Devon ended the second quarter with $1.7 billion cash on hand. The company posted narrow quarterly losses as it tackles the worst downturn in decades. State Street Corp now owns 25,649,107 shares of the energy company’s stock worth $703,812,000 after buying an additional 6,194,903 shares in the last quarter.
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The cost cuts highlight the stark choices facing Devon and the rest of the oil and natural gas industry, with commodity prices mired in a steep slump.
The second-quarter loss translates to a loss of $3.04 a share, improved from a loss of $2.8 billion, or $6.94 a share, in the second quarter of 2015. Four analysts surveyed by Zacks expected $2.29 billion. Rhumbline Advisers owned 0.15% of SM Energy worth $1,978,000 at the end of the most recent quarter. The company’s revenue for the quarter was down 26.7% on a year-over-year basis.
In the quarter under review, sales volumes averaged 427 thousand barrels of oil equivalent per day (MBoe/d), reflecting a 43% year-over-year surge. Of this amount, 545,000 Boe per day was attributable to the Company’s core assets, where investment will be directed going forward. “Production from our USA resource plays once again exceeded guidance expectations and we were able to deliver this outperformance with dramatically lower costs”. Within the Company’s US resource plays, production averaged 419,000 Boe per day. Light-oil production from US resource plays, which is Devon’s highest margin product, averaged 110,000 barrels per day. NC bought a new position in Devon Energy Corp. during the second quarter worth approximately $201,000.
In seeking higher cost savings, however, the group also slashed the sum of dividends paid on common stock to US$33 million, compared to US$98 million paid in dividends for the second quarter of 2015.
Devon executives increased the company’s full-year production guidance to a range of 590,000 to 623,000 equivalent barrels per day. The most vital change in the company’s previous guidance is to retain select assets in the Midland Basin that were previously labelled as non-core assets for the company. The most significant cost saving came from the lease operating expense (LOE), which is the company’s largest segment that generates substantial portion of the overall expenses.
Lease operating expenses declined by 26%, driven by improved power and water-handling infrastructure, declining labor expense and lower supply-chain costs. The energy company reported ($0.44) EPS for the quarter, topping the Zacks’ consensus estimate of ($0.71) by $0.27.
The company remained successful in keeping its cost intact throughout the quarter.
Capital expenditure in the quarter was $262 million, down almost 70% from the year-ago quarter. The increased capital spending will be made in the Delaware Basin and STACK, which has the potential to add as much as seven drilling rigs in the second half of 2016. The additional capital investment is expected to deliver incremental production in early 2017.
On the flip side, Devon Energy’s consolidated debt stood at $12.7 billion for the second quarter. Excluding non-recourse obligations associated with EnLink and after adjusting for asset divestitures, the company’s net debt tumbled to $4.7 billion.
Revenues for the second quarter clocked in at $2.4 billion, up from $2.1 billion in the preceding quarter and down from $3.3 billion in the corresponding period past year.
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In late June, the company agreed to sell its 50% stake in Canada’s Access Pipeline for $1.1 billion. This transaction is expected to be closed in the third quarter of 2016. The Company is engaged in the acquisition, exploration, development and production of crude oil and condensate, natural gas and natural gas liquids (NGLs) in onshore North America.
