Devon reduces capital budget by 20% in 2015

Feb. 17, 2015
Devon Energy Corp., Oklahoma City, plans an exploration and production capital budget of $4.1-4.4 billion in 2015, representing a 20% decline compared with 2014.

Devon Energy Corp., Oklahoma City, plans an exploration and production capital budget of $4.1-4.4 billion in 2015, representing a 20% decline compared with 2014.

The reduced budget follows full-year earnings of $1.6 billion in 2014. Fourth-quarter core earnings totaled $343 million.

However, even with reduced E&P capital investment for the year, the company’s production growth outlook remains unchanged.

With significant improvements in completion design and a capital program focused on development drilling, Devon expects to deliver oil production growth of 20-25% year-over-year on a retained property basis, driven by balanced oil growth in both the US and Canada.

Fourth-quarter production up

Total production from Devon’s retained assets averaged 664,000 boe/d during the fourth quarter, exceeding the company’s guidance range by 9,000 boe/d and representing a 20% increase compared with fourth-quarter 2013.

Devon also delivered record oil production of 239,000 b/d in the fourth quarter, exceeding the top end of the company’s guidance range and representing a 48% increase compared with fourth-quarter 2013. The most significant growth came from the company’s US operations, where oil production increased 82% for the quarter year-over-year.

The strong growth in US oil production during the quarter was largely attributable to well results from the company’s Eagle Ford assets. Net production in the Eagle Ford averaged 98,000 boe/d in the fourth quarter, a 100% increase compared with Devon’s first month of ownership in March 2014.

The company in February 2014 completed its $6-billion purchase of 82,000 net acres in the Eagle Ford from GeoSouthern Energy (OGJ Online, Feb. 28, 2014).

Devon also reported strong production growth in the Permian basin, facilitated by positive results from the company’s Delaware basin assets. Total Permian production increased to 98,000 boe/d in the fourth quarter, a 14% increase compared with a year ago.

In Canada, net oil production from the company’s heavy-oil projects increased to a record high of 93,000 b/d in the fourth quarter.

The result exceeded the top end of Devon’s guidance range by 5,000 b/d and represents a 15% increase in production compared with fourth-quarter 2013, driven by the continued ramp-up of the company’s Jackfish 3 heavy-oil facility, which ended the year averaging 13,000 b/d.