Devon production soars on merge

Record oil and gas production, together with higher commodity prices, pushed Devon Energy’s 2003 third-quarter profit to $412 million or $1.76 per share, a nearly seven-fold increase over the $38 million or 38 cents Devon earned for the same quarter last year, the company said Oct. 6.

Devon, the largest exploration and production independent in the United States, attributed the surge in production largely to April’s merger with Ocean Energy. However, low risk development projects also contributed to the increase, Devon said, adding that 2003 third-quarter output was significantly higher than that of Devon and Ocean combined in the prior quarter and last year’s second quarter.

Daily production during the 2003 third quarter averaged 689,000 barrels of oil equivalent per day, a 41 percent increase over the 500,000 barrels of equivalent per day produced in the year-ago quarter.

“Our development projects and the merger with Ocean are delivering exactly what we anticipated,” said Larry Nichols, Devon’s chief executive officer.

One development project that contributed significantly to Devon’s third-quarter production was the company’s Barnett Shale play near Dallas, Texas, which rocketed 12 percent from the prior quarter to 580 million cubic feet per day of gas equivalent. The company is operating 14 rigs at Barnett, half of which are dedicated to drilling highly productive horizontal wells.

Sales of oil, gas and natural gas liquids during the 2003 third quarter increased 111 percent over the year-ago period to a record $1.6 billion, Devon said. However, because of expenses associated with a larger company, operating costs in this year’s third quarter increased 61 percent versus last year’s third quarter to $1.2 billion.