Devon Energy Lowers 2016 E&P Capital Spending Outlook By 75%; Adjusts Dividend

(RTTNews) - Devon Energy Corp. (DVN) announced, in 2016, the company's E&P capital investment is estimated to range from $900 million to $1.1 billion, a decrease of 75 percent from 2015. Devon's E&P investment in 2016 will be focused entirely on its core asset portfolio. This level of investment is expected to maintain relatively flat oil production from the company's core assets compared to the full-year 2015. Top-line production from core assets is expected to decline by 6 percent driven by lower gas volumes.

"With the challenging industry conditions, Devon continues to be highly focused on delivering meaningful cost reductions and efficiency gains across our asset portfolio," said Dave Hager, president and CEO.

Devon's workforce reduction program, which includes G&A as well as operating personnel, will decrease employee count by approximately 20 percent in the first quarter of 2016. These workforce and non-personnel related cost reductions are expected to decrease G&A costs by approximately $400 million to $500 million on an annual basis, exclusive of reorganization charges.

Devon also announced its board has declared a quarterly cash dividend of $0.06 per share on the company's common stock for the second quarter of 2016. This compares to the previous quarterly dividend of $0.24 per share. The adjusted dividend will improve Devon's cash flow by approximately $320 million annually.

Devon's reported oil production averaged 278,000 barrels per day in the fourth quarter, a 16 percent increase compared to the fourth quarter of 2014. Oil production from core assets increased 26 percent year over year, driven by Delaware Basin and Rockies growth in the U.S. and the Jackfish 3 project in Canada. Overall, net production from Devon's core assets averaged 571,000 oil-equivalent barrels per day during the fourth quarter, representing a 7 percent increase compared to the fourth quarter of 2014.

Devon reported core earnings of $319 million, or $0.77 per share, for the fourth quarter of 2015. On a reported basis, due to non-cash, asset-impairment charges, the company had a net loss of $4.5 billion, or $11.12 per share, for the fourth quarter of 2015.On average, 33 analysts polled by Thomson Reuters expected the company to report profit per share of $0.71 for the quarter. Analysts' estimates typically exclude special items.

Revenue from oil, natural gas and natural gas liquids sales totaled $1.1 billion in the fourth quarter of 2015, with oil revenue accounting for nearly 70 percent of the total. Total operating revenues decreased to $2.89 billion from $6.00 billion. Analysts expected revenue of $3.63 billion, for the quarter.