion impairment charge because of lower natural gas prices, Devon Energy Corp. on Wednesday reported a net loss of $719 million, or $1.80 a share, for the third quarter. Devon earned $1 billion, or $2.51 a share, in the same period of 2011.
Excluding one-time accounting charges, Devon earned $355 million, or 88 cents a share for the quarter. That is well above analysts' estimates of 69 cents a share.
“Devon's capital program has delivered strong results this year with aggressive drilling programs in oil-focused basins,” CEO John Richels said.
The Oklahoma City-based energy company boosted its quarterly production to an average of 678,000 barrels of oil equivalent a day, a 3 percent increase over last year.
Richels said Devon increased its oil production by 14 percent, despite scheduled maintenance at its Jackfish operation in Canada's oil sands. That reduced third-quarter production by about 10,000 barrels a day.
“As we have pursued higher-returning oil projects, we also have de-emphasized natural gas drilling, limiting overall production growth,” Richels said. “This is exactly the right tactical decision for Devon in this environment and is consistent with our long-standing strategy to optimize returns as opposed to top-line production growth.”
Richels said Devon expects to reduce its capital expenditure budget in 2013 as the company focuses on its oil drilling program rather than capturing leasehold.
“We believe the long-term growth potential of Devon's oil projects, both light sweet crude in the U.S. and heavy oil in Canada, married with an option on natural gas provided by our world-class gas resource plays, differentiates us from the other companies in our sector,” he said during Wednesday's conference call with analysts.