Devon Energy Corporation (Devon) is an independent energy company. It is engaged primarily in exploration, development and production of natural gas and oil. The Company's operations are concentrated in various North American onshore areas in the United States and Canada. Devon also has offshore operations located in Brazil and Angola. Devon manages its North American onshore operations through six segments. The Company also has marketing and midstream operations primarily in North America. In addition, it constructs and operates pipelines, storage and treating facilities and natural gas processing plants. These midstream facilities are used to transport oil, gas, and natural gas liquids (NGLs) and process natural gas.
In June 2010, the Company sold its interest in Gulf of Mexico shelf assets to Apache Corporation. During the year ended December 31, 2010, the Company completed the divestiture of its Panyu operations in China, and the divestiture of its Azerbaijan operations. During 2010, Devon drilled 1,584 gross wells on its North American onshore properties, and drilled 87 wells in the Cana-Woodford Shale play in western Oklahoma. During 2010, its net production from the Jackfish oil sands project averaged 25 thousand barrels per day. As of December 31, 2010, Devon had 2,042 million barrel of oil equivalent of proved developed reserves.
United States
The Company’s Barnett Shale is located in north Texas. Its leases include approximately 630,000 net acres located primarily in Denton, Johnson, Parker, Tarrant and Wise counties. The Barnett Shale produces natural gas and NGLs. As of December 31, 2010, the Company had an average working interest of 89%. During 2010, it drilled 460 gross wells. The Carthage area in east Texas includes primarily Harrison, Marion, Panola and Shelby counties. Its average working interest is 86% and the Company holds approximately 225,000 net acres. Its Carthage area wells produce primarily natural gas and NGLs from reservoirs. During 2010, Devon drilled 26 gross wells in this area.
The Cana-Woodford Shale is located primarily in Canadian, Blaine, Caddo and Dewey counties in western Oklahoma. Its average working interest is 52% and Devon holds more than 240,000 net acres. Devon’s Cana-Woodford Shale properties produce natural gas, NGLs and condensate from a reservoir. During 2010, the Company drilled 87 gross wells. Devon’s oil and gas properties in the Permian Basin in west Texas and southeast New Mexico consists of approximately 950,000 net acres. Its drilling activity is focused within the Avalon Shale, Bone Spring and Wolfberry. Devon’s average working interest in these properties is 53%. During 2010, Devon drilled 262 gross wells.
The Company’s Washakie area leases are concentrated in Carbon and Sweetwater counties in southern Wyoming. Its average working interest is about 76% and Devon holds about 160,000 net acres in the area. The Washakie wells produce primarily natural gas from reservoirs. During 2010, Devon drilled 93 gross wells. Its Arkoma-Woodford Shale properties in southeastern Oklahoma produce natural gas and NGLs from a reservoir. Devon’s more than 55,000 net acres are concentrated in Coal and Hughes counties, and it has an average working interest of about 31%. During 2010, Devon drilled 61 gross wells in this area.
The Groesbeck area of east Texas includes portions of Freestone, Leon, Limestone and Robertson counties. Its average working interest is 72% and Devon holds about 130,000 net acres of land. The Groesbeck wells produce primarily natural gas from reservoirs. During 2010, the Company drilled 20 gross wells in this area. The Granite Wash is concentrated in Hemphill and Wheeler counties in the Texas Panhandle and in western Oklahoma. Its average working interest is approximately 48% and Devon holds approximately 60,000 net acres of land. The Granite Wash wells produce liquids and natural gas from reservoirs. During 2010, it drilled 29 gross wells in this area.
Devon’s Haynesville Shale acreage position spans across east Texas and north Louisiana with an average working interest of 92%. As of December 31, 2010, Devon’s drilling activity was focused on approximately 150,000 acres located in Panola, Shelby and San Augustine counties in east Texas. During 2010, the Company drilled 23 gross wells.
Canada
Jackfish is Devon’s 100%-owned thermal heavy oil project in the oil sands of east central Alberta. The first phase of Jackfish is fully operational with a gross facility capacity of 35 thousand barrels per day. The Northwest region includes acreage within west central Alberta and northeast British Columbia. It holds approximately 1.9 million net acres in the region, which produces primarily natural gas from reservoirs. Devon’s average working interest in the area is approximately 73%. During 2010, Devon drilled 67 gross wells. The Company’s Lloydminster properties are located to the south and east of Jackfish in eastern Alberta and western Saskatchewan. Lloydminster produces heavy oil. It holds 2.4 million net acres and has an 89% average working interest in its Lloydminster properties. During 2010, the Company drilled 181 gross wells.
Devon’s properties in Canada’s Deep Basin include portions of west central Alberta and east central British Columbia. It holds approximately 520,000 net acres in the Deep Basin. The area produces natural gas and liquids from reservoirs. Devon’s average working interest in the Deep Basin is 43%. During 2010, the Company drilled 39 gross wells. The Horn River Basin, located in northeast British Columbia, is a gas reservoir targeting the Devonian Shale. Its leases include approximately 170,000 net acres with a 100% working interest. During 2010, it drilled seven gross wells. The Company’s 50%-owned Pike oil sands acreage is situated directly to the south of its Jackfish acreage in east central Alberta.
During several years of low energy prices in the 1990s, Devon bought a large number of properties. In March 1994 the company completed its next significant purchase, paying $66 million for Denver-based Alta Energy Corporation. Devon's total proved oil and gas reserves increased by 37 percent. Of particular importance was the Grayburg-Jackson Field located in southeast New Mexico, which fit nicely with Devon's other holdings in the area. During the final weeks of 1995, the company supplemented another core area of operation, Wyoming, where Devon had enjoyed success in drilling for coalbed methane. It spent $50.3 million to acquire oil and gas properties and a gas processing plant in the region. The pickups in New Mexico and Wyoming were not without risk, however. According to Oil & Gas Investor, "Devon has seemingly been in the wrong places at the wrong times--holding natural gas properties in the Rocky Mountains and the San Juan Basin during the miserable early months of 1996, for example--only to come out smelling like a rose when pipeline extensions came on line."
In December 1996, Devon completed its largest acquisition to that point, trading more than $250 million in stock for the North American onshore oil and gas properties of Kerr-McGee Corporation, which received 31 percent of Devon's stock as well as three seats on its board. The deal boosted Devon's reserves by 46 percent, bolstered its Wyoming presence, and also added some interests in Canada. Devon's next big deal added to the company's Canadian holdings. In 1998 it used another $750 million in stock to acquire Northstar Energy Corp. to achieve critical mass in Canada, adding 550 billion cubic feet of natural gas and 36 million barrels of oil and natural-gas liquids located in Alberta and British Columbia. As a result of this transaction, Devon became a $2 billion company in market capitalization and one of the top 15 U.S.-based independents. In a lesser deal in 1998, Devon paid $57.5 million to acquire natural gas properties in Alberta from a subsidiary of Canadian Occidental Petroleum Ltd.
Devon's penchant for completing ever larger acquisitions on an annual basis continued in 1999, when Devon acquired PennzEnergy, the oil and gas business of Pennzoil Co., in a stock swap. Once again, Larry Nichols's ability to shun conventional thinking paid off. According to Forbes, "In 1997 oil was going for as much as $26 a barrel and many producers borrowed money and bought each other out. At the height of the frenzy, Pennzoil got a $6.4 billion offer (including assumed debt) from Union Pacific Resources--and rejected it. Nichols went the other way. He used profits from selling oil to pay down debt and prepare for the inevitable crash. The next year oil prices dipped to $10. That's when he started talking to Pennzoil about selling some assets. Devon wound up buying Pennzoil's oil and gas exploration and production operations for a measly $2.6 billion, a bargain that appeared even cheaper after Nichol's eliminated $50 million a year in operating costs. Thrown in essentially free: a 5% interest in a 4-billion-barrel oilfield in Azerbaijan." Doubled in size as a result, Devon now cracked the top 10 of U.S.-based independent oil and gas companies. For 1999 Devon topped $1 billion in revenues for the first time, increasing from $604 million in 1998 to $1.14 billion. With the Pennzoil assets available for the full year, in 2000 Devon's revenues approached $2.6 billion and the company posted net earnings of $730 million.
With the dawn of the new century, Devon continued its pattern of growth through opportunistic acquisitions. In 2000 Devon paid $3.5 billion in cash and the assumption of debt to add Houston-based Santa Fe Snyder Corp. In addition to supplementing Devon's holding in the Rocky Mountains, Permian Basin, and Gulf of Mexico, the deal also included assets in South America, southeast Asia, and west Africa. Devon now became a top five independent. In 2001 Devon engineered a $3.5 billion takeover of Mitchell Energy & Development Corp. (completed in 2002), a deal that increased its reserve base by 38 percent. In particular, it greatly enhanced the company's presence in the important Fort Worth Basin. Devon then completed the $4.6 billion acquisition of Anderson Exploration Ltd., which solidified Devon's position in Canada, as it now became the country's third largest gas producer. Revenues in fiscal 2002 exceeded $4.3 billion, making Devon the 47th largest oil company in the world, according to Petroleum Intelligence Weekly. Devon struck next in 2003 when in a $3.5 billion stock deal, plus the assumption of $1.8 billion in debt, it acquired Houston-based Ocean Energy. This acquisition elevated Devon to the top spot among U.S. independent producers of oil and gas, with the ability to produce 2.4 billion cubic feet of natural gas and 250,000 barrels of oil and gas liquids per day. In addition, Devon became the largest independent deepwater Gulf of Mexico leaseholder with over 500 deepwater blocks, and also held 29 million net undeveloped acres around the world. Annual revenues were projected to approach $6 billion. Some analysts were concerned that Devon had taken on too much debt, but management took steps to sell off some $1.5 billion in assets picked up in the Anderson and Mitchell acquisitions, freeing itself of a large portion of debt. Nevertheless, interest payments for 2003 were an estimated $550 million. For a company that for decades had been cautious about taking on debt, it was a significant departure. But given Devon's track record, there was every reason to believe that the company would find a way to maintain its pattern of ongoing prosperity.
Principal Subsidiaries: Devon Energy Corporation; Devon Energy Production Company, L.P.; Devon Canada Corporation; Devon Gas Services, L.P.
Principal Competitors: BP p.l.c.; Burlington Resources Inc.; Royal Dutch/Shell Group of Companies.
OVERALL
Beta: 1.04
Market Cap (Mil.): $37,068.77
Shares Outstanding (Mil.): 424.52
Annual Dividend: 0.68
Yield (%): 0.78
FINANCIALS
DVN Industry Sector
P/E (TTM): 16.66 14.36 11.44
EPS (TTM): 184.66 -- --
ROI: 8.60 5.35 4.19
ROE: 13.40 6.17 5.51
Statistics:
Public Company
Incorporated: 1969
Employees: 3,436
Sales: $4.3 billion (2002)
Stock Exchanges: American
Ticker Symbol: DVN
NAIC: 211111 Crude Petroleum and Natural Gas Extraction
Key Dates:
1969: "Old" Devon Energy Corporation is formed.
1971: "New" Devon Energy begins operations when J. Larry Nichols joins father, John W. Nichols.
1980: Larry Nichols becomes CEO.
1988: Devon becomes a public company.
1992: Hondo Oil & Gas Company becomes first major acquisition.
1999: Acquisition of PennzEnergy makes Devon a top ten independent.
2003: Ocean Energy Acquisition makes Devon largest U.S.-based independent.
Name Age Since Current Position
Nichols, J. Larry 68 2010 Executive Chairman of the Board
Richels, John 60 2010 President, Chief Executive Officer, Director
Agosta, Jeffrey 43 2010 Chief Financial Officer, Executive Vice President
Taylor, Lyndon 52 2007 Executive Vice President, General Counsel
Smette, Darryl 63 2008 Executive Vice President - Marketing and Midstream
Rudolph, Frank 54 2007 Executive Vice President - Human Resources
Hager, David 54 2009 Executive Vice President - Exploration and Production
Marcum, R. Alan 44 2008 Executive Vice President - Administration
Whitsitt, William 66 2008 Executive Vice President - Public Affairs
Hill, John 69 2010 Lead Independent Director
Kanovsky, Michael 62 1999 Independent Director
Mosbacher, Robert 59 2009 Independent Director
Mitchell, J. Todd 51 2002 Independent Director
Ricciardello, Mary 55 2007 Independent Director
Henry, Robert 58 2010 Independent Director
Radtke, Duane 62 2010 Independent Director
Address:
20 N. Broadway
Oklahoma City, Oklahoma 73102-8260
U.S.A.
In June 2010, the Company sold its interest in Gulf of Mexico shelf assets to Apache Corporation. During the year ended December 31, 2010, the Company completed the divestiture of its Panyu operations in China, and the divestiture of its Azerbaijan operations. During 2010, Devon drilled 1,584 gross wells on its North American onshore properties, and drilled 87 wells in the Cana-Woodford Shale play in western Oklahoma. During 2010, its net production from the Jackfish oil sands project averaged 25 thousand barrels per day. As of December 31, 2010, Devon had 2,042 million barrel of oil equivalent of proved developed reserves.
United States
The Company’s Barnett Shale is located in north Texas. Its leases include approximately 630,000 net acres located primarily in Denton, Johnson, Parker, Tarrant and Wise counties. The Barnett Shale produces natural gas and NGLs. As of December 31, 2010, the Company had an average working interest of 89%. During 2010, it drilled 460 gross wells. The Carthage area in east Texas includes primarily Harrison, Marion, Panola and Shelby counties. Its average working interest is 86% and the Company holds approximately 225,000 net acres. Its Carthage area wells produce primarily natural gas and NGLs from reservoirs. During 2010, Devon drilled 26 gross wells in this area.
The Cana-Woodford Shale is located primarily in Canadian, Blaine, Caddo and Dewey counties in western Oklahoma. Its average working interest is 52% and Devon holds more than 240,000 net acres. Devon’s Cana-Woodford Shale properties produce natural gas, NGLs and condensate from a reservoir. During 2010, the Company drilled 87 gross wells. Devon’s oil and gas properties in the Permian Basin in west Texas and southeast New Mexico consists of approximately 950,000 net acres. Its drilling activity is focused within the Avalon Shale, Bone Spring and Wolfberry. Devon’s average working interest in these properties is 53%. During 2010, Devon drilled 262 gross wells.
The Company’s Washakie area leases are concentrated in Carbon and Sweetwater counties in southern Wyoming. Its average working interest is about 76% and Devon holds about 160,000 net acres in the area. The Washakie wells produce primarily natural gas from reservoirs. During 2010, Devon drilled 93 gross wells. Its Arkoma-Woodford Shale properties in southeastern Oklahoma produce natural gas and NGLs from a reservoir. Devon’s more than 55,000 net acres are concentrated in Coal and Hughes counties, and it has an average working interest of about 31%. During 2010, Devon drilled 61 gross wells in this area.
The Groesbeck area of east Texas includes portions of Freestone, Leon, Limestone and Robertson counties. Its average working interest is 72% and Devon holds about 130,000 net acres of land. The Groesbeck wells produce primarily natural gas from reservoirs. During 2010, the Company drilled 20 gross wells in this area. The Granite Wash is concentrated in Hemphill and Wheeler counties in the Texas Panhandle and in western Oklahoma. Its average working interest is approximately 48% and Devon holds approximately 60,000 net acres of land. The Granite Wash wells produce liquids and natural gas from reservoirs. During 2010, it drilled 29 gross wells in this area.
Devon’s Haynesville Shale acreage position spans across east Texas and north Louisiana with an average working interest of 92%. As of December 31, 2010, Devon’s drilling activity was focused on approximately 150,000 acres located in Panola, Shelby and San Augustine counties in east Texas. During 2010, the Company drilled 23 gross wells.
Canada
Jackfish is Devon’s 100%-owned thermal heavy oil project in the oil sands of east central Alberta. The first phase of Jackfish is fully operational with a gross facility capacity of 35 thousand barrels per day. The Northwest region includes acreage within west central Alberta and northeast British Columbia. It holds approximately 1.9 million net acres in the region, which produces primarily natural gas from reservoirs. Devon’s average working interest in the area is approximately 73%. During 2010, Devon drilled 67 gross wells. The Company’s Lloydminster properties are located to the south and east of Jackfish in eastern Alberta and western Saskatchewan. Lloydminster produces heavy oil. It holds 2.4 million net acres and has an 89% average working interest in its Lloydminster properties. During 2010, the Company drilled 181 gross wells.
Devon’s properties in Canada’s Deep Basin include portions of west central Alberta and east central British Columbia. It holds approximately 520,000 net acres in the Deep Basin. The area produces natural gas and liquids from reservoirs. Devon’s average working interest in the Deep Basin is 43%. During 2010, the Company drilled 39 gross wells. The Horn River Basin, located in northeast British Columbia, is a gas reservoir targeting the Devonian Shale. Its leases include approximately 170,000 net acres with a 100% working interest. During 2010, it drilled seven gross wells. The Company’s 50%-owned Pike oil sands acreage is situated directly to the south of its Jackfish acreage in east central Alberta.
During several years of low energy prices in the 1990s, Devon bought a large number of properties. In March 1994 the company completed its next significant purchase, paying $66 million for Denver-based Alta Energy Corporation. Devon's total proved oil and gas reserves increased by 37 percent. Of particular importance was the Grayburg-Jackson Field located in southeast New Mexico, which fit nicely with Devon's other holdings in the area. During the final weeks of 1995, the company supplemented another core area of operation, Wyoming, where Devon had enjoyed success in drilling for coalbed methane. It spent $50.3 million to acquire oil and gas properties and a gas processing plant in the region. The pickups in New Mexico and Wyoming were not without risk, however. According to Oil & Gas Investor, "Devon has seemingly been in the wrong places at the wrong times--holding natural gas properties in the Rocky Mountains and the San Juan Basin during the miserable early months of 1996, for example--only to come out smelling like a rose when pipeline extensions came on line."
In December 1996, Devon completed its largest acquisition to that point, trading more than $250 million in stock for the North American onshore oil and gas properties of Kerr-McGee Corporation, which received 31 percent of Devon's stock as well as three seats on its board. The deal boosted Devon's reserves by 46 percent, bolstered its Wyoming presence, and also added some interests in Canada. Devon's next big deal added to the company's Canadian holdings. In 1998 it used another $750 million in stock to acquire Northstar Energy Corp. to achieve critical mass in Canada, adding 550 billion cubic feet of natural gas and 36 million barrels of oil and natural-gas liquids located in Alberta and British Columbia. As a result of this transaction, Devon became a $2 billion company in market capitalization and one of the top 15 U.S.-based independents. In a lesser deal in 1998, Devon paid $57.5 million to acquire natural gas properties in Alberta from a subsidiary of Canadian Occidental Petroleum Ltd.
Devon's penchant for completing ever larger acquisitions on an annual basis continued in 1999, when Devon acquired PennzEnergy, the oil and gas business of Pennzoil Co., in a stock swap. Once again, Larry Nichols's ability to shun conventional thinking paid off. According to Forbes, "In 1997 oil was going for as much as $26 a barrel and many producers borrowed money and bought each other out. At the height of the frenzy, Pennzoil got a $6.4 billion offer (including assumed debt) from Union Pacific Resources--and rejected it. Nichols went the other way. He used profits from selling oil to pay down debt and prepare for the inevitable crash. The next year oil prices dipped to $10. That's when he started talking to Pennzoil about selling some assets. Devon wound up buying Pennzoil's oil and gas exploration and production operations for a measly $2.6 billion, a bargain that appeared even cheaper after Nichol's eliminated $50 million a year in operating costs. Thrown in essentially free: a 5% interest in a 4-billion-barrel oilfield in Azerbaijan." Doubled in size as a result, Devon now cracked the top 10 of U.S.-based independent oil and gas companies. For 1999 Devon topped $1 billion in revenues for the first time, increasing from $604 million in 1998 to $1.14 billion. With the Pennzoil assets available for the full year, in 2000 Devon's revenues approached $2.6 billion and the company posted net earnings of $730 million.
With the dawn of the new century, Devon continued its pattern of growth through opportunistic acquisitions. In 2000 Devon paid $3.5 billion in cash and the assumption of debt to add Houston-based Santa Fe Snyder Corp. In addition to supplementing Devon's holding in the Rocky Mountains, Permian Basin, and Gulf of Mexico, the deal also included assets in South America, southeast Asia, and west Africa. Devon now became a top five independent. In 2001 Devon engineered a $3.5 billion takeover of Mitchell Energy & Development Corp. (completed in 2002), a deal that increased its reserve base by 38 percent. In particular, it greatly enhanced the company's presence in the important Fort Worth Basin. Devon then completed the $4.6 billion acquisition of Anderson Exploration Ltd., which solidified Devon's position in Canada, as it now became the country's third largest gas producer. Revenues in fiscal 2002 exceeded $4.3 billion, making Devon the 47th largest oil company in the world, according to Petroleum Intelligence Weekly. Devon struck next in 2003 when in a $3.5 billion stock deal, plus the assumption of $1.8 billion in debt, it acquired Houston-based Ocean Energy. This acquisition elevated Devon to the top spot among U.S. independent producers of oil and gas, with the ability to produce 2.4 billion cubic feet of natural gas and 250,000 barrels of oil and gas liquids per day. In addition, Devon became the largest independent deepwater Gulf of Mexico leaseholder with over 500 deepwater blocks, and also held 29 million net undeveloped acres around the world. Annual revenues were projected to approach $6 billion. Some analysts were concerned that Devon had taken on too much debt, but management took steps to sell off some $1.5 billion in assets picked up in the Anderson and Mitchell acquisitions, freeing itself of a large portion of debt. Nevertheless, interest payments for 2003 were an estimated $550 million. For a company that for decades had been cautious about taking on debt, it was a significant departure. But given Devon's track record, there was every reason to believe that the company would find a way to maintain its pattern of ongoing prosperity.
Principal Subsidiaries: Devon Energy Corporation; Devon Energy Production Company, L.P.; Devon Canada Corporation; Devon Gas Services, L.P.
Principal Competitors: BP p.l.c.; Burlington Resources Inc.; Royal Dutch/Shell Group of Companies.
OVERALL
Beta: 1.04
Market Cap (Mil.): $37,068.77
Shares Outstanding (Mil.): 424.52
Annual Dividend: 0.68
Yield (%): 0.78
FINANCIALS
DVN Industry Sector
P/E (TTM): 16.66 14.36 11.44
EPS (TTM): 184.66 -- --
ROI: 8.60 5.35 4.19
ROE: 13.40 6.17 5.51
Statistics:
Public Company
Incorporated: 1969
Employees: 3,436
Sales: $4.3 billion (2002)
Stock Exchanges: American
Ticker Symbol: DVN
NAIC: 211111 Crude Petroleum and Natural Gas Extraction
Key Dates:
1969: "Old" Devon Energy Corporation is formed.
1971: "New" Devon Energy begins operations when J. Larry Nichols joins father, John W. Nichols.
1980: Larry Nichols becomes CEO.
1988: Devon becomes a public company.
1992: Hondo Oil & Gas Company becomes first major acquisition.
1999: Acquisition of PennzEnergy makes Devon a top ten independent.
2003: Ocean Energy Acquisition makes Devon largest U.S.-based independent.
Name Age Since Current Position
Nichols, J. Larry 68 2010 Executive Chairman of the Board
Richels, John 60 2010 President, Chief Executive Officer, Director
Agosta, Jeffrey 43 2010 Chief Financial Officer, Executive Vice President
Taylor, Lyndon 52 2007 Executive Vice President, General Counsel
Smette, Darryl 63 2008 Executive Vice President - Marketing and Midstream
Rudolph, Frank 54 2007 Executive Vice President - Human Resources
Hager, David 54 2009 Executive Vice President - Exploration and Production
Marcum, R. Alan 44 2008 Executive Vice President - Administration
Whitsitt, William 66 2008 Executive Vice President - Public Affairs
Hill, John 69 2010 Lead Independent Director
Kanovsky, Michael 62 1999 Independent Director
Mosbacher, Robert 59 2009 Independent Director
Mitchell, J. Todd 51 2002 Independent Director
Ricciardello, Mary 55 2007 Independent Director
Henry, Robert 58 2010 Independent Director
Radtke, Duane 62 2010 Independent Director
Address:
20 N. Broadway
Oklahoma City, Oklahoma 73102-8260
U.S.A.