Devon Energy Earns $393 Million in First-Quarter 2012; Oil Production Increases 26 Percent
 New 50 Story Devon Energy Tower, Oklahoma City |
SEE ALSO: Big Oil Benefits From Divide and Conquer
OKLAHOMA CITY May 2, 2012; Devon Energy Corporation today reported net earnings of $393 million for the quarter ended March 31, 2012, or $0.97 per common share ($0.97 per diluted share). This compares with first-quarter 2011 net earnings of $416 million, or $0.97 per common share ($0.97 per diluted share).
Devon’s first-quarter 2012 financial results were impacted by certain items securities analysts typically exclude from their published estimates. Adjusting for these items, the company earned $427 million or $1.05 per diluted share in the first quarter of 2012. The adjusting items are discussed in more detail later in this news release.
Devon’s first-quarter 2012 earnings were significantly affected by unusually wide Canadian oil price differentials. Following the end of the quarter, Canadian oil differentials have begun to normalize.
Strong Oil Growth Drives Record Production
Total production of oil, natural gas and natural gas liquids averaged 694,000 oil-equivalent barrels (Boe) per day in the first quarter of 2012. This is the highest daily production rate in history from the company’s North American onshore properties and represents a 10 percent increase compared to the year-ago quarter. Record production from the company’s cornerstone development properties, including the Permian Basin, Jackfish, Cana-Woodford and Barnett Shale, drove the strong first quarter performance.
Devon’s first quarter liquids production increased for the sixth consecutive quarter to 256,000 Boe per day. This growth was led by a 26 percent year-over-year increase in oil production.
Sales of oil, natural gas and natural gas liquids, before the impact of hedges, increased 3 percent to $1.9 billion in the first quarter of 2012. Cash settlements related to oil and natural gas hedges increased revenues by $158 million or $2.50 per Boe in the first-quarter 2012.
Marketing and midstream operating profit was $112 million in the first quarter of 2012. This was a 7 percent decrease compared with the first-quarter 2011. The decrease was attributable to lower natural gas and natural gas liquids prices.
Permian Basin Activity and Production Growth Lead Operating Highlights
- Devon continued to aggressively ramp-up activity in the Permian Basin in the first quarter. Since year-end the company has added five operated rigs and now has 21 rigs running in the basin.
- Permian Basin oil production increased 32 percent over the first-quarter 2011. Liquids production accounted for 76 percent of the 56,000 Boe per day produced in the Permian Basin during the first quarter.
- Additionally, Devon recently enhanced its leasehold position in the Permian Basin by assembling a 500,000 net acre position in the Cline Shale light-oil play. The company is currently drilling its first horizontal well in the Cline and expects to drill 15 wells in 2012.
- Also in the Permian, Devon completed 16 operated Bone Spring wells in the first quarter. Initial daily production averaged 580 Boe per day per well.
- Net production from Devon’s Jackfish 1 and Jackfish 2 oil sands projects in Canada averaged a record 46,000 barrels per day in the first quarter, representing a 55 percent increase over the year-ago quarter. The company’s Jackfish 2 production is now at 21,000 barrels per day and will continue to ramp-up throughout 2012.
- Construction of Devon’s third Jackfish oil sands project is now approximately 30 percent complete. Jackfish 3 is expected to produce 35,000 barrels per day before royalties for more than 20 years. Plant startup is targeted for late 2014.
- The company’s Cana-Woodford Shale production averaged a record 271 million cubic feet of natural gas equivalent per day in the first quarter of 2012. Liquids production averaged 13,000 barrels per day, an 80 percent year-over-year increase.
- Net liquids production from the Barnett Shale increased more than 20 percent compared to the year-ago quarter to 52,500 barrels per day, accounting for 23 percent of total Barnett production. In aggregate, net production reached a record 1.37 billion cubic feet of natural gas equivalent per day in the first quarter.
- Devon brought seven operated Granite Wash wells online in the first quarter. Initial production from these wells averaged 1,650 Boe per day. The company has an average working interest of 73 percent in these wells.
- In the first quarter, the company continued to capture acreage in new oil-focused opportunities. Devon has now contracted for or leased 250,000 net acres in an undisclosed position. The company is targeting 500,000 net acres in this play.
Cost Containment Efforts Partially Offset Rising Costs
First-quarter 2012 expenses increased compared to the year-ago quarter due to rising oilfield service and supply costs. Compared to the first quarter of 2011, the company’s total pre-tax cash costs increased 5 percent to $13.80 per Boe. The company’s successful cost management efforts and efficient operations partially offset the full impact of industry inflation and a shift towards oil projects. In general, oil projects are more expensive to develop and have higher operating costs than gas production.
Lease operating expenses (LOE) were $514 million in the first quarter. On a unit of production basis, LOE increased 9 percent compared with the first-quarter 2011 and was 2 percent higher than the fourth-quarter 2011. The increase in LOE reflects rising industry costs coupled with increased activity levels in oil-focused basins.
Taxes other than income decreased 6 percent to $102 million in the first quarter of 2012. The year-over-year decrease was driven by lower ad valorem and production taxes.
Interest expense for the first quarter totaled $87 million, a $6 million increase over the first quarter of 2011. Higher average debt balances drove the increase.
First-quarter general and administrative expenses were $168 million, or $2.67 per Boe. This compares with $2.29 per Boe in the first quarter of 2011. Higher personnel costs were the largest contributor to the increase. Devon has increased the size of its workforce to support its expanding exploration and development activity.
Compared with the first-quarter 2011, depreciation, depletion and amortization expense (DD&A) increased 21 percent to $10.78 per Boe. Inflation in industry costs and increased investment in oil-focused projects drove DD&A expense higher.
Balance Sheet and Liquidity Remain Strong
In the first quarter of 2012, Devon generated cash flow before balance sheet changes of $1.4 billion. On a per share basis, this represents a 3 percent increase in cash flow compared to the first-quarter 2011. At March 31, 2012, the company’s cash and short-term investments totaled $7.1 billion, and its net debt to adjusted capitalization was 15 percent.
Devon Adds Oil and Gas Hedges in 2012 and 2013
The strong oil price environment has provided Devon the opportunity to add attractive oil hedges for 2013. The company has entered into various swap and collar contracts to hedge 72,000 barrels per day of oil production. Of this total, 31,000 barrels per day are swapped at a weighted average price of $104 per barrel. The remaining 41,000 barrels per day utilize costless collars with a weighted average ceiling of $117 per barrel and a floor of $91 per barrel. For the remainder of 2012, the company has 109,000 barrels per day of oil production hedged, or roughly 70 percent of forecasted oil production, at a weighted average floor price of $95 per barrel.
The company has also recently bolstered its natural gas hedging position. For the remaining three quarters of 2012, Devon has approximately 1 billion cubic feet per day protected at a weighted average floor price of $4.42 per thousand cubic feet. This represents about 40 percent of Devon’s 2012 forecasted gas production.
Non-GAAP Reconciliations
Pursuant to regulatory disclosure requirements, Devon is required to reconcile non-GAAP financial measures to the related GAAP information (GAAP refers to generally accepted accounting principles). Cash flow before balance sheet changes, net debt and adjusted capitalization are non-GAAP financial measures referenced within this release. Reconciliations of these non-GAAP measures are provided on page 11.
Items Excluded from Published Earnings Estimates
Devon's reported net earnings include items of income and expense that are typically excluded by securities analysts in their published estimates of the company's financial results. The following tables summarize the first-quarter 2012 effects of these items on earnings and cash flow.
| Quarter Ended March 31, 2012 | |||||||||||||||
| Before-Tax | After-Tax | ||||||||||||||
| Net earnings (GAAP) | $ | 393 | |||||||||||||
| Adjustments on asset sales - discontinued operations | 16 | 21 | |||||||||||||
| Oil and gas derivatives | 13 | 8 | |||||||||||||
| Interest rate and other financial instruments | 6 | 5 | |||||||||||||
| Adjusted earnings (Non-GAAP) | $ | 427 | |||||||||||||
| Diluted share count | 405 | ||||||||||||||
| Adjusted diluted earnings per share (Non-GAAP) | $ | 1.05 | |||||||||||||
| Cash flow before balance sheet changes (Non-GAAP) | $ | 1,356 | |||||||||||||
| Adjustments on asset sales - discontinued operations | (7 | ) | |||||||||||||
| Adjusted cash flow before balance sheet changes (Non-GAAP) | $ | 1,349 | |||||||||||||
Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and gas exploration and production. Devon is a leading U.S.-based independent oil and gas producer and is included in the S&P 500 Index. For more information about Devon, please visit our website at www.devonenergy.com.
| DEVON ENERGY CORPORATION | ||||||||||
| FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||
| PRODUCTION (net of royalties) | Quarter Ended | |||||||||
| Excludes discontinued operations | March 31, | |||||||||
| 2012 | 2011 | |||||||||
| Total Period Production | ||||||||||
| Natural Gas (Bcf) | ||||||||||
| United States | 188.5 | 176.8 | ||||||||
| Canada | 50.7 | 51.2 | ||||||||
| Total Natural Gas | 239.2 | 228.0 | ||||||||
| Oil (MMBbls) | ||||||||||
|
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United States | 5.0 | 3.6 | |||||||
|
|
Canada | 7.9 | 6.5 | |||||||
| Total Oil | 12.9 | 10.1 | ||||||||
| Natural Gas Liquids (MMBbls) | ||||||||||
|
|
United States | 9.3 | 7.6 | |||||||
|
|
Canada | 1.0 | 0.9 | |||||||
| Total Natural Gas Liquids | 10.3 | 8.5 | ||||||||
| Oil Equivalent (MMBoe) | ||||||||||
|
|
United States | 45.7 | 40.7 | |||||||
|
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Canada | 17.4 | 15.9 | |||||||
| Total Oil Equivalent | 63.1 | 56.6 | ||||||||
| Average Daily Production | ||||||||||
| Natural Gas (MMcf) | ||||||||||
| U.S. | 2,071.8 | 1,964.1 | ||||||||
| Canada | 556.4 | 568.9 | ||||||||
| Total Natural Gas | 2,628.2 | 2,533.0 | ||||||||
| Oil (MBbls) | ||||||||||
| United States | 54.7 | 40.7 | ||||||||
| Canada | 87.3 | 71.9 | ||||||||
| Total Oil | 142.0 | 112.6 | ||||||||
| Natural Gas Liquids (MBbls) | ||||||||||
| United States | 102.1 | 84.1 | ||||||||
| Canada | 11.4 | 9.9 | ||||||||
| Total Natural Gas Liquids | 113.5 | 94.0 | ||||||||
| Oil Equivalent (MBoe) | ||||||||||
| United States | 502.2 | 452.2 | ||||||||
| Canada | 191.4 | 176.6 | ||||||||
| Total Oil Equivalent | 693.6 | 628.8 | ||||||||
| DEVON ENERGY CORPORATION | ||||||||||||
| FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||
| BENCHMARK PRICES | Quarter Ended | |||||||||||
| (average prices) | March 31, | |||||||||||
| 2012 | 2011 | |||||||||||
| Natural Gas ($/Mcf) – Henry Hub | $ | 2.72 | $ | 4.11 | ||||||||
| Oil ($/Bbl) – West Texas Intermediate (Cushing) | $ | 102.87 | $ | 94.11 | ||||||||
| Quarter Ended March 31, 2012 | Oil | Gas | NGLs | Total | ||||||||||||||||||
| (Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||||||||
| United States | $ | 99.35 | $ | 2.28 | $ | 33.37 | $ | 27.03 | ||||||||||||||
| Canada | $ | 62.29 | $ | 2.54 | $ | 54.18 | $ | 39.00 | ||||||||||||||
| Realized price without hedges | $ | 76.58 | $ | 2.34 | $ | 35.46 | $ | 30.33 | ||||||||||||||
| Cash settlements | $ | (0.44 | ) | $ | 0.68 | $ | 0.03 | $ | 2.50 | |||||||||||||
| Realized price, including cash settlements | $ | 76.14 | $ | 3.02 | $ | 35.49 | $ | 32.83 | ||||||||||||||
| Quarter Ended March 31, 2011 | Oil | Gas | NGLs | Total | ||||||||||||||||||
| (Per Bbl) | (Per Mcf) | (Per Bbl) | (Per Boe) | |||||||||||||||||||
| United States | $ | 88.73 | $ | 3.50 | $ | 35.41 | $ | 29.77 | ||||||||||||||
| Canada | $ | 60.86 | $ | 4.03 | $ | 54.18 | $ | 40.78 | ||||||||||||||
| Realized price without hedges | $ | 70.95 | $ | 3.62 | $ | 37.39 | $ | 32.86 | ||||||||||||||
| Cash settlements | $ | (0.48 | ) | $ | 0.39 | $ | 0.06 | $ | 1.52 | |||||||||||||
| Realized price, including cash settlements | $ | 70.47 | $ | 4.01 | $ | 37.45 | $ | 34.38 | ||||||||||||||
| CAPITAL EXPENDITURES (in millions) | |||||||||||||||
| Quarter Ended March 31, 2012 | |||||||||||||||
| United States | Canada | Total | |||||||||||||
| Capital Expenditures | |||||||||||||||
| Exploration | $ | 210 | 145 | $ | 355 | ||||||||||
| Development | 939 | 318 | 1,257 | ||||||||||||
| Exploration and development capital | $ | 1,149 | 463 | $ | 1,612 | ||||||||||
| Capitalized G&A | 90 | ||||||||||||||
| Capitalized interest | 10 | ||||||||||||||
| Midstream capital | 111 | ||||||||||||||
| Other capital | 124 | ||||||||||||||
| Total Continuing Operations | $ | 1,947 | |||||||||||||
| Discontinued operations | 12 | ||||||||||||||
| Total Operations | $ | 1,959 | |||||||||||||
| DEVON ENERGY CORPORATION | |||||||||||||
| FINANCIAL AND OPERATIONAL INFORMATION | |||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | Quarter Ended | ||||||||||||
| (in millions, except per share amounts) | March 31, | ||||||||||||
| 2012 | 2011 | ||||||||||||
| Revenues | |||||||||||||
| Oil, gas, and NGL sales | $ | 1,915 | $ | 1,860 | |||||||||
| Oil, gas, and NGL derivatives | 145 | (168 | ) | ||||||||||
| Marketing and midstream revenues | 437 | 455 | |||||||||||
| Total revenues | 2,497 | 2,147 | |||||||||||
| Expenses and other, net | |||||||||||||
| Lease operating expenses | 514 | 424 | |||||||||||
| Marketing and midstream operating costs and expenses | 325 | 333 | |||||||||||
| Depreciation, depletion and amortization | 680 | 506 | |||||||||||
| General and administrative expenses | 168 | 130 | |||||||||||
| Taxes other than income taxes | 102 | 108 | |||||||||||
| Interest expense | 87 | 81 | |||||||||||
| Restructuring costs | - | (5 | ) | ||||||||||
| Other, net | 10 | (10 | ) | ||||||||||
| Total expenses and other, net | 1,886 | 1,567 | |||||||||||
| Earnings from continuing operations before income taxes | 611 | 580 | |||||||||||
| Current income tax expense (benefit) | 18 | (89 | ) | ||||||||||
| Deferred income tax expense | 179 | 280 | |||||||||||
| Earnings from continuing operations | 414 | 389 | |||||||||||
| Earnings (loss) from discontinued operations, net of income tax expense | (21 | ) | 27 | ||||||||||
| Net earnings | $ | 393 | $ | 416 | |||||||||
| Basic net earnings per share | |||||||||||||
| Basic earnings from continuing operations per share | $ | 1.03 | $ | 0.91 | |||||||||
| Basic earnings (loss) from discontinued operations per share | (0.06 | ) | 0.06 | ||||||||||
| Basic net earnings per share | $ | 0.97 | $ | 0.97 | |||||||||
| Diluted net earnings per share | |||||||||||||
| Diluted earnings from continuing operations per share | $ | 1.03 | $ | 0.91 | |||||||||
| Diluted earnings (loss) from discontinued operations per share | (0.06 | ) | 0.06 | ||||||||||
| Diluted net earnings per share | $ | 0.97 | $ | 0.97 | |||||||||
| Weighted average common shares outstanding | |||||||||||||
| Basic | 404 | 428 | |||||||||||
| Diluted | 405 | 430 | |||||||||||
|
DEVON ENERGY CORPORATION FINANCIAL AND OPERATIONAL INFORMATION |
|||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| (in millions) | Quarter Ended March 31, | ||||||||||||
| 2012 | 2011 | ||||||||||||
| Cash Flows From Operating Activities | |||||||||||||
| Net earnings | $ | 393 | $ | 416 | |||||||||
| Earnings from discontinued operations, net of tax | 21 | (27 | ) | ||||||||||
| Adjustments to reconcile earnings from continuing operations | |||||||||||||
| to net cash provided by operating activities: | |||||||||||||
| Depreciation, depletion and amortization | 680 | 506 | |||||||||||
| Deferred income tax expense | 179 | 280 | |||||||||||
| Unrealized change in fair value of financial instruments | 22 | 253 | |||||||||||
| Other noncash charges | 54 | 36 | |||||||||||
| Net cash from operating activities before balance sheet changes | 1,349 | 1,464 | |||||||||||
| Net increase in working capital | (321 | ) | (171 | ) | |||||||||
| Increase in long-term other assets | (12 | ) | (4 | ) | |||||||||
| Decrease in long-term other liabilities | (16 | ) | (23 | ) | |||||||||
| Cash from operating activities - continuing operations | 1,000 | 1,266 | |||||||||||
| Cash from operating activities - discontinued operations | 26 | (6 | ) | ||||||||||
| Net cash from operating activities | 1,026 | 1,260 | |||||||||||
| Cash Flows From Investing Activities | |||||||||||||
| Capital expenditures | (2,088 | ) | (1,827 | ) | |||||||||
| Purchases of short-term investments | (827 | ) | (1,636 | ) | |||||||||
| Redemptions of short-term investments | 1,048 | 145 | |||||||||||
| Other | (1 | ) | (4 | ) | |||||||||
| Cash from investing activities - continuing operations | (1,868 | ) | (3,322 | ) | |||||||||
| Cash from investing activities - discontinued operations | 58 | (52 | ) | ||||||||||
| Net cash from investing activities | (1,810 | ) | (3,374 | ) | |||||||||
| Cash Flows From Financing Activities | |||||||||||||
| Net commercial paper borrowings | 357 | 1,197 | |||||||||||
| Credit facility borrowings | 750 | - | |||||||||||
| Proceeds from stock option exercises | 20 | 88 | |||||||||||
| Repurchases of common stock | - | (706 | ) | ||||||||||
| Dividends paid on common stock | (80 | ) | (68 | ) | |||||||||
| Excess tax benefits related to share-based compensation | 1 | 9 | |||||||||||
| Net cash from financing activities | 1,048 | 520 | |||||||||||
| Effect of exchange rate changes on cash | 9 | 20 | |||||||||||
| Net increase (decrease) in cash and cash equivalents | 273 | (1,574 | ) | ||||||||||
| Cash and cash equivalents at beginning of period | 5,555 | 3,290 | |||||||||||
| Cash and cash equivalents at end of period | $ | 5,828 | $ | 1,716 | |||||||||
| DEVON ENERGY CORPORATION | ||||||||||||||
| FINANCIAL AND OPERATIONAL INFORMATION | ||||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (in millions) | March 31, | December 31, | ||||||||||||
| 2012 | 2011 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 5,828 | $ | 5,555 | ||||||||||
| Short-term investments | 1,282 | 1,503 | ||||||||||||
| Accounts receivable | 1,107 | 1,379 | ||||||||||||
| Other current assets | 861 | 868 | ||||||||||||
| Total current assets | 9,078 | 9,305 | ||||||||||||
| Property and equipment, at cost: | ||||||||||||||
| Oil and gas, based on full cost accounting: | ||||||||||||||
| Subject to amortization | 64,272 | 61,696 | ||||||||||||
| Not subject to amortization | 3,896 | 3,982 | ||||||||||||
| Total oil and gas | 68,168 | 65,678 | ||||||||||||
| Other | 5,341 | 5,098 | ||||||||||||
| Total property and equipment, at cost | 73,509 | 70,776 | ||||||||||||
| Less accumulated depreciation, depletion and amortization | (46,948 | ) | (46,002 | ) | ||||||||||
| Property and equipment, net | 26,561 | 24,774 | ||||||||||||
| Goodwill | 6,067 | 6,013 | ||||||||||||
| Other long-term assets | 899 | 1,025 | ||||||||||||
| Total Assets | $ | 42,605 | $ | 41,117 | ||||||||||
| Liabilities and Stockholders' Equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 1,079 | $ | 1,471 | ||||||||||
| Revenues and royalties payable | 513 | 678 | ||||||||||||
| Short-term debt | 4,120 | 3,811 | ||||||||||||
| Other current liabilities | 550 | 778 | ||||||||||||
| Total current liabilities | 6,262 | 6,738 | ||||||||||||
| Long-term debt | 6,719 | 5,969 | ||||||||||||
| Asset retirement obligations | 1,944 | 1,496 | ||||||||||||
| Other long-term liabilities | 752 | 721 | ||||||||||||
| Deferred income taxes | 4,972 | 4,763 | ||||||||||||
| Stockholders' equity: | ||||||||||||||
| Common stock | 40 | 40 | ||||||||||||
| Additional paid-in capital | 3,564 | 3,507 | ||||||||||||
| Retained earnings | 16,621 | 16,308 | ||||||||||||
| Accumulated other comprehensive earnings | 1,731 | 1,575 | ||||||||||||
| Total Stockholders' Equity | 21,956 | 21,430 | ||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 42,605 | $ | 41,117 | ||||||||||
| Common Shares Outstanding | 404 | 404 | ||||||||||||
| DEVON ENERGY CORPORATION | |||||||||
| FINANCIAL AND OPERATIONAL INFORMATION | |||||||||
| COMPANY OPERATED RIGS | Quarter Ended | ||||||||
| March 31, | |||||||||
| 2012 | 2011 | ||||||||
| Number of Company Operated Rigs Running | |||||||||
| United States |
67 |
70 | |||||||
| Canada | 3 | 5 | |||||||
| Total |
70 |
75 | |||||||
| KEY OPERATING STATISTICS BY REGION | |||||||||||||
| Quarter Ended March 31, 2012 | Avg. Production | Operated Rigs at | Gross Wells | ||||||||||
| (MBOED) | March 31, 2012 | Drilled | |||||||||||
| Barnett Shale | 229.1 | 12 | 95 | ||||||||||
| Canadian Oilsands - Jackfish / Pike | 46.1 | 1 | 8 | ||||||||||
| Cana-Woodford Shale | 45.1 | 16 | 44 | ||||||||||
| Granite Wash | 18.6 | 3 | 16 | ||||||||||
| Gulf Coast / East Texas | 65.7 |
6 |
11 | ||||||||||
| Lloydminster | 38.8 | - | 49 | ||||||||||
| Permian Basin | 56.3 | 20 | 63 | ||||||||||
| Rocky Mountains | 62.6 | 4 | 7 | ||||||||||
| Other | 131.3 |
8 |
44 | ||||||||||
| Total | 693.6 |
70 |
337 | ||||||||||
DEVON ENERGY CORPORATION
FINANCIAL AND OPERATIONAL INFORMATION
NON-GAAP FINANCIAL MEASURES
The United States Securities and Exchange Commission has adopted disclosure requirements for public companies such as Devon concerning Non-GAAP financial measures. (GAAP refers to generally accepted accounting principles). The company must reconcile the Non-GAAP financial measure to related GAAP information. Cash flow before balance sheet changes is a Non-GAAP financial measure. Devon believes cash flow before balance sheet changes is relevant because it is a measure of cash available to fund the company’s capital expenditures, dividends and to service its debt. Cash flow before balance sheet changes is also used by certain securities analysts as a measure of Devon’s financial results.
| RECONCILIATION TO GAAP INFORMATION | Quarter Ended | ||||||||||||
| (in millions) | March 31, | ||||||||||||
| 2012 | 2011 | ||||||||||||
| Net Cash Provided By Operating Activities (GAAP) | $ | 1,026 | $ | 1,260 | |||||||||
| Changes in assets and liabilities - continuing operations | 349 | 198 | |||||||||||
| Changes in assets and liabilities - discontinued operations | (19 | ) | 30 | ||||||||||
| Cash flow before balance sheet changes (Non-GAAP) | $ | 1,356 | $ | 1,488 | |||||||||
Devon believes that using net debt for the calculation of “net debt to adjusted capitalization�?? provides a better measure than using debt. Devon defines net debt as debt less cash, cash equivalents and short-term investments. Devon believes that netting these sources of cash against debt provides a clearer picture of the future demands on cash to repay debt.
| RECONCILIATION TO GAAP INFORMATION | |||||||||||
| (in millions) | |||||||||||
| March 31, | |||||||||||
| 2012 | 2011 | ||||||||||
| Total debt (GAAP) | $ | 10,839 | $ | 6,803 | |||||||
| Adjustments: | |||||||||||
| Cash and short-term investments | 7,110 | 3,352 | |||||||||
| Net debt (Non-GAAP) | $ | 3,729 | $ | 3,451 | |||||||
| Total debt | $ | 10,839 | $ | 6,803 | |||||||
| Stockholders' equity | 21,956 | 19,229 | |||||||||
| Total capitalization (GAAP) | $ | 32,795 | $ | 26,032 | |||||||
| Net debt | $ | 3,729 | $ | 3,451 | |||||||
| Stockholders' equity | 21,956 | 19,229 | |||||||||
| Adjusted capitalization (Non-GAAP) | $ | 25,685 | $ | 22,680 | |||||||
