Despite its name, independent oil and gas producer Devon Energy puts its energy into oil and gas fields far from England's southwestern coast. It focuses on exploration and production assets in Oklahoma, Texas, Wyoming, and western Canada. In 2012 Devon Energy reported proved reserves of about 3 billion barrels of oil equivalent and more than 14,000 net acres of assets. Devon Energy produces about 2.6 billion cu. ft. of natural gas a day (4% of all the gas consumed in North America). It also has midstream and marketing assets. The company is the largest producer and lease holder in the Barnett Shale (Texas) and is looking to replicate its success there in other unconventional plays.
In 2012 the company's US operations included the Barnett Shale, Cana-Woodford Shale, Permian Basin, Gulf Coast/East Texas, Rocky Mountains, Granite Wash, and Mississippian. Its Canadian assets included Oil Sands and the Lloydminster heavy oil operations.
Sales and Marketing
Devon Energy sells its production under both long-term and short-term agreements at prices negotiated with third parties. In Canada, the national government and the governments of Alberta, British Columbia, and Saskatchewan regulate the volume of natural gas that may be shipped from those provinces.
Devon Energy's revenues dropped by 17% in 2012 due to a 17% cut in prices (especially natural gas prices as the result of North American regional index price fluctuations). NGL, bitumen. and oil sales also declined as the result of wider bitumen differentials to the NYMEX West Texas Intermediate index price and lower NGL prices at the Mont Belvieu, Texas hub.
The company reported a $206 million net loss in 2012, a drop of 104% over 2011 due to higher operating expenses and asset impairment charges reflecting reduced proved reserve values.
Once active in major oil patches worldwide such as Azerbaijan, Brazil, and China, in the late-2000s the company decided to focus on safer and increasingly productive unconventional onshore exploration opportunities (shales and oil sands) in North America. As a result, Devon Energy has sold all of its international properties for about $10 billion. In 2012 it sold its last international offshore asset, in Angola, for about $71 million.
It pursuing a series of measures to increase capital and reduce debt.
To raise cash, in 2014 Devon Energy agreed to sell some conventional liquids-rich gas assets in Western Canada, as well as six gas plants and related infrastructure, to Canadian Natural Resources for C$3.1 billion.
Seeking public capital to defray costs, in 2013 company announced plans to form a publicly traded midstream master limited partnership to own a minority interest in Devon Energy’s midstream business in the US (natural gas gathering and processing assets in Oklahoma, Texas, and Wyoming). In another cost savings move, in 2012 and 2013 the company closed its office in Houston and consolidated its US personnel into a single operations group at its corporate headquarters in Oklahoma City.
Boosting its financial resources, in 2012 Devon Energy secured a commitment from Sinopec International Petroleum Exploration & Production for the Chinese company to invest $2.2 billion in exchange for one-third of Devon's interest in five new joint venture plays in the Tuscaloosa Marine Shale, Niobrara, Mississippian, Ohio Utica Shale, and the Michigan Basin.
That year it also closed a similar $1.4 billion joint venture deal with Sumitomo Corp. to develop 650,000 net acres in the Cline Shale and the Midland-Wolfcamp Shale in West Texas.
Growing its US shale portfolio, in 2013 the company agreed to acquire GeoSouthern Energy’s assets in the Eagle Ford oil play (53,000 barrels of oil equivalent per day and 82,000 net acres) for $6 billion.