Devon has loss, output falls short
(Reuters) - Devon Energy Corp (DVN.N) reported a third-quarter loss as it wrote down the value of some assets due to low natural gas prices and the company's output disappointed, prompting a 7 percent drop in the stock.
The company came up short after it produced less liquids-rich natural gas and new production from a Canadian oil sands project was also less than expected, it said.
Devon's oil and gas output rose 3 percent from a year ago to 678,000 barrels of oil equivalent per day in the quarter. That was below Robert W. Baird & Co's forecast for 685,000 boe per day.
Burdened by heavy supplies, U.S. natural gas prices fell about 30 percent from a year earlier in the third quarter to an average of $2.83 per million British thermal units.
Those low prices caused a number of exploration and production companies to write down the value of some assets. In the third quarter, Devon took a $1.1 billion writedown.
Low natural gas prices sent many exploration and production companies in search of natural gas liquids such as butane, propane and ethane, but excess supplies of these liquids have also put pressure on prices. The price of ethane has been hit particularly hard, falling more than 60 percent this year.
Devon will continue its search for pricier crude oil next year, but plans to spend "significantly" less as purchases of oil and gas acreage slow, said John Richels, Devon chief executive, on a call with analysts.
For the first nine months, Devon spent $5.3 billion on exploration and production and expects to spend about $1.7 billion in the fourth quarter, the company said.
The Oklahoma City, Oklahoma company reported a third-quarter loss of $719 million, or $1.80 per share, compared with a profit of $1 billion, or $2.51 per share, a year earlier.
Excluding one-time items, the company earned 88 cents per share. Analysts on average expected 69 cents, according to Thomson Reuters I/B/E/S.
A good part of Devon's earnings beat was due to a tax benefit, analysts at Houston-based energy investment bank Simmons & Co said in a note to clients.
Revenue fell 47 percent to $1.87 billion as average realized prices for natural gas fell 27 percent, and that for natural gas liquids fell 37 percent. Analysts expected $2.27 billion.
Shares of Devon were down $4.16 to $55.46 in afternoon New York Stock Exchange trading.
(Reporting by Thyagaraju Adinarayan in Bangalore and Anna Driver in Houston; Editing by Roshni Menon and John Wallace)
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