Devon Energy Corp. DVN reported first-quarter 2015 adjusted earnings per share of 22 cents, 15.4% below the Zacks Consensus Estimate of 26 cents. Earnings in the first quarter were much lower than $1.34 reported in the year-ago quarter.
Devon Energy Corporation - Earnings Surprise | FindTheCompany
On a GAAP basis, the company reported a loss of $8.88 per share as compared to earnings of 79 cents per share in the year-ago quarter. The difference between the operating and GAAP figures in the reported quarter was due to the impact of change in value of financial instruments and foreign currency as well as asset impairments.
Revenues
Devon’s quarterly revenues of $3,265 million lagged year-ago revenues of $3,725 million by 12.3% and the Zacks Consensus Estimate of $3,855 million by 15.3%.
Highlights of the Release
In the first quarter 2015, Devon’s total production averaged 685,000 barrels of oil-equivalent (Boe) per day, exceeding the top end of the guidance range of 650,000–673,000 boe per day. Higher oil production from domestic assets and Canada boosted total production.
Leasing operating costs, the largest cash cost of the company, were $8.97 per boe, 7% lower than the first quarter of 2014.
Total operating expenses however increased 188.6% to $8.76 billion from $3.03 billion a year ago. The increase was due to higher marketing and midstream operating expenses. Excluding asset impairment of $5.46 billion the reported quarter, operating expenses were up 8.7% year over year.
Realized Prices
Realized oil prices in the quarter were $56.29 per barrel, down 25.6% from $75.65 per barrel in the year-ago quarter. Realized prices for natural gas liquids were down 69.8% to $9.40 per barrel from $31.13 per barrel in the year-ago quarter.
Natural gas price realization was down 25.4% year over year to $2.96 per thousand cubic feet (Mcf) from $3.97 per Mcf in the year-ago quarter.
Total realized prices in the first quarter, including cash settlements, were $31.36 per boe, down 20.6% year over year, due to lower prices of all commodities sold by the company.
Financial Health
As of Mar 31, 2015, the company’s cash balance totaled $1,858 million, down from $1,480 million as of Mar 31, 2014.
Long-term debt as of Mar 31, 2015, was $10,381 million compared with $9,830 million as of Dec 31, 2014.
Devon’s cash flow from operating activities in first-quarter 2015 was $1,648 million compared with $1,410 million in first-quarter 2014.
Capital expenditure was $1,717 million, higher than $1,583 million in first-quarter 2014.
Guidance
Devon Energy estimates total production in the second quarter of 2015 in the range of 660,000–688,000 boe per day. 2015 total production guidance was revised to 649,000–684,000 boe per day from the earlier range of 637,000–662,000 boe per day.
Capital expenditure in the second quarter and 2015 is expected in the range of $1,100–$1,250 million and $4,510–-$4,910 million respectively. Devon revised its 2015 E&P capital expenditure guidance to a range of $3,900 to $4,100 million down by $250 million at both ends from the previous projection.
Other Company Releases
Anadarko Petroleum Corporation APC reported a first-quarter 2015 adjusted loss of 72 cents per share, wider than the Zacks Consensus Estimate of a loss of 63 cents.
EOG Resources Inc. EOG reported first-quarter 2015 adjusted earnings of 3 cents per share that surpassed the Zacks Consensus Estimate of 1 cent.
Murphy Oil Corporation MUR reported a first-quarter 2015 loss of $1.11 per share, wider than the Zacks Consensus Estimate of a loss of 86 cents.
Our View
Devon has completed the divestiture of non-core assets. Its focus on high-quality North American properties has led to increased output. We expect strong production from the Eagle Ford and Permian Basin to help in achieving growth of 25–35% year over year.
However, oil and gas prices continue to remain soft. Devon is doing its part to cut down on expenses but the ongoing softness in prices is expected to have a negative impact on year-over-year comparisons.
Devon Energy currently has a Zacks Rank #3 (Hold).
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Click to get this free report DEVON ENERGY (DVN): Free Stock Analysis Report MURPHY OIL (MUR): Free Stock Analysis Report ANADARKO PETROL (APC): Free Stock Analysis Report EOG RES INC (EOG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research