Devon Energy records $1.8 billion loss in 1Q—plans reduced oil production

 

While Devon Energy’s leadership maintains the firm’s financial position is “exceptionally strong,” the firm released its first quarter 2020 financial results on Tuesday showing a net loss of $1.8 billion or $4.82 per diluted share. It also indicated it intends to lower oil production in the second quarter of the year.

The company said the loss was attributable to $2.8 billion of non-cash impairment charges due to asset evaluations associated with current business conditions. Its financial report said Devon’s adjusted core earnings were $48 million or 13 cents a diluted share.

The company said its operating cash flow from continuing operations totaled $529 million in the first quarter which represented a 21% increase compared to the same period a year ago.

Devon reported it exited the quarter with $1.7 billion of cash and an undrawn credit facility of $3 billion. At the end of the quarter, Devon had an outstanding debt balance of $4.3 billion
with no outstanding debt maturities occurring until late 2025.

Company leadership said the firm’s financial strength is enhanced by an attractive hedge position where nearly 90% of expected oil production is protected for the remainder of 2020. The contracts provide an average protected floor price of $42 a barrel.

The company invested $38 million to repurchase 2.2 million shares of its common stock in the first quarter. Devon has suspended its share repurchase program to preserve liquidity in light of the COVID-19 pandemic.

In March, Devon announced it had cut its capital expenditures by $800 million for the full-year 2020 and that represents a 45% reduction compared to the original 2020 capital budget. Devon said it anticipates investing up to $250 million of capital.

It also anticipates second-quarter oil production to average 145,000 to 155,000 barrels of oil a day. Included within the company’s second-quarter production outlook
is the election to curtail 10,000 barrels per day due to low commodity prices. Given the ongoing price
volatility, curtailment decisions are expected to be made on a month-to-month basis. For the full-year,
Devon expects oil production to be essentially flat compared to 2019.
Click here to view Devon’s report.

Source: Devon Energy