* Oil output in Permian Basin up 31 pct in Q4
* Reports Q4 loss on asset impairment charges
* Adjusted profit beats analysts' estimates
* Sees 2013 E&P capex down 25 percent
* Shares fall 5 pct
Feb 20 Devon Energy Corp said it expects
output to stay flat this year as it spends less on exploration
and production, and is relooking at the prospect of forming a
master limited partnership for its pipelines and processing
The oil and gas producer had first considered forming a
publicly-traded MLP in 2007 for its gas pipeline and processing
operations in Texas, Oklahoma, Wyoming and Montana, but had
called off the plan due to market conditions.
MLPs have found favor with owners of cash-generating
pipeline and other energy infrastructure in recent years because
they pay virtually no corporate taxes.
"We will leave no stone unturned in looking for true
value-creation opportunities. One potential opportunity that
appears to have promise is the creation of a midstream master
limited partnership," Devon Chief Executive John Richels said on
a conference call with analysts.
Shares of the company were down nearly 5 percent in
afternoon trading after the company provided a dismal outlook
North American energy companies are focusing on drilling for
more valuable oil as gas prices remain weak due to heavy
supplies, forcing Devon, Encana Corp and EOG Resources
Inc to write down the value of their properties.
Devon intends to spend $4.9 billion to $5.3 billion on
exploration and production this year as it looks to cut down gas
Total capital budget, including spending on pipelines and
processing facilities, will be $6.4 billion to $7 billion, Devon
Larger rival Anadarko Petroleum Corp expects capital
spending to change little at $7.2 billion to $7.6 billion in
2013, with production growing 5 percent.
"We will aggressively invest in oil-driven projects while
letting gas volumes decline," Devon's Richels said. "We simply
refuse to compromise value by funding projects with low rates of
Oklahoma City-based Devon's oil output rose about 20 percent
last year, helping production reach 250 million barrels of oil
equivalent (boe) - its highest annual production ever despite a
marginal fall in natural gas output.
In the course of shifting towards oil, Devon expects its
total production to dip to 670,000 boe per day in the current
quarter ending March 31, from 678,000 boe per day reported in
the fourth quarter.
Devon took an impairment charge of $896 million in the
fourth quarter, resulting in a net loss of $357 million, or 89
cents per share. The company had recorded an impairment charge
of $1.1 billion in the third quarter.
Excluding the charge and some other items, Devon earned 78
cents per share in the September-December quarter.
Analysts on average expected earnings of 75 cents, according
to Thomson Reuters I/B/E/S.
Devon's revenue fell marginally to $2.6 billion, still above
analysts' estimates of $2.4 billion.
Natural gas prices averaged $3.54 per million British
thermal unit in the fourth quarter, well below the $14 high set
Devon drills for oil, gas and natural gas liquids on land
from the Canadian Arctic to the Gulf Coast of the United States.
Devon's shares fell 5 percent to a two-week low of $57.70 on
the New York Stock Exchange. Shares of Anadarko were down 3
percent at $81.74.