Devon Eenrgy 2Q income more than doubles on higher fuel prices

Devon Energy 2Q earns more than double

OKLAHOMA CITY — Devon Energy Corp. has used proceeds from the divestiture of its Gulf of Mexico and overseas assets to buy back shares, reduce its debt and invest in a Canadian oil sands project, CEO John Richels said Wednesday.

Speaking during a conference call with analysts following the release of Devon’s second-quarter earnings, Richels said the Oklahoma City-based independent oil and natural gas producer has received aggregate pre-tax proceeds of about $4.6 billion so far from the sale of its assets in the Gulf and the South China Sea.

Richels said another $5.3 billion of signed transactions for Devon assets in Azerbaijan, Brazil and China have yet to close, but that the company has completed its move out of the Gulf. Devon started that move last year, long before the April 20 explosion of a rig operated by BP LLC and owned by Transocean Ltd. that killed 11 men and left a blown-out well releasing millions of gallons of oil into the Gulf.

In announcing its plans to sell its offshore and foreign assets, Devon said it planned to focus on its onshore North American projects.

After taxes, Richels said Devon should net about $8 billion from the sales, above the company’s original projection of $4.5 billion to $7.5 billion.

Richels said Devon has used proceeds from the sales to reduce its debt balances by $1.7 billion. It also spent $495 million to repurchase 7.6 million shares of its common stock and directed $500 million to acquire a 50 percent interest from BP LLC in the Kirby oil sands leases in Alberta. Those leases are adjacent to Devon’s ongoing Jackfish project.

When the pending asset sales are closed, Richels said Devon will have sold about 10 percent of its proved reserves and production with after-tax proceeds exceeding 20 percent of the company’s enterprise value.

“This puts us in an extremely competitive position for the future, regardless of the macro environment,” Richels said.

Devon reported Wednesday that its net income more than doubled in the second quarter on higher oil and natural gas prices, reporting earnings of $706 million, or $1.58 per share, in the quarter ended June 30. That compares with earnings of $314 million, or 70 cents per share, in the same period last year. Revenue increased 23 percent to $2.23 billion.

Analysts had expected earnings of $1.42 per share on revenue of $2.38 billion.

Devon said oil prices jumped 23 percent year-over-year to an average of $62.35 per barrel. Natural gas prices increased 24 percent to $3.62 per thousand cubic feet.

Devon’s stock stood at $65.54 during midday trading, up $1.20.