Devon Energy posts $1.3 billion loss

Wed May 1, 2013 1:24pm EDT

(Reuters) - Devon Energy Corp (DVN.N) on Wednesday reported a large quarterly loss as the U.S. oil and gas company wrote down the value of some assets, but production was better-than expected, a factor that helped push shares higher.

Devon and other energy companies have made big investments in drilling for oil in U.S. shale formations following a collapse in natural gas prices. Devon's oil output in the quarter rose to a record for its North American operations, a sign that the company's efforts is taking hold.

"On the positive side, they continue to increase their liquids production because they don't make money on gas," said Fadel Gheit, analyst at Oppenheimer & Co. "The only way this stock is going to get unstuck, is if they grow their oil production.

Shares of Devon climbed 2 percent on Wednesday but have risen only 5 percent so far this year, underperforming an 11 percent gain in the Standard & Poor's 500 index .SPX.

As part of its efforts to unlock value in the shares, Devon said it is evaluating where to put some of its midstream assets in a tax-advantaged master limited partnership (MLP). A final decision will be made by the end of this quarter, John Richels, Devon's chief executive officer told analysts on a conference call.

The company also said it plans to immediately repatriate about $2 billion dollars of cash held in foreign subsidiaries. Those proceeds will first be used to pay down short-term borrowings, Devon told analysts.

Devon's loss in the first quarter was $1.3 billion, or $3.34 per share, compared with a year-earlier profit of $393 million, or 97 cents per share.

Excluding one-time items, Devon had a profit of 66 cents per share. Analysts on average had expected earnings of 55 cents, according to Thomson Reuters I/B/E/S.

The Oklahoma City company's oil and natural gas output fell 1 percent to 687,000 barrels of oil equivalent per day. Crude oil production rose 14 percent to 162,000 barrels per day, better than a number of analysts' s projections.

For example, analysts at Houston based energy investment bank Simmons & Co had expected oil output of 158,000 barrels per day.

The average price Devon realized for its crude oil fell 14 percent in the quarter, while natural gas liquids prices declined 20 percent, hit by oversupply.

Devon's shares were up 95 cents at $56.01 in midday trading.

(Reporting by Anna Driver; Editing by Gerald E. McCormick, Lisa Von Ahn and Marguerita Choy)

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