Devon posts record earnings on merger

Petroleum News Houston staff

Big independent Devon Energy, on the strength of its Ocean Energy merger, saw its 2003 second-quarter production and profit soar to record levels.

The company reported Aug. 6 that it earned net income of $356 million or $1.67 per share in the second quarter, compared to a loss of $104 million or 68 cents per share for the same period last year.

Sales of oil, gas and natural gas liquids increased 67 percent over the 2002 second quarter to $1.5 billion. Cash flow during the 2003 second quarter rocketed 101 percent to $890 million.

Because Devon completed its takeover of Ocean on April 25, its second-quarter earnings report includes about two months of Ocean production. Devon said it produced 56 million barrels of oil equivalent during the three-month period, up 13 percent from the 50 million barrels of equivalent produced a year earlier.

Production rose despite the sale of $1.4 billion of non-core properties in 2002, Devon noted. In addition to higher volumes, higher commodity prices contributed to Devon’s record quarter, the company said.

Devon said the huge infusion of cash during the second quarter allowed the company to fully finance capital expenditures during the period and to pay down $300 million in debt.

However, along with record production and earnings came higher operating costs associated with the Ocean merger. Costs during the second quarter increased 37 percent to $1.1 billion, the company said.