Devon Energy Updates 2005 Estimates and Provides 2006 Summary Forecasts
Devon Energy provided revised estimates of its 2005 oil and gas production, capital expenditures and reserve additions. The company also provided summary forecasts of 2006 production, capital expenditures and reserve additions. Devon will provide more detailed forecasts for 2006 in early February.
Estimated 2005 Reserve Additions Exceed Forecasts
Devon estimates that its additions to proved reserves in 2005 will be 410 million to 420 million barrels of oil equivalent (Boe). This exceeds the company's previous estimate of 360 million to 390 million Boe. Devon confirmed its previous estimate that it will produce about 216 million Boe in 2005 from properties retained after its 2005 divestiture program. Estimated 2005 production was reduced by approximately five million Boe because of hurricanes. Drill-bit capital for 2005 is estimated at $3.9 billion to $4 billion.
"We have had a terrific year with the drill-bit," said Devon's President, John Richels. "We previously estimated that we would add up to 390 million Boe, but we now expect to book as much as 420 million Boe, at very attractive unit costs. These additions would significantly exceed our expected 2005 production from retained properties of 216 million Boe. Reserve additions are coming from across Devon's high quality oil and gas property base and include about 100 million barrels of additions from our Jackfish project in the Canadian oil sands."
2006 Reserve Growth and Increased 2007 Production Expected
The company also expects to post strong reserve growth in 2006. Devon forecasts proved reserve additions of 410 million to 440 million Boe in the coming year. Devon's 2006 forecast of reserve additions represents a significant increase over the company's previous forecast. Drill-bit capital for 2006 is forecast at $4.5 billion to $4.7 billion. Company-wide 2006 production is forecasted to be between 215 million and 219 million Boe. This excludes about three million Boe suspended because of hurricane-related damage. The increase in drill-bit capital is a result of additional exploration and development opportunities coupled with industry-wide cost pressures.
"With the exception of the impact of hurricanes, our 2006 production forecast is largely in line with the long-range projections we provided in late 2004," added Richels. "Furthermore, our 2007 production forecast of 232 to 236 million Boe significantly exceeds the 225 million Boe forecast that we provided last year. Our strong reserve additions in 2004, 2005 and 2006 are leading to this expected production growth in 2007 and beyond."
Summary Forecasts $ Billions Millions of Oil Equivalent Barrels (MMBoe) Drill - Bit Reserve Retained Divested Year Capital (A) Additions (B) Production© Production 2005 3.9 - 4.0 410 - 420 216 10 2006 4.5 - 4.7 410 - 440 215 - 219 --- Notes to the table above: (A) Drill-bit Capital includes exploration and development expenditures, plugging and abandonment charges and capitalized interest and general and administrative costs. The 2005 drill-bit capital also includes approximately $200 million for the Iron River acreage acquisition in Canada. Marketing and midstream capital is excluded. (B) Reserve Additions include performance revisions but exclude revisions due to changes in oil, natural gas and natural gas liquids prices. © Retained Production excludes production from properties divested by Devon in 2005. Estimates of 2005 and 2006 production have also been reduced by approximately five million Boe and three million Boe, respectively, due to the impact of hurricanes.
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