Devon Energy posts loss on asset write-down
OKLAHOMA CITY (AP) — Devon Energy Corp. on Wednesday posted a fourth-quarter loss due to an $896 million write-down related to its value of its gas and oil assets, but its adjusted results beat market expectations.
The Oklahoma City-based oil and gas exploration company reported a net loss of $357 million, or 89 cents per share, for the three months ended Dec. 31. That's compared with net income of $507 million, or $1.25 per share, in the fourth quarter of 2011.
Excluding the impairment charge and other special items, Devon said its adjusted earnings came to 78 cents per share in the most recent quarter.
Devon's total revenue slipped slightly to $2.58 billion from $2.59 billion.
Analysts, on average, were expecting the company to earn 75 cents per share on revenue of $2.24 billion, according to FactSet.
Oil production averaged 151,000 barrels per day, a 13 percent increase compared to the 2011 fourth quarter. The company said the most significant growth in oil production came from the U.S., where quarterly year-over-year oil production increased 30 percent.
"In spite of a challenging commodity price environment that impacted our financial results, Devon delivered solid operating results in 2012," John Richels, Devon's president and chief executive officer, said in a statement. "This is evident through the strong oil production growth we delivered during the year and the impressive growth in oil reserves."
Richels told investors that weak prices for natural gas, natural gas liquids and Canadian oil, which accounts for nearly all of its production, posed a challenge in 2012. Concerns about this have hurt Devon's stock price performances during the past year and Richels said it has been a source of frustration for both the company and shareholders.
However, he believes the company's current stock price does not adequately reflect its underlying value. He said Devon is pursuing a number of measures to unlock value in the company.
One of those options includes the possibility of creating a master limited partnership spinoff for its midstream business. The company considered the move in 2007, but decided the timing was not right. Devon is looking at this option again, which would create a separate partnership for its pipeline and logistics assets.
Richel told investors on a conference call Wednesday that the company has hired investment bankers and legal counsel to help evaluate the option.
Shares of Devon fell $4, or 6.6 percent, to close at $56.57 Wednesday, with volume about two-and-a-half times normal trade. Its shares began sinking at the beginning of 2012 and have yet to recover. The stock has traded between $50.89 and $76.34 during the past 52 weeks.