Devon Energy Corporation : Devon : Open To Joint Ventures To Develop Oil, Gas Acreage
05/02/2012| 12:27pm US/Eastern
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Devon Energy Corp. (DVN) is open to inviting partners into its oil and gas operations in order to share the risk of developing them, Chief Executive John Richels said Wednesday.
"We could easily pursue these opportunities on our own," but joint ventures can "accelerate activity, improve capital efficiency and mitigate risk," Richels said in an earnings conference call.
In the second quarter, Devon expects to produce between 685,000 and 695,000 barrels of oil equivalent per day on average, said Jeff Agosta, Devon's Chief Financial Officer, who added that production is likely to grow in the second half of the year as growth in oil and natural gas liquids outpaces decline in natural gas production. The company is on track to having 40% of its total output be in the form of hydrocarbon liquids by year end, Agosta said.
Devon's earnings came below expectations in the first quarter mainly because Canadian crude traded more cheaply than expected as refiners simultaneously performed plant turnarounds. The differential between Canadian crude and West Texas Intermediate crude, however, is quickly narrowing, Agosta said, having come down to $26 per barrel in May from $48 per barrel in March.
Natural gas liquids are also seeing price weakness versus WTI crude due to turnarounds in petrochemical plants in the U.S. Gulf Coast. Devon expects natural gas realizations in the second quarter to average 32% to 38% of WTI prices, Agosta said. In the second half of the year, NGLs are expected to trade at 34% to 40% of WTI prices, he added.
Marketing and midstream profits in the next quarter are expected to come $50 million below the previous guidance, Agosta said.
-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214;angel.gonzalez@dowjones.com
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