Devon Energy Corporation Valuation Report, June 2010 - Strategic and Operational Analysis

March 22, 2011 - PRLog -- Devon Energy Corporation Valuation Report, June 2010 - Strategic and Operational Analysis

Making Way to Emerge as Leading E&P Operator Emphasizing in Unconventional Operations

Extending Barnett Expertise to Other Shale Operations:

Devon Energy Corp (Devon) derived more than 31% of its total 2009 production from the Barnett shale. Operations in Barnett are so important to the company that its share of the total production will remain at a minimum of 27% until 2015. Its operational expertise of this shale will be useful for operations in the newly started Haynesville, Cana and Horn River shales. The company estimates a net risked potential of more than 3,700 MMboe in the Haynesville, Woodford and Horn River projects. Most of these operations could be just repeatable plays when Devon books their reserves and starts full fledged development.          
 
Repositioning of Devon to Create a Fresh Entity with Greater Efficiency:

Devon announced its intention to sell assets in the Gulf of Mexico and international locations in Q4 2009. We think that this is a positive thing for the company. Its strategy for repositioning the company could enhance its focus on its North American onshore operations. In addition, this process will create a fresh entity from Devon, which has been tactically performing a series of asset divestments since 2007. We expect this to improve the company’s operational metrics such as operating costs per barrel and F&D costs per barrel, which have been dragged down by its international operations. This divestment, coupled with improved operational metrics, will positively drive the company’s growth and bring its bottom line results back into positive territory. Nevertheless, it should be noted that the recent economic slowdown forced Devon to perform this asset divestment as it had already recorded two straight yearly losses along with forthcoming debt repayments.

Asset Sale Proceeds to Yield Multiple Benefits for Devon:

Devon received after-tax proceeds of $6.5–$6.9 billion as a result of these sales and expects to receive another $1.0–$1.4 billion after-tax from the sale of the remaining assets by the end of 2010. It intends to spend these proceeds in on its E&P plans, buying back its shares and reducing its debt. This plan is directed mainly towards the improvement of its existing operations and providing a financial cushion for the future, however the company may also make a few acquisitions in its key operating regions. This would strengthen its position further as a leading E&P operator.

Kirby Venture Seen as the First Step in Concentrating North America Operations:

Devon has bought a 50% interest in Kirby oil sands with BP Plc in Q1 2010. We view this move as the company’s first step towards an increased focus on its North American operations. The company has made its presence in heavy oil felt through its recent second and third phase disclosures of Jackfish. We expect more of such partnerships if Devon continues its strategy of concentrating on its North American operations.  For more details, please vist http://www.reportreserve.com/reportdet.php?company=Global...

# # #

ReportReserve is an online research report distribution company. The company lists several market research reports published by several research houses across the globe.