Devon Energy, the biggest producer in the Barnett Shale, said it lost $357 million in 2012's fourth quarter, largely on the impact of an $896 million non-cash asset impairment. The Oklahoma City-based producer said that not counting the impairment and other one-time items, Devon earned $316 million in the quarter ended Dec. 31. The company's shares were down 3 percent in early trading.
For the year, Devon lost $206 million. Excluding $2 billion in impairments and other adjustments during the year, it earned $1.3 billion in 2012. Impairments are the result of a test, made at least once a year, of a company's book value of assets against its market value based on benchmark prices. If the market valuation is lower, the assets' book value must be lowered to the market value. Natural gas prices last year hit a 10-year low, dipping below $2 per 1,000 cubic feet briefly, and were depressed through the year.
In the Barnett Shale, Devon said its daily production averaged 1.4 billion cubic feet of natural gas equivalent per day during the fourth quarter. "Liquids production increased 3 percent year-over-year to 48,000 barrels per day," it said. During a conference call with analysts, the company said it plans to spend $500 million in the field and drill about 150 wells. It is running 10 drilling rigs, but plans to reduce that to six in "the next couple of months." It drilled 73 gross wells in the fourth quarter of 2012, it said.
“In spite of a challenging commodity price environment that impacted our financial results, Devon delivered solid operating results in 2012. During the year, we continued to make significant progress toward the conversion of our asset portfolio to a higher oil weighting,” CEO John Richels said in a prepared release. The company reported Wednesday that total production of oil, natural gas, and natural gas liquids increased to 250 million oil-equivalent barrels (boe) in 2012, a record and up 10 million boe from 2011. "The increase in 2012 production was driven almost entirely by growth in oil production," Devon said.
-- Jim Fuquay