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1. Summary of Significant Accounting Policies
The accompanying unaudited interim financial statements and notes of Devon Energy Corporation (“Devon,” “we,” “us” or “our”) have been prepared pursuant to the rules and regulations of the SEC. Pursuant to such rules and regulations, certain disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) have been omitted. The accompanying unaudited interim financial statements and notes should be read in conjunction with the financial statements and notes included in Devon’s 2014 Annual Report on Form 10-K.
The accompanying unaudited interim financial statements furnished in this report reflect all adjustments that are, in the opinion of management, necessary for a fair statement of Devon’s results of operations and cash flows for the three-month and nine-month periods ended September 30, 2015 and 2014, as applicable, and Devon’s financial position as of September 30, 2015.
Recently Issued Accounting Standards not yet Adopted
The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance in Subtopic 932-605, Extractive Activities – Oil and Gas – Revenue Recognition. This ASU provides guidance concerning the recognition and measurement of revenue from contracts with customers. Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues. The effective date for ASU 2014-09 was delayed through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual and interim periods beginning in 2018 and is required to be adopted using either the retrospective or cumulative effect (modified retrospective) transition method, with early adoption permitted in 2017. Devon is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures and does not plan on early adopting.
The FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This ASU provides additional guidance to reporting entities in evaluating whether certain legal entities, such as limited partnerships, limited liability corporations and securitization structures, should be consolidated. The ASU is considered to be an improvement on current accounting requirements as it reduces the number of existing consolidation models. The ASU is effective for annual and interim periods beginning in 2016 and is required to be adopted using a retrospective or modified retrospective approach, with early adoption permitted. Devon is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures and will not early adopt.
The FASB issued ASU 2015-03, Interest – Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs and ASU 2015-15, Interest – Imputation of Interest (Topic 835): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. These ASUs require debt issuance costs related to a recognized debt liability, except for those related to revolving credit facilities, to be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability rather than as an asset. These ASUs are effective for annual and interim periods beginning in 2016 and are required to be applied retrospectively, with early adoption permitted. Devon does not expect the adoption to have a material impact on its consolidated financial statements and related disclosures and will not early adopt.
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2. Acquisitions and Divestitures
Acquisition of GeoSouthern and Formation of EnLink
On February 28, 2014, Devon completed its acquisition of interests in certain affiliates of GeoSouthern Energy Corporation (“GeoSouthern”). On March 7, 2014, Devon, Crosstex Energy, Inc. and Crosstex Energy, LP (together with Crosstex Energy, Inc., “Crosstex”) completed a business combination to combine substantially all of Devon’s U.S. midstream assets with Crosstex’s assets to form a new midstream business. The new business consists of EnLink Midstream, LLC (the “General Partner”) and EnLink Midstream Partners, LP (“EnLink”), which are both controlled by Devon and are publicly traded entities.
The following unaudited pro forma financial information was prepared assuming both the GeoSouthern acquisition and the formation of EnLink and the General Partner occurred on January 1, 2014. The pro forma information has been included for comparative purposes only and is not intended to reflect the actual results of operations that would have occurred if the business combination and acquisition had been completed at the date indicated. In addition, it does not project Devon’s results of operations for any future period.
Nine Months Ended |
||||
September 30, 2014 |
||||
(Millions) |
||||
Total operating revenues |
$ |
14,218 | ||
Net earnings |
$ |
2,109 | ||
Noncontrolling interests |
$ |
68 | ||
Net earnings attributable to Devon |
$ |
2,041 | ||
Net earnings per common share attributable to Devon |
$ |
4.98 |
EnLink Acquisitions
The following table presents a summary of EnLink’s acquisition activity for the first nine months of 2015.
Purchase Price |
Allocation |
|||||||||||||
Date |
Acquiree |
Cash |
EnLink Units |
PP&E |
Goodwill |
Intangibles |
Other |
|||||||
January 31 |
LPC Crude Oil Marketing LLC |
$108 |
- |
$30 |
$30 |
$43 |
$5 |
|||||||
March 16 |
Coronado Midstream Holdings LLC ("Coronado") |
$240 |
$360 |
$302 |
$18 |
$281 |
$(1) |
|||||||
On October 1, 2015, EnLink acquired Delaware Basin natural gas gathering and processing assets from MRC Energy Company (“Matador”) for approximately $143 million, subject to certain adjustments.
EnLink Dropdowns
In February 2015, EnLink acquired a 25% equity interest in EnLink Midstream Holdings, LP (“EMH”) from the General Partner in exchange for units valued at approximately $925 million. In May 2015, EnLink acquired the remaining 25% equity interest in EMH from the General Partner in exchange for units valued at approximately $900 million.
In April 2015, EnLink acquired the Victoria Express Pipeline and related truck terminal and storage assets (“VEX”) from Devon for approximately $180 million in cash and equity, subject to certain adjustments. EnLink also assumed approximately $35 million in certain future construction costs to expand the system to full capacity.
Asset Divestitures
In the second quarter of 2014, Devon sold Canadian conventional assets for $2.8 billion ($3.125 billion Canadian dollars) and recognized a gain totaling $1.1 billion ($0.6 billion after-tax). This gain is included as a separate item in the accompanying consolidated comprehensive statements of earnings. Included in the gain calculation were asset retirement obligations of approximately $700 million assumed by the purchaser as well as the derecognition of approximately $700 million of goodwill allocated to the sold assets. In conjunction with the divestiture, Devon repatriated approximately $2.8 billion of proceeds to the U.S. in the second quarter of 2014, which was utilized to repay commercial paper and term loan balances. Between collecting the divestiture proceeds and repatriating funds to the U.S., Devon recognized an $84 million foreign currency exchange loss and a $29 million foreign currency derivative loss. These losses are included in other nonoperating items in the accompanying consolidated comprehensive statements of earnings.
In the third quarter of 2014, Devon sold certain U.S. assets for $2.2 billion. Additionally, approximately $200 million of asset retirement obligations were assumed by the purchaser. No gain or loss was recognized on the sale.
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3. Derivative Financial Instruments
Objectives and Strategies
Devon periodically enters into derivative financial instruments with respect to a portion of its oil, gas and NGL production to hedge future prices received. Additionally, Devon and EnLink periodically enter into derivative financial instruments with respect to a portion of their oil, gas and NGL marketing activities. These commodity derivative financial instruments include financial price swaps, basis swaps, costless price collars and call options. Devon periodically enters into interest rate swaps to manage its exposure to interest rate volatility and foreign exchange forward contracts to manage its exposure to fluctuations in the U.S. and Canadian dollar exchange rates.
Devon does not intend to hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its derivative instruments for hedge accounting treatment.
Counterparty Credit Risk
By using derivative financial instruments, Devon is exposed to credit risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are placed with a number of counterparties whom Devon believes are acceptable credit risks. It is Devon’s policy to enter into derivative contracts only with investment-grade rated counterparties deemed by management to be competent and competitive market makers. Additionally, Devon’s derivative contracts contain provisions that provide for collateral payments, depending on levels of exposure and the credit rating of the counterparty.
As of September 30, 2015 and December 31, 2014, Devon held $169 million and $524 million, respectively, of cash collateral which represented the estimated fair value of certain derivative positions in excess of Devon’s credit guidelines. The collateral is reported in other current liabilities in the accompanying consolidated balance sheets.
Commodity Derivatives
As of September 30, 2015, Devon had the following open oil derivative positions. The first table presents Devon’s oil derivatives that settle against the average of the prompt month NYMEX West Texas Intermediate (“WTI”) futures price. The second table presents Devon’s oil derivatives that settle against the respective indices noted within the table.
Price Swaps |
Price Collars |
Call Options Sold |
||||||||||||||||
Period |
Volume (Bbls/d) |
Weighted Average Price ($/Bbl) |
Volume (Bbls/d) |
Weighted Average Floor Price ($/Bbl) |
Weighted Average Ceiling Price ($/Bbl) |
Volume (Bbls/d) |
Weighted Average Price ($/Bbl) |
|||||||||||
Q4 2015 |
107,000 |
$ |
90.61 |
44,000 |
$ |
81.36 |
$ |
88.63 |
28,000 |
$ |
116.43 |
|||||||
Q1-Q4 2016 |
- |
$ |
- |
- |
$ |
- |
$ |
- |
18,500 |
$ |
89.05 |
Oil Basis Swaps |
|||||||
Period |
Index |
Volume (Bbls/d) |
Weighted Average Differential to WTI ($/Bbl) |
||||
Q4 2015 |
Western Canadian Select |
40,000 |
$ |
(15.58) | |||
Q4 2015 |
West Texas Sour |
8,000 |
$ |
(3.68) | |||
Q4 2015 |
Midland Sweet |
16,000 |
$ |
(2.86) | |||
Q1-Q4 2016 |
West Texas Sour |
5,000 |
$ |
(0.53) | |||
Q1-Q4 2016 |
Midland Sweet |
13,000 |
$ |
0.25 |
As of September 30, 2015, Devon had the following open natural gas derivative positions. The first table presents Devon’s natural gas derivatives that settle against the Inside FERC first of the month Henry Hub index. The second table presents Devon’s natural gas derivatives that settle against the respective indices noted within the table.
Price Swaps |
Price Collars |
Call Options Sold |
||||||||||||||||
Period |
Volume (MMBtu/d) |
Weighted Average Price ($/MMBtu) |
Volume (MMBtu/d) |
Weighted Average Floor Price ($/MMBtu) |
Weighted Average Ceiling Price ($/MMBtu) |
Volume (MMBtu/d) |
Weighted Average Price ($/MMBtu) |
|||||||||||
Q4 2015 |
250,000 |
$ |
4.32 |
480,000 |
$ |
3.52 |
$ |
3.83 |
550,000 |
$ |
5.09 |
|||||||
Q1-Q4 2016 |
24,863 |
$ |
3.17 |
- |
$ |
- |
$ |
- |
400,000 |
$ |
4.73 |
Natural Gas Basis Swaps |
|||||||
Period |
Index |
Volume (MMBtu/d) |
Weighted Average Differential to Henry Hub ($/MMBtu) |
||||
Q4 2015 |
Panhandle Eastern Pipe Line |
100,000 |
$ |
(0.28) |
|||
Q4 2015 |
El Paso Natural Gas |
70,000 |
$ |
(0.11) |
|||
Q4 2015 |
Houston Ship Channel |
200,000 |
$ |
0.01 |
|||
Q1-Q4 2016 |
Panhandle Eastern Pipe Line |
175,000 |
$ |
(0.34) |
|||
Q1-Q4 2016 |
El Paso Natural Gas |
15,000 |
$ |
(0.13) |
|||
Q1-Q4 2016 |
Houston Ship Channel |
30,000 |
$ |
0.11 |
|||
Q1-Q4 2016 |
Transco Zone 4 |
60,000 |
$ |
0.01 |
|||
Q1-Q4 2017 |
Panhandle Eastern Pipe Line |
60,000 |
$ |
(0.34) |
|||
Q1-Q4 2017 |
El Paso Natural Gas |
30,000 |
$ |
(0.14) |
|||
Q1-Q4 2017 |
Houston Ship Channel |
35,000 |
$ |
0.06 |
|||
Q1-Q4 2017 |
Transco Zone 4 |
85,000 |
$ |
0.04 |
As of September 30, 2015, EnLink had the following open derivative positions associated with gas processing and fractionation. EnLink’s NGL derivative positions settle by purity product against the average of the prompt month OPIS Mont Belvieu, Texas index. EnLink’s natural gas derivative positions settle against the Henry Hub Gas Daily index.
Period |
Product |
Volume (Total) |
Weighted Average Price Paid |
Weighted Average Price Received |
|||||||
Q4 2015-Q4 2016 |
Ethane |
817 |
MBbls |
$ |
0.28/gal |
Index |
|||||
Q4 2015-Q4 2016 |
Propane |
908 |
MBbls |
Index |
$ |
0.88/gal |
|||||
Q4 2015-Q3 2016 |
Normal Butane |
74 |
MBbls |
Index |
$ |
0.63/gal |
|||||
Q4 2015-Q3 2016 |
Natural Gasoline |
63 |
MBbls |
Index |
$ |
1.30/gal |
|||||
Q4 2015-Q3 2016 |
Natural Gas |
2,497 |
MMBtu/d |
$ |
3.13/MMBtu |
Index |
Interest Rate Derivatives
As of September 30, 2015, Devon had the following open interest rate derivative positions:
Notional |
Rate Received |
Rate Paid |
Expiration |
||||
(Millions) |
|||||||
$ |
100 |
Three Month LIBOR |
0.92% |
December 2016 |
|||
$ |
100 |
1.76% |
Three Month LIBOR |
January 2019 |
|||
$ |
750 |
Three Month LIBOR |
2.98% |
December 2048 |
Foreign Currency Derivatives
As of September 30, 2015, Devon had the following open foreign currency derivative position:
Forward Contract |
|||||||||
Currency |
Contract Type |
CAD Notional |
Weighted Average Fixed Rate Received |
Expiration |
|||||
(Millions) |
(CAD-USD) |
||||||||
Canadian Dollar |
Sell |
$ |
1,884 |
0.752 |
December 2015 |
Financial Statement Presentation
The following table presents the net gains and losses by derivative financial instrument type followed by the corresponding individual comprehensive statements of earnings caption.
Three Months Ended |
Nine Months Ended |
|||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||
Commodity derivatives: |
(Millions) |
|||||||||||
Oil, gas and NGL derivatives |
$ |
414 |
$ |
748 |
$ |
426 |
$ |
29 | ||||
Marketing and midstream revenues |
6 | 1 | 8 | (2) | ||||||||
Interest rate derivatives: |
||||||||||||
Other nonoperating items |
(30) |
— |
(28) | 1 | ||||||||
Foreign currency derivatives: |
||||||||||||
Other nonoperating items |
91 | 55 | 200 | 15 | ||||||||
Net gains recognized |
$ |
481 |
$ |
804 |
$ |
606 |
$ |
43 |
The following table presents the derivative fair values by derivative financial instrument type followed by the corresponding individual consolidated balance sheet caption.
September 30, 2015 |
December 31, 2014 |
||||||
(Millions) |
|||||||
Commodity derivative assets: |
|||||||
Derivatives, at fair value |
$ |
687 |
$ |
1,984 | |||
Other long-term assets |
4 | 11 | |||||
Interest rate derivative assets: |
|||||||
Derivatives, at fair value |
1 | 1 | |||||
Other long-term assets |
1 |
— |
|||||
Foreign currency derivative assets: |
|||||||
Derivatives, at fair value |
2 | 8 | |||||
Total derivative assets |
$ |
695 |
$ |
2,004 | |||
Commodity derivative liabilities: |
|||||||
Other current liabilities |
$ |
19 |
$ |
28 | |||
Other long-term liabilities |
5 | 28 | |||||
Interest rate derivative liabilities: |
|||||||
Other current liabilities |
1 | 1 | |||||
Other long-term liabilities |
30 |
— |
|||||
Total derivative liabilities |
$ |
55 |
$ |
57 |
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5. Asset Impairments
The following table presents the asset impairments recognized by Devon in the first nine months of 2015.
Three Months Ended September 30, 2015 |
Nine Months Ended September 30, 2015 |
||||||||||||
Gross |
Net of Taxes |
Gross |
Net of Taxes |
||||||||||
(Millions) |
|||||||||||||
U.S. oil and gas assets |
$ |
4,715 |
$ |
2,994 |
$ |
14,340 |
$ |
9,105 | |||||
Canada oil and gas assets |
336 | 248 | 336 | 248 | |||||||||
EnLink goodwill |
576 | 576 | 576 | 576 | |||||||||
EnLink other intangible assets |
223 | 223 | 223 | 223 | |||||||||
Other assets |
1 | 1 | 4 | 3 | |||||||||
Total asset impairments |
$ |
5,851 |
$ |
4,042 |
$ |
15,479 |
$ |
10,155 |
Oil and Gas Impairments
Under the full cost method of accounting, capitalized costs of oil and gas properties, net of accumulated DD&A and deferred income taxes, may not exceed the full cost “ceiling” at the end of each quarter. The ceiling is calculated separately for each country and is based on the present value of estimated future net cash flows from proved oil and gas reserves, discounted at 10% per annum, net of related tax effects. Estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months.
The oil and gas impairments resulted from declines in the U.S. and Canada full cost ceilings. The lower ceiling values resulted primarily from significant decreases in the 12-month average trailing prices for oil, bitumen, gas and NGLs, which significantly reduced proved reserves values and, to a lesser degree, proved reserves.
EnLink Goodwill and Other Intangible Assets Impairments
In the third quarter of 2015, Devon recognized goodwill and other intangible assets impairments related to EnLink’s business. Additional information regarding the impairments is discussed in Note 11.
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6. Income Taxes
The following table presents Devon’s total income tax expense (benefit) and a reconciliation of its effective income tax rate to the U.S. statutory income tax rate.
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||
Total income tax expense (benefit) (millions) |
$ |
(1,714) |
$ |
613 |
$ |
(5,435) |
$ |
1,698 | |||||
U.S. statutory income tax rate |
(35%) | 35% | (35%) | 35% | |||||||||
Non-deductible goodwill and intangible impairment |
5% | 0% | 2% | 0% | |||||||||
Taxation on Canadian operations |
0% | 0% | 1% | 1% | |||||||||
State income taxes |
(1%) | 2% | (2%) | 1% | |||||||||
Repatriations |
0% | 0% | 0% | 7% | |||||||||
Other |
1% | 0% | (1%) | 1% | |||||||||
Effective income tax rate |
(30%) | 37% | (35%) | 45% |
Devon estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur.
In the third quarter of 2015, EnLink recorded goodwill and intangibles impairments of approximately $799 million. These impairments are not deductible for purposes of calculating income tax and therefore have an impact on the effective tax rate.
In the second quarter of 2015, Devon recognized $57 million of income tax benefits in conjunction with favorable tax settlements. In addition, changes in statutory tax rates in Texas and the province of Alberta, Canada resulted in a net increase to deferred tax expense of $44 million.
Devon and its subsidiaries are subject to U.S. federal income tax as well as income or capital taxes in various state and foreign jurisdictions. Devon’s tax reserves are related to tax years that may be subject to examination by the relevant taxing authority. Devon is under audit in the U.S. and various foreign jurisdictions as part of its normal course of business.
In the third quarter of 2014, Devon completed its U.S. asset divestiture program. In conjunction with the divestiture closing, Devon recognized $543 million of current income tax expense. The current tax expense was entirely offset by the recognition of deferred tax benefits.
In the second quarter of 2014, Devon recognized $247 million of additional income tax expense related to the $2.8 billion of repatriations to the U.S. Prior to the repatriation, Devon had recognized a $143 million deferred income tax liability associated with the planned repatriation. When the repatriation was made, Devon retained a larger property basis in Canada than was previously estimated, resulting in the incremental tax in the second quarter.
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8. Other Comprehensive Earnings
Components of other comprehensive earnings consist of the following:
Three Months Ended |
Nine Months Ended |
|||||||||||
September 30, |
September 30, |
|||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||
(Millions) |
||||||||||||
Foreign currency translation: |
||||||||||||
Beginning accumulated foreign currency translation |
$ |
725 |
$ |
1,442 |
$ |
983 |
$ |
1,448 | ||||
Change in cumulative translation adjustment |
(242) | (299) | (519) | (306) | ||||||||
Income tax benefit |
30 | 20 | 49 | 21 | ||||||||
Ending accumulated foreign currency translation |
513 | 1,163 | 513 | 1,163 | ||||||||
Pension and postretirement benefit plans: |
||||||||||||
Beginning accumulated pension and postretirement benefits |
(197) | (172) | (204) | (180) | ||||||||
Recognition of net actuarial loss and prior service cost in earnings (1) |
6 | 4 | 17 | 15 | ||||||||
Income tax expense |
(1) | (2) | (5) | (5) | ||||||||
Ending accumulated pension and postretirement benefits |
(192) | (170) | (192) | (170) | ||||||||
Accumulated other comprehensive earnings, net of tax |
$ |
321 |
$ |
993 |
$ |
321 |
$ |
993 |
__________________________
(1) These accumulated other comprehensive earnings components are included in the computation of net periodic benefit cost, which is a component of general and administrative expenses on the accompanying consolidated comprehensive statements of earnings. See Note 14 for additional details.
|
9. Supplemental Information to Statements of Cash Flows
Nine Months Ended September 30, |
||||||
2015 |
2014 |
|||||
(Millions) |
||||||
Net change in working capital accounts: |
||||||
Accounts receivable |
$ |
713 |
$ |
(25) | ||
Income taxes receivable |
514 |
- |
||||
Other current assets |
(36) | (120) | ||||
Accounts payable |
(135) | (118) | ||||
Revenues and royalties payable |
(288) | 381 | ||||
Income taxes payable |
(158) | 704 | ||||
Other current liabilities |
(517) | (56) | ||||
Net change in working capital |
$ |
93 |
$ |
766 | ||
Interest paid (net of capitalized interest) |
$ |
343 |
$ |
355 | ||
Income taxes paid (received) |
$ |
(339) |
$ |
214 |
On March 7, 2014, Devon completed a business combination to form EnLink. With the exception of a $100 million cash payment to noncontrolling interests, the business combination was a non-monetary transaction. Furthermore, EnLink’s noncash acquisition activity during the first nine months of 2015 included a portion of the Coronado transaction. See Note 2 for additional details.
|
10. Accounts Receivable
Components of accounts receivable include the following:
September 30, 2015 |
December 31, 2014 |
|||||
(Millions) |
||||||
Oil, gas and NGL sales |
$ |
463 |
$ |
723 | ||
Joint interest billings |
215 | 475 | ||||
Marketing and midstream revenues |
637 | 706 | ||||
Other |
17 | 71 | ||||
Gross accounts receivable |
1,332 | 1,975 | ||||
Allowance for doubtful accounts |
(14) | (16) | ||||
Net accounts receivable |
$ |
1,318 |
$ |
1,959 |
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11. Goodwill and Other Intangible Assets
Goodwill
The following table presents a summary of Devon’s goodwill.
U.S. |
EnLink |
Total |
|||||||
(Millions) |
|||||||||
Balance as of December 31, 2014 |
$ |
2,618 |
$ |
3,685 |
$ |
6,303 | |||
Acquired during period |
- |
48 | 48 | ||||||
Impairment |
- |
(576) | (576) | ||||||
Balance as of September 30, 2015 |
$ |
2,618 |
$ |
3,157 |
$ |
5,775 | |||
See Note 2 for discussion of changes in goodwill resulting from acquisitions during the first nine months of 2015.
Devon performs an annual impairment test of goodwill at October 31, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable. Sustained weakness in the overall energy sector driven by low commodity prices, together with a decline in EnLink’s unit price, caused a change in circumstances warranting an interim impairment test of EnLink’s reporting units. In the third quarter of 2015, Devon recorded a noncash goodwill impairment of $576 million related to EnLink’s Louisiana reporting unit.
Other Intangible Assets
The assessment of EnLink’s customer relationships was also updated as of September 30, 2015 due to the factors in the aforementioned goodwill impairment analysis. Level 3 fair value measurements were utilized for the impairment analysis of definite-lived intangible assets, which included discounted cash flow estimates, consistent with those utilized in the goodwill impairment assessment. This assessment resulted in Devon recognizing a $223 million noncash other intangible assets impairment related to EnLink’s Crude and Condensate reporting unit.
The following table presents other intangible assets reported in other long-term assets in the accompanying consolidated balance sheets.
September 30, 2015 |
December 31, 2014 |
|||||
(Millions) |
||||||
Customer relationships |
$ |
646 |
$ |
569 | ||
Accumulated amortization |
(43) | (36) | ||||
Net intangibles |
$ |
603 |
$ |
533 |
The weighted-average amortization period for other intangible assets is 11.4 years. Amortization expense for intangibles was approximately $14.6 million and $10.2 million for the three months ended September 30, 2015 and 2014, respectively, and $44.3 million and $23.2 million for the nine months ended September 30, 2015 and 2014, respectively.
The following table presents a summary of the estimated remaining aggregate amortization expense for the next five years.
Year |
Amortization Amount |
||
(Millions) |
|||
2015 |
$ |
10 | |
2016 |
$ |
41 | |
2017 |
$ |
41 | |
2018 |
$ |
41 | |
2019 |
$ |
41 |
|
12. Debt
A summary of debt is as follows:
September 30, 2015 |
December 31, 2014 |
||||
(Millions) |
|||||
Devon debt |
|||||
Commercial paper |
$ |
- |
$ |
932 | |
Floating rate due December 15, 2015 |
500 | 500 | |||
Floating rate due December 15, 2016 |
350 | 350 | |||
8.25% due July 1, 2018 |
125 | 125 | |||
2.25% due December 15, 2018 |
750 | 750 | |||
6.30% due January 15, 2019 |
700 | 700 | |||
4.00% due July 15, 2021 |
500 | 500 | |||
3.25% due May 15, 2022 |
1,000 | 1,000 | |||
7.50% due September 15, 2027 |
150 | 150 | |||
7.875% due September 30, 2031 |
1,250 | 1,250 | |||
7.95% due April 15, 2032 |
1,000 | 1,000 | |||
5.60% due July 15, 2041 |
1,250 | 1,250 | |||
4.75% due May 15, 2042 |
750 | 750 | |||
5.00% due June 15, 2045 |
750 |
- |
|||
Net discount on debentures and notes |
(27) | (18) | |||
Total Devon debt |
9,048 | 9,239 | |||
EnLink debt |
|||||
Credit facilities |
175 | 237 | |||
2.70% due April 1, 2019 |
400 | 400 | |||
7.125% due June 1, 2022 |
163 | 163 | |||
4.40% due April 1, 2024 |
550 | 550 | |||
4.15% due June 1, 2025 |
750 |
- |
|||
5.60% due April 1, 2044 |
350 | 350 | |||
5.05% due April 1, 2045 |
450 | 300 | |||
Net premium on debentures and notes |
14 | 23 | |||
Total EnLink debt |
2,852 | 2,023 | |||
Total debt |
11,900 | 11,262 | |||
Less amount classified as short-term debt (1) |
500 | 1,432 | |||
Total long-term debt |
$ |
11,400 |
$ |
9,830 |
____________________________
Long-Term Debt
In June 2015, Devon issued $750 million of 5.0% senior notes that are unsecured and unsubordinated obligations. Devon intends to use the net proceeds to repay the aggregate principal amount of the floating rate senior notes due 2015 when they mature on December 15, 2015. Pending that use, part of the net proceeds have been used to repay a portion of outstanding commercial paper balances.
Commercial Paper
During the nine months ended September 30, 2015, Devon reduced commercial paper borrowings by $932 million. As of September 30, 2015, Devon had no outstanding commercial paper borrowings.
Credit Lines
Devon has a $3.0 billion syndicated, unsecured revolving line of credit (the “Senior Credit Facility”). As of September 30, 2015, there were no borrowings under the Senior Credit Facility. The Senior Credit Facility contains only one material financial covenant. This covenant requires Devon’s ratio of total funded debt to total capitalization, as defined in the credit agreement, to be no greater than 65%. Under the terms of the credit agreement, total capitalization is adjusted to add back noncash financial write-downs such as full cost ceiling impairments or goodwill impairments. As of September 30, 2015, Devon was in compliance with this covenant with a debt-to-capitalization ratio of 21.9%.
EnLink Debt
All of EnLink’s and the General Partner’s debt is non-recourse to Devon.
EnLink has a $1.5 billion unsecured revolving credit facility. As of September 30, 2015, there were $2.8 million in outstanding letters of credit and $175 million in outstanding borrowings at an average rate of 1.46% under the $1.5 billion credit facility. The General Partner has a $250 million secured revolving credit facility. As of September 30, 2015, the General Partner had no outstanding borrowings under the $250 million credit facility. EnLink and the General Partner were in compliance with all financial covenants in their respective credit facilities as of September 30, 2015.
In May 2015, EnLink issued $900 million principal amount of unsecured senior notes, consisting of $750 million principal amount of its 4.15% senior notes due 2025 and an additional $150 million principal amount of its 5.05% senior notes due 2045. EnLink used the net proceeds to repay outstanding borrowings under its revolving credit facility, for capital expenditures and for general operations.
|
13. Asset Retirement Obligations
The following table presents the changes in Devon’s asset retirement obligations.
Nine Months Ended September 30, |
||||||
2015 |
2014 |
|||||
(Millions) |
||||||
Asset retirement obligations as of beginning of period |
$ |
1,399 |
$ |
2,228 | ||
Liabilities incurred |
46 | 79 | ||||
Liabilities settled and divested (1) |
(48) | (987) | ||||
Revision of estimated obligation |
62 | 75 | ||||
Accretion expense on discounted obligation |
56 | 70 | ||||
Foreign currency translation adjustment |
(80) | (55) | ||||
Asset retirement obligations as of end of period |
1,435 | 1,410 | ||||
Less current portion |
58 | 62 | ||||
Asset retirement obligations, long-term |
$ |
1,377 |
$ |
1,348 |
__________________________
(1) During the first nine months of 2014, Devon reduced its asset retirement obligations by $949 million related to its asset divestiture program discussed in Note 2.
|
14. Retirement Plans
The following table presents the components of net periodic benefit cost for Devon’s pension and postretirement benefit plans.
Pension Benefits |
Postretirement Benefits |
|||||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
(Millions) |
||||||||||||||||||||||||
Service cost |
$ |
9 |
$ |
7 |
$ |
25 |
$ |
22 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
||||||||
Interest cost |
13 | 14 | 39 | 41 |
- |
- |
- |
- |
||||||||||||||||
Expected return on plan assets |
(14) | (13) | (44) | (40) |
- |
- |
- |
- |
||||||||||||||||
Amortization of prior service cost (1) |
1 | 1 | 3 | 3 |
- |
(1) | (1) | (1) | ||||||||||||||||
Net actuarial loss (gain) (1) |
5 | 4 | 15 | 14 |
- |
- |
- |
(1) | ||||||||||||||||
Net periodic benefit cost (2) |
$ |
14 |
$ |
13 |
$ |
38 |
$ |
40 |
$ |
- |
$ |
(1) |
$ |
(1) |
$ |
(2) |
__________________________
(1) These net periodic benefit costs were reclassified out of other comprehensive earnings in the current period.
(2) Net periodic benefit cost is a component of general and administrative expenses in the accompanying consolidated comprehensive statements of earnings.
|
15. Stockholders’ Equity
Dividends
Devon paid common stock dividends of $296 million and $287 million in the first nine months of 2015 and 2014, respectively. Devon increased the quarterly cash dividend rate from $0.22 per share to $0.24 per share in the second quarter of 2014.
Stock Option Proceeds
Devon received $4 million and $92 million from stock option proceeds during the first nine months of 2015 and 2014, respectively.
|
16. Noncontrolling Interests
Subsidiary Equity Transactions
In March 2015, Devon conducted an underwritten secondary public offering of 22.8 million common units representing limited partner interests in EnLink, raising net proceeds of $569 million. In April 2015, as part of the secondary public offering, the underwriters fully exercised their option to purchase an additional 3.4 million EnLink common units from Devon, resulting in an incremental $85 million of net proceeds raised.
Through its equity distribution agreements, EnLink has the ability to sell common units through an “at the market” equity offering program. During the first nine months of 2015 and 2014, EnLink sold approximately 0.7 million and 2.4 million common units, generating net proceeds of $13 million and $72 million, respectively.
As a result of these transactions and the Coronado acquisition and dropdown transactions discussed in Note 2, Devon’s ownership interest in EnLink decreased from 49% at December 31, 2014 to 29% at September 30, 2015, excluding the interest held by the General Partner. The net gains and losses and related income taxes resulting from these transactions have been recorded as an adjustment to equity, and the change in ownership reflected as an adjustment to noncontrolling interests.
On October 29, 2015, the General Partner acquired approximately 2.8 million common units in EnLink in a private placement. EnLink received proceeds of $50 million in the transaction.
Distributions to Noncontrolling Interests
EnLink and the General Partner distributed $186 million and $187 million to non-Devon unitholders during the first nine months of 2015 and 2014, respectively.
|
17. Commitments and Contingencies
Devon is party to various legal actions arising in the normal course of business. Matters that are probable of unfavorable outcome to Devon and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, Devon’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve future amounts that would be material to Devon’s financial position or results of operations after consideration of recorded accruals. Actual amounts could differ materially from management’s estimates.
Royalty Matters
Numerous oil and natural gas producers and related parties, including Devon, have been named in various lawsuits alleging royalty underpayments. The suits allege that the producers and related parties used below-market prices, made improper deductions, used improper measurement techniques and entered into gas purchase and processing arrangements with affiliates that resulted in underpayment of royalties in connection with oil, natural gas and NGLs produced and sold. Devon is also involved in governmental agency proceedings and is subject to related contracts and regulatory controls in the ordinary course of business, some that may lead to additional royalty claims. Devon does not currently believe that it is subject to material exposure with respect to such royalty matters.
Environmental Matters
Devon is subject to certain laws and regulations relating to environmental remediation activities associated with past operations, such as the Comprehensive Environmental Response, Compensation, and Liability Act and similar state statutes. In response to liabilities associated with these activities, loss accruals primarily consist of estimated uninsured remediation costs. Devon’s monetary exposure for environmental matters is not expected to be material.
Other Matters
Devon is involved in other various routine legal proceedings incidental to its business. However, to Devon’s knowledge, there were no other material pending legal proceedings to which Devon is a party or to which any of its property is subject.
|
18. Fair Value Measurements
The following table provides carrying value and fair value measurement information for certain of Devon’s financial assets and liabilities. The carrying values of cash, accounts receivable, other current receivables, accounts payable, other current payables and accrued expenses included in the accompanying consolidated balance sheets approximated fair value at September 30, 2015 and December 31, 2014. Therefore, such financial assets and liabilities are not presented in the following tables. Additionally, information regarding the fair values of oil and gas assets, goodwill and other intangible assets is provided in Note 5 and Note 11.
Fair Value Measurements Using: |
|||||||||||||||
Carrying |
Total Fair |
Level 1 |
Level 2 |
Level 3 |
|||||||||||
Amount |
Value |
Inputs |
Inputs |
Inputs |
|||||||||||
(Millions) |
|||||||||||||||
September 30, 2015 assets (liabilities): |
|||||||||||||||
Cash equivalents |
$ |
1,271 |
$ |
1,271 |
$ |
841 |
$ |
430 |
$ |
- |
|||||
Commodity derivatives |
$ |
691 |
$ |
691 |
$ |
- |
$ |
691 |
$ |
- |
|||||
Commodity derivatives |
$ |
(24) |
$ |
(24) |
$ |
- |
$ |
(24) |
$ |
- |
|||||
Interest rate derivatives |
$ |
2 |
$ |
2 |
$ |
- |
$ |
2 |
$ |
- |
|||||
Interest rate derivatives |
$ |
(31) |
$ |
(31) |
$ |
- |
$ |
(31) |
$ |
- |
|||||
Foreign currency derivatives |
$ |
2 |
$ |
2 |
$ |
- |
$ |
2 |
$ |
- |
|||||
Debt |
$ |
(11,900) |
$ |
(12,113) |
$ |
- |
$ |
(12,113) |
$ |
- |
|||||
Capital lease obligations |
$ |
(18) |
$ |
(17) |
$ |
- |
$ |
(17) |
$ |
- |
|||||
December 31, 2014 assets (liabilities): |
|||||||||||||||
Cash equivalents |
$ |
950 |
$ |
950 |
$ |
340 |
$ |
610 |
$ |
- |
|||||
Commodity derivatives |
$ |
1,995 |
$ |
1,995 |
$ |
- |
$ |
1,995 |
$ |
- |
|||||
Commodity derivatives |
$ |
(56) |
$ |
(56) |
$ |
- |
$ |
(56) |
$ |
- |
|||||
Interest rate derivatives |
$ |
1 |
$ |
1 |
$ |
- |
$ |
1 |
$ |
- |
|||||
Interest rate derivatives |
$ |
(1) |
$ |
(1) |
$ |
- |
$ |
(1) |
$ |
- |
|||||
Foreign currency derivatives |
$ |
8 |
$ |
8 |
$ |
- |
$ |
8 |
$ |
- |
|||||
Debt |
$ |
(11,262) |
$ |
(12,472) |
$ |
- |
$ |
(12,472) |
$ |
- |
|||||
Capital lease obligations |
$ |
(20) |
$ |
(20) |
$ |
- |
$ |
(20) |
$ |
- |
The following methods and assumptions were used to estimate the fair values in the table above.
Level 1 Fair Value Measurements
Cash equivalents — Amounts consist primarily of money market investments. The fair value approximates the carrying value.
Level 2 Fair Value Measurements
Cash equivalents — Amounts consist primarily of commercial paper and Canadian agency and provincial securities investments. The fair value approximates the carrying value.
Commodity, interest rate and foreign currency derivatives — The fair values of commodity, interest rate and foreign currency derivatives are estimated using internal discounted cash flow calculations based upon forward curves and data obtained from independent third parties for contracts with similar terms or data obtained from counterparties to the agreements.
Debt — Devon’s debt instruments do not actively trade in an established market. The fair values of its debt are estimated based on rates available for debt with similar terms and maturity. The fair values of commercial paper and credit facility balances are the carrying values.
Capital lease obligations — The fair value was calculated using inputs from third-party banks.
|
19. Segment Information
Devon manages its operations through distinct operating segments, which are defined primarily by geographic areas. For financial reporting purposes, Devon aggregates its U.S. exploration and production operating segments into one reporting segment due to the similar nature of the businesses. However, Devon’s Canadian exploration and production operating segment is reported as a separate reporting segment primarily due to the significant differences between the U.S. and Canadian regulatory environments. Devon’s U.S. and Canadian segments are both primarily engaged in oil and gas exploration and production activities.
EnLink, combined with the General Partner, is presented as a separate reporting segment. Devon considers EnLink’s operations distinct from the U.S. and Canadian operating segments. Additionally, EnLink has a management team that is primarily responsible for capital and resource allocation decisions.
U.S.(1) |
Canada |
EnLink(1) |
Eliminations |
Total |
||||||||||||||||||
(Millions) |
||||||||||||||||||||||
Three Months Ended September 30, 2015: |
||||||||||||||||||||||
Revenues from external customers |
$ |
2,381 |
$ |
221 |
$ |
999 |
$ |
- |
$ |
3,601 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
172 |
$ |
(172) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
510 |
$ |
134 |
$ |
100 |
$ |
- |
$ |
744 | ||||||||||||
Interest expense |
$ |
96 |
$ |
22 |
$ |
31 |
$ |
(11) |
$ |
138 | ||||||||||||
Asset impairments |
$ |
4,716 |
$ |
336 |
$ |
799 |
$ |
- |
$ |
5,851 | ||||||||||||
Loss before income taxes |
$ |
(4,464) |
$ |
(401) |
$ |
(758) |
$ |
- |
$ |
(5,623) | ||||||||||||
Income tax expense (benefit) |
$ |
(1,605) |
$ |
(116) |
$ |
7 |
$ |
- |
$ |
(1,714) | ||||||||||||
Net loss |
$ |
(2,859) |
$ |
(285) |
$ |
(765) |
$ |
- |
$ |
(3,909) | ||||||||||||
Net loss attributable to noncontrolling interests |
$ |
- |
$ |
- |
$ |
(402) |
$ |
- |
$ |
(402) | ||||||||||||
Net loss attributable to Devon |
$ |
(2,859) |
$ |
(285) |
$ |
(363) |
$ |
- |
$ |
(3,507) | ||||||||||||
Capital expenditures |
$ |
974 |
$ |
108 |
$ |
105 |
$ |
- |
$ |
1,187 | ||||||||||||
Three Months Ended September 30, 2014: |
||||||||||||||||||||||
Revenues from external customers |
$ |
4,197 |
$ |
481 |
$ |
658 |
$ |
- |
$ |
5,336 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
199 |
$ |
(199) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
654 |
$ |
113 |
$ |
75 |
$ |
- |
$ |
842 | ||||||||||||
Interest expense |
$ |
95 |
$ |
20 |
$ |
14 |
$ |
(11) |
$ |
118 | ||||||||||||
Earnings before income taxes |
$ |
1,463 |
$ |
109 |
$ |
82 |
$ |
- |
$ |
1,654 | ||||||||||||
Income tax expense |
$ |
557 |
$ |
38 |
$ |
18 |
$ |
- |
$ |
613 | ||||||||||||
Net earnings |
$ |
906 |
$ |
71 |
$ |
64 |
$ |
- |
$ |
1,041 | ||||||||||||
Net earnings attributable to noncontrolling interests |
$ |
- |
$ |
- |
$ |
25 |
$ |
- |
$ |
25 | ||||||||||||
Net earnings attributable to Devon |
$ |
906 |
$ |
71 |
$ |
39 |
$ |
- |
$ |
1,016 | ||||||||||||
Capital expenditures |
$ |
1,211 |
$ |
335 |
$ |
209 |
$ |
- |
$ |
1,755 | ||||||||||||
Nine Months Ended September 30, 2015: |
||||||||||||||||||||||
Revenues from external customers |
$ |
6,570 |
$ |
802 |
$ |
2,887 |
$ |
- |
$ |
10,259 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
499 |
$ |
(499) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
1,817 |
$ |
382 |
$ |
289 |
$ |
- |
$ |
2,488 | ||||||||||||
Interest expense |
$ |
271 |
$ |
70 |
$ |
76 |
$ |
(34) |
$ |
383 | ||||||||||||
Asset impairments |
$ |
14,344 |
$ |
336 |
$ |
799 |
$ |
- |
$ |
15,479 | ||||||||||||
Loss before income taxes |
$ |
(14,450) |
$ |
(609) |
$ |
(667) |
$ |
- |
$ |
(15,726) | ||||||||||||
Income tax expense (benefit) |
$ |
(5,334) |
$ |
(129) |
$ |
28 |
$ |
- |
$ |
(5,435) | ||||||||||||
Net loss |
$ |
(9,116) |
$ |
(480) |
$ |
(695) |
$ |
- |
$ |
(10,291) | ||||||||||||
Net earnings (loss) attributable to noncontrolling interests |
$ |
1 |
$ |
- |
$ |
(370) |
$ |
- |
$ |
(369) | ||||||||||||
Net loss attributable to Devon |
$ |
(9,117) |
$ |
(480) |
$ |
(325) |
$ |
- |
$ |
(9,922) | ||||||||||||
Property and equipment, net |
$ |
11,586 |
$ |
5,623 |
$ |
5,566 |
$ |
- |
$ |
22,775 | ||||||||||||
Total assets |
$ |
17,436 |
$ |
6,754 |
$ |
10,274 |
$ |
(113) |
$ |
34,351 | ||||||||||||
Capital expenditures |
$ |
3,205 |
$ |
478 |
$ |
777 |
$ |
- |
$ |
4,460 | ||||||||||||
Nine Months Ended September 30, 2014: |
||||||||||||||||||||||
Revenues from external customers |
$ |
10,065 |
$ |
1,671 |
$ |
1,835 |
$ |
- |
$ |
13,571 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
672 |
$ |
(672) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
1,791 |
$ |
419 |
$ |
199 |
$ |
- |
$ |
2,409 | ||||||||||||
Interest expense |
$ |
303 |
$ |
61 |
$ |
33 |
$ |
(31) |
$ |
366 | ||||||||||||
Earnings before income taxes |
$ |
2,224 |
$ |
1,310 |
$ |
234 |
$ |
- |
$ |
3,768 | ||||||||||||
Income tax expense |
$ |
1,121 |
$ |
517 |
$ |
60 |
$ |
- |
$ |
1,698 | ||||||||||||
Net earnings |
$ |
1,103 |
$ |
793 |
$ |
174 |
$ |
- |
$ |
2,070 | ||||||||||||
Net earnings attributable to noncontrolling interests |
$ |
1 |
$ |
- |
$ |
54 |
$ |
- |
$ |
55 | ||||||||||||
Net earnings attributable to Devon |
$ |
1,102 |
$ |
793 |
$ |
120 |
$ |
- |
$ |
2,015 | ||||||||||||
Property and equipment, net |
$ |
23,661 |
$ |
6,882 |
$ |
4,626 |
$ |
- |
$ |
35,169 | ||||||||||||
Total assets |
$ |
30,431 |
$ |
10,895 |
$ |
9,630 |
$ |
(117) |
$ |
50,839 | ||||||||||||
Capital expenditures |
$ |
9,724 |
$ |
1,055 |
$ |
515 |
$ |
- |
$ |
11,294 | ||||||||||||
Year Ended December 31, 2014: |
||||||||||||||||||||||
Property and equipment, net |
$ |
24,463 |
$ |
6,790 |
$ |
5,043 |
$ |
- |
$ |
36,296 | ||||||||||||
Total assets |
$ |
32,037 |
$ |
8,517 |
$ |
10,207 |
$ |
(124) |
$ |
50,637 |
____________________________
|
Recently Issued Accounting Standards not yet Adopted
The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and industry-specific guidance in Subtopic 932-605, Extractive Activities – Oil and Gas – Revenue Recognition. This ASU provides guidance concerning the recognition and measurement of revenue from contracts with customers. Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues. The effective date for ASU 2014-09 was delayed through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual and interim periods beginning in 2018 and is required to be adopted using either the retrospective or cumulative effect (modified retrospective) transition method, with early adoption permitted in 2017. Devon is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures and does not plan on early adopting.
The FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This ASU provides additional guidance to reporting entities in evaluating whether certain legal entities, such as limited partnerships, limited liability corporations and securitization structures, should be consolidated. The ASU is considered to be an improvement on current accounting requirements as it reduces the number of existing consolidation models. The ASU is effective for annual and interim periods beginning in 2016 and is required to be adopted using a retrospective or modified retrospective approach, with early adoption permitted. Devon is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures and will not early adopt.
The FASB issued ASU 2015-03, Interest – Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs and ASU 2015-15, Interest – Imputation of Interest (Topic 835): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. These ASUs require debt issuance costs related to a recognized debt liability, except for those related to revolving credit facilities, to be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability rather than as an asset. These ASUs are effective for annual and interim periods beginning in 2016 and are required to be applied retrospectively, with early adoption permitted. Devon does not expect the adoption to have a material impact on its consolidated financial statements and related disclosures and will not early adopt.
|
Devon is party to various legal actions arising in the normal course of business. Matters that are probable of unfavorable outcome to Devon and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, Devon’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. None of the actions are believed by management to involve future amounts that would be material to Devon’s financial position or results of operations after consideration of recorded accruals. Actual amounts could differ materially from management’s estimates.
|
Purchase Price |
Allocation |
|||||||||||||
Date |
Acquiree |
Cash |
EnLink Units |
PP&E |
Goodwill |
Intangibles |
Other |
|||||||
January 31 |
LPC Crude Oil Marketing LLC |
$108 |
- |
$30 |
$30 |
$43 |
$5 |
|||||||
March 16 |
Coronado Midstream Holdings LLC ("Coronado") |
$240 |
$360 |
$302 |
$18 |
$281 |
$(1) |
|||||||
Nine Months Ended |
||||
September 30, 2014 |
||||
(Millions) |
||||
Total operating revenues |
$ |
14,218 | ||
Net earnings |
$ |
2,109 | ||
Noncontrolling interests |
$ |
68 | ||
Net earnings attributable to Devon |
$ |
2,041 | ||
Net earnings per common share attributable to Devon |
$ |
4.98 |
|
The following table presents the net gains and losses by derivative financial instrument type followed by the corresponding individual comprehensive statements of earnings caption.
Three Months Ended |
Nine Months Ended |
|||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||
Commodity derivatives: |
(Millions) |
|||||||||||
Oil, gas and NGL derivatives |
$ |
414 |
$ |
748 |
$ |
426 |
$ |
29 | ||||
Marketing and midstream revenues |
6 | 1 | 8 | (2) | ||||||||
Interest rate derivatives: |
||||||||||||
Other nonoperating items |
(30) |
— |
(28) | 1 | ||||||||
Foreign currency derivatives: |
||||||||||||
Other nonoperating items |
91 | 55 | 200 | 15 | ||||||||
Net gains recognized |
$ |
481 |
$ |
804 |
$ |
606 |
$ |
43 |
The following table presents the derivative fair values by derivative financial instrument type followed by the corresponding individual consolidated balance sheet caption.
September 30, 2015 |
December 31, 2014 |
||||||
(Millions) |
|||||||
Commodity derivative assets: |
|||||||
Derivatives, at fair value |
$ |
687 |
$ |
1,984 | |||
Other long-term assets |
4 | 11 | |||||
Interest rate derivative assets: |
|||||||
Derivatives, at fair value |
1 | 1 | |||||
Other long-term assets |
1 |
— |
|||||
Foreign currency derivative assets: |
|||||||
Derivatives, at fair value |
2 | 8 | |||||
Total derivative assets |
$ |
695 |
$ |
2,004 | |||
Commodity derivative liabilities: |
|||||||
Other current liabilities |
$ |
19 |
$ |
28 | |||
Other long-term liabilities |
5 | 28 | |||||
Interest rate derivative liabilities: |
|||||||
Other current liabilities |
1 | 1 | |||||
Other long-term liabilities |
30 |
— |
|||||
Total derivative liabilities |
$ |
55 |
$ |
57 |
Price Swaps |
Price Collars |
Call Options Sold |
||||||||||||||||
Period |
Volume (Bbls/d) |
Weighted Average Price ($/Bbl) |
Volume (Bbls/d) |
Weighted Average Floor Price ($/Bbl) |
Weighted Average Ceiling Price ($/Bbl) |
Volume (Bbls/d) |
Weighted Average Price ($/Bbl) |
|||||||||||
Q4 2015 |
107,000 |
$ |
90.61 |
44,000 |
$ |
81.36 |
$ |
88.63 |
28,000 |
$ |
116.43 |
|||||||
Q1-Q4 2016 |
- |
$ |
- |
- |
$ |
- |
$ |
- |
18,500 |
$ |
89.05 |
Oil Basis Swaps |
|||||||
Period |
Index |
Volume (Bbls/d) |
Weighted Average Differential to WTI ($/Bbl) |
||||
Q4 2015 |
Western Canadian Select |
40,000 |
$ |
(15.58) | |||
Q4 2015 |
West Texas Sour |
8,000 |
$ |
(3.68) | |||
Q4 2015 |
Midland Sweet |
16,000 |
$ |
(2.86) | |||
Q1-Q4 2016 |
West Texas Sour |
5,000 |
$ |
(0.53) | |||
Q1-Q4 2016 |
Midland Sweet |
13,000 |
$ |
0.25 |
Price Swaps |
Price Collars |
Call Options Sold |
||||||||||||||||
Period |
Volume (MMBtu/d) |
Weighted Average Price ($/MMBtu) |
Volume (MMBtu/d) |
Weighted Average Floor Price ($/MMBtu) |
Weighted Average Ceiling Price ($/MMBtu) |
Volume (MMBtu/d) |
Weighted Average Price ($/MMBtu) |
|||||||||||
Q4 2015 |
250,000 |
$ |
4.32 |
480,000 |
$ |
3.52 |
$ |
3.83 |
550,000 |
$ |
5.09 |
|||||||
Q1-Q4 2016 |
24,863 |
$ |
3.17 |
- |
$ |
- |
$ |
- |
400,000 |
$ |
4.73 |
Natural Gas Basis Swaps |
|||||||
Period |
Index |
Volume (MMBtu/d) |
Weighted Average Differential to Henry Hub ($/MMBtu) |
||||
Q4 2015 |
Panhandle Eastern Pipe Line |
100,000 |
$ |
(0.28) |
|||
Q4 2015 |
El Paso Natural Gas |
70,000 |
$ |
(0.11) |
|||
Q4 2015 |
Houston Ship Channel |
200,000 |
$ |
0.01 |
|||
Q1-Q4 2016 |
Panhandle Eastern Pipe Line |
175,000 |
$ |
(0.34) |
|||
Q1-Q4 2016 |
El Paso Natural Gas |
15,000 |
$ |
(0.13) |
|||
Q1-Q4 2016 |
Houston Ship Channel |
30,000 |
$ |
0.11 |
|||
Q1-Q4 2016 |
Transco Zone 4 |
60,000 |
$ |
0.01 |
|||
Q1-Q4 2017 |
Panhandle Eastern Pipe Line |
60,000 |
$ |
(0.34) |
|||
Q1-Q4 2017 |
El Paso Natural Gas |
30,000 |
$ |
(0.14) |
|||
Q1-Q4 2017 |
Houston Ship Channel |
35,000 |
$ |
0.06 |
|||
Q1-Q4 2017 |
Transco Zone 4 |
85,000 |
$ |
0.04 |
Period |
Product |
Volume (Total) |
Weighted Average Price Paid |
Weighted Average Price Received |
|||||||
Q4 2015-Q4 2016 |
Ethane |
817 |
MBbls |
$ |
0.28/gal |
Index |
|||||
Q4 2015-Q4 2016 |
Propane |
908 |
MBbls |
Index |
$ |
0.88/gal |
|||||
Q4 2015-Q3 2016 |
Normal Butane |
74 |
MBbls |
Index |
$ |
0.63/gal |
|||||
Q4 2015-Q3 2016 |
Natural Gasoline |
63 |
MBbls |
Index |
$ |
1.30/gal |
|||||
Q4 2015-Q3 2016 |
Natural Gas |
2,497 |
MMBtu/d |
$ |
3.13/MMBtu |
Index |
Notional |
Rate Received |
Rate Paid |
Expiration |
||||
(Millions) |
|||||||
$ |
100 |
Three Month LIBOR |
0.92% |
December 2016 |
|||
$ |
100 |
1.76% |
Three Month LIBOR |
January 2019 |
|||
$ |
750 |
Three Month LIBOR |
2.98% |
December 2048 |
Forward Contract |
|||||||||
Currency |
Contract Type |
CAD Notional |
Weighted Average Fixed Rate Received |
Expiration |
|||||
(Millions) |
(CAD-USD) |
||||||||
Canadian Dollar |
Sell |
$ |
1,884 |
0.752 |
December 2015 |
|
Three Months Ended September 30, 2015 |
Nine Months Ended September 30, 2015 |
||||||||||||
Gross |
Net of Taxes |
Gross |
Net of Taxes |
||||||||||
(Millions) |
|||||||||||||
U.S. oil and gas assets |
$ |
4,715 |
$ |
2,994 |
$ |
14,340 |
$ |
9,105 | |||||
Canada oil and gas assets |
336 | 248 | 336 | 248 | |||||||||
EnLink goodwill |
576 | 576 | 576 | 576 | |||||||||
EnLink other intangible assets |
223 | 223 | 223 | 223 | |||||||||
Other assets |
1 | 1 | 4 | 3 | |||||||||
Total asset impairments |
$ |
5,851 |
$ |
4,042 |
$ |
15,479 |
$ |
10,155 |
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||
Total income tax expense (benefit) (millions) |
$ |
(1,714) |
$ |
613 |
$ |
(5,435) |
$ |
1,698 | |||||
U.S. statutory income tax rate |
(35%) | 35% | (35%) | 35% | |||||||||
Non-deductible goodwill and intangible impairment |
5% | 0% | 2% | 0% | |||||||||
Taxation on Canadian operations |
0% | 0% | 1% | 1% | |||||||||
State income taxes |
(1%) | 2% | (2%) | 1% | |||||||||
Repatriations |
0% | 0% | 0% | 7% | |||||||||
Other |
1% | 0% | (1%) | 1% | |||||||||
Effective income tax rate |
(30%) | 37% | (35%) | 45% |
|
Three Months Ended |
Nine Months Ended |
|||||||||||
September 30, |
September 30, |
|||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||
(Millions) |
||||||||||||
Foreign currency translation: |
||||||||||||
Beginning accumulated foreign currency translation |
$ |
725 |
$ |
1,442 |
$ |
983 |
$ |
1,448 | ||||
Change in cumulative translation adjustment |
(242) | (299) | (519) | (306) | ||||||||
Income tax benefit |
30 | 20 | 49 | 21 | ||||||||
Ending accumulated foreign currency translation |
513 | 1,163 | 513 | 1,163 | ||||||||
Pension and postretirement benefit plans: |
||||||||||||
Beginning accumulated pension and postretirement benefits |
(197) | (172) | (204) | (180) | ||||||||
Recognition of net actuarial loss and prior service cost in earnings (1) |
6 | 4 | 17 | 15 | ||||||||
Income tax expense |
(1) | (2) | (5) | (5) | ||||||||
Ending accumulated pension and postretirement benefits |
(192) | (170) | (192) | (170) | ||||||||
Accumulated other comprehensive earnings, net of tax |
$ |
321 |
$ |
993 |
$ |
321 |
$ |
993 |
__________________________
(1) These accumulated other comprehensive earnings components are included in the computation of net periodic benefit cost, which is a component of general and administrative expenses on the accompanying consolidated comprehensive statements of earnings. See Note 14 for additional details.
|
Nine Months Ended September 30, |
||||||
2015 |
2014 |
|||||
(Millions) |
||||||
Net change in working capital accounts: |
||||||
Accounts receivable |
$ |
713 |
$ |
(25) | ||
Income taxes receivable |
514 |
- |
||||
Other current assets |
(36) | (120) | ||||
Accounts payable |
(135) | (118) | ||||
Revenues and royalties payable |
(288) | 381 | ||||
Income taxes payable |
(158) | 704 | ||||
Other current liabilities |
(517) | (56) | ||||
Net change in working capital |
$ |
93 |
$ |
766 | ||
Interest paid (net of capitalized interest) |
$ |
343 |
$ |
355 | ||
Income taxes paid (received) |
$ |
(339) |
$ |
214 |
|
September 30, 2015 |
December 31, 2014 |
|||||
(Millions) |
||||||
Oil, gas and NGL sales |
$ |
463 |
$ |
723 | ||
Joint interest billings |
215 | 475 | ||||
Marketing and midstream revenues |
637 | 706 | ||||
Other |
17 | 71 | ||||
Gross accounts receivable |
1,332 | 1,975 | ||||
Allowance for doubtful accounts |
(14) | (16) | ||||
Net accounts receivable |
$ |
1,318 |
$ |
1,959 |
|
U.S. |
EnLink |
Total |
|||||||
(Millions) |
|||||||||
Balance as of December 31, 2014 |
$ |
2,618 |
$ |
3,685 |
$ |
6,303 | |||
Acquired during period |
- |
48 | 48 | ||||||
Impairment |
- |
(576) | (576) | ||||||
Balance as of September 30, 2015 |
$ |
2,618 |
$ |
3,157 |
$ |
5,775 | |||
September 30, 2015 |
December 31, 2014 |
|||||
(Millions) |
||||||
Customer relationships |
$ |
646 |
$ |
569 | ||
Accumulated amortization |
(43) | (36) | ||||
Net intangibles |
$ |
603 |
$ |
533 |
Year |
Amortization Amount |
||
(Millions) |
|||
2015 |
$ |
10 | |
2016 |
$ |
41 | |
2017 |
$ |
41 | |
2018 |
$ |
41 | |
2019 |
$ |
41 |
|
September 30, 2015 |
December 31, 2014 |
||||
(Millions) |
|||||
Devon debt |
|||||
Commercial paper |
$ |
- |
$ |
932 | |
Floating rate due December 15, 2015 |
500 | 500 | |||
Floating rate due December 15, 2016 |
350 | 350 | |||
8.25% due July 1, 2018 |
125 | 125 | |||
2.25% due December 15, 2018 |
750 | 750 | |||
6.30% due January 15, 2019 |
700 | 700 | |||
4.00% due July 15, 2021 |
500 | 500 | |||
3.25% due May 15, 2022 |
1,000 | 1,000 | |||
7.50% due September 15, 2027 |
150 | 150 | |||
7.875% due September 30, 2031 |
1,250 | 1,250 | |||
7.95% due April 15, 2032 |
1,000 | 1,000 | |||
5.60% due July 15, 2041 |
1,250 | 1,250 | |||
4.75% due May 15, 2042 |
750 | 750 | |||
5.00% due June 15, 2045 |
750 |
- |
|||
Net discount on debentures and notes |
(27) | (18) | |||
Total Devon debt |
9,048 | 9,239 | |||
EnLink debt |
|||||
Credit facilities |
175 | 237 | |||
2.70% due April 1, 2019 |
400 | 400 | |||
7.125% due June 1, 2022 |
163 | 163 | |||
4.40% due April 1, 2024 |
550 | 550 | |||
4.15% due June 1, 2025 |
750 |
- |
|||
5.60% due April 1, 2044 |
350 | 350 | |||
5.05% due April 1, 2045 |
450 | 300 | |||
Net premium on debentures and notes |
14 | 23 | |||
Total EnLink debt |
2,852 | 2,023 | |||
Total debt |
11,900 | 11,262 | |||
Less amount classified as short-term debt (1) |
500 | 1,432 | |||
Total long-term debt |
$ |
11,400 |
$ |
9,830 |
____________________________
|
Nine Months Ended September 30, |
||||||
2015 |
2014 |
|||||
(Millions) |
||||||
Asset retirement obligations as of beginning of period |
$ |
1,399 |
$ |
2,228 | ||
Liabilities incurred |
46 | 79 | ||||
Liabilities settled and divested (1) |
(48) | (987) | ||||
Revision of estimated obligation |
62 | 75 | ||||
Accretion expense on discounted obligation |
56 | 70 | ||||
Foreign currency translation adjustment |
(80) | (55) | ||||
Asset retirement obligations as of end of period |
1,435 | 1,410 | ||||
Less current portion |
58 | 62 | ||||
Asset retirement obligations, long-term |
$ |
1,377 |
$ |
1,348 |
__________________________
(1) During the first nine months of 2014, Devon reduced its asset retirement obligations by $949 million related to its asset divestiture program discussed in Note 2.
|
Pension Benefits |
Postretirement Benefits |
|||||||||||||||||||||||
Three Months Ended |
Nine Months Ended |
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||||
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||||||||||
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
2015 |
2014 |
|||||||||||||||||
(Millions) |
||||||||||||||||||||||||
Service cost |
$ |
9 |
$ |
7 |
$ |
25 |
$ |
22 |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
||||||||
Interest cost |
13 | 14 | 39 | 41 |
- |
- |
- |
- |
||||||||||||||||
Expected return on plan assets |
(14) | (13) | (44) | (40) |
- |
- |
- |
- |
||||||||||||||||
Amortization of prior service cost (1) |
1 | 1 | 3 | 3 |
- |
(1) | (1) | (1) | ||||||||||||||||
Net actuarial loss (gain) (1) |
5 | 4 | 15 | 14 |
- |
- |
- |
(1) | ||||||||||||||||
Net periodic benefit cost (2) |
$ |
14 |
$ |
13 |
$ |
38 |
$ |
40 |
$ |
- |
$ |
(1) |
$ |
(1) |
$ |
(2) |
__________________________
(1) These net periodic benefit costs were reclassified out of other comprehensive earnings in the current period.
(2) Net periodic benefit cost is a component of general and administrative expenses in the accompanying consolidated comprehensive statements of earnings.
|
Fair Value Measurements Using: |
|||||||||||||||
Carrying |
Total Fair |
Level 1 |
Level 2 |
Level 3 |
|||||||||||
Amount |
Value |
Inputs |
Inputs |
Inputs |
|||||||||||
(Millions) |
|||||||||||||||
September 30, 2015 assets (liabilities): |
|||||||||||||||
Cash equivalents |
$ |
1,271 |
$ |
1,271 |
$ |
841 |
$ |
430 |
$ |
- |
|||||
Commodity derivatives |
$ |
691 |
$ |
691 |
$ |
- |
$ |
691 |
$ |
- |
|||||
Commodity derivatives |
$ |
(24) |
$ |
(24) |
$ |
- |
$ |
(24) |
$ |
- |
|||||
Interest rate derivatives |
$ |
2 |
$ |
2 |
$ |
- |
$ |
2 |
$ |
- |
|||||
Interest rate derivatives |
$ |
(31) |
$ |
(31) |
$ |
- |
$ |
(31) |
$ |
- |
|||||
Foreign currency derivatives |
$ |
2 |
$ |
2 |
$ |
- |
$ |
2 |
$ |
- |
|||||
Debt |
$ |
(11,900) |
$ |
(12,113) |
$ |
- |
$ |
(12,113) |
$ |
- |
|||||
Capital lease obligations |
$ |
(18) |
$ |
(17) |
$ |
- |
$ |
(17) |
$ |
- |
|||||
December 31, 2014 assets (liabilities): |
|||||||||||||||
Cash equivalents |
$ |
950 |
$ |
950 |
$ |
340 |
$ |
610 |
$ |
- |
|||||
Commodity derivatives |
$ |
1,995 |
$ |
1,995 |
$ |
- |
$ |
1,995 |
$ |
- |
|||||
Commodity derivatives |
$ |
(56) |
$ |
(56) |
$ |
- |
$ |
(56) |
$ |
- |
|||||
Interest rate derivatives |
$ |
1 |
$ |
1 |
$ |
- |
$ |
1 |
$ |
- |
|||||
Interest rate derivatives |
$ |
(1) |
$ |
(1) |
$ |
- |
$ |
(1) |
$ |
- |
|||||
Foreign currency derivatives |
$ |
8 |
$ |
8 |
$ |
- |
$ |
8 |
$ |
- |
|||||
Debt |
$ |
(11,262) |
$ |
(12,472) |
$ |
- |
$ |
(12,472) |
$ |
- |
|||||
Capital lease obligations |
$ |
(20) |
$ |
(20) |
$ |
- |
$ |
(20) |
$ |
- |
|
U.S.(1) |
Canada |
EnLink(1) |
Eliminations |
Total |
||||||||||||||||||
(Millions) |
||||||||||||||||||||||
Three Months Ended September 30, 2015: |
||||||||||||||||||||||
Revenues from external customers |
$ |
2,381 |
$ |
221 |
$ |
999 |
$ |
- |
$ |
3,601 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
172 |
$ |
(172) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
510 |
$ |
134 |
$ |
100 |
$ |
- |
$ |
744 | ||||||||||||
Interest expense |
$ |
96 |
$ |
22 |
$ |
31 |
$ |
(11) |
$ |
138 | ||||||||||||
Asset impairments |
$ |
4,716 |
$ |
336 |
$ |
799 |
$ |
- |
$ |
5,851 | ||||||||||||
Loss before income taxes |
$ |
(4,464) |
$ |
(401) |
$ |
(758) |
$ |
- |
$ |
(5,623) | ||||||||||||
Income tax expense (benefit) |
$ |
(1,605) |
$ |
(116) |
$ |
7 |
$ |
- |
$ |
(1,714) | ||||||||||||
Net loss |
$ |
(2,859) |
$ |
(285) |
$ |
(765) |
$ |
- |
$ |
(3,909) | ||||||||||||
Net loss attributable to noncontrolling interests |
$ |
- |
$ |
- |
$ |
(402) |
$ |
- |
$ |
(402) | ||||||||||||
Net loss attributable to Devon |
$ |
(2,859) |
$ |
(285) |
$ |
(363) |
$ |
- |
$ |
(3,507) | ||||||||||||
Capital expenditures |
$ |
974 |
$ |
108 |
$ |
105 |
$ |
- |
$ |
1,187 | ||||||||||||
Three Months Ended September 30, 2014: |
||||||||||||||||||||||
Revenues from external customers |
$ |
4,197 |
$ |
481 |
$ |
658 |
$ |
- |
$ |
5,336 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
199 |
$ |
(199) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
654 |
$ |
113 |
$ |
75 |
$ |
- |
$ |
842 | ||||||||||||
Interest expense |
$ |
95 |
$ |
20 |
$ |
14 |
$ |
(11) |
$ |
118 | ||||||||||||
Earnings before income taxes |
$ |
1,463 |
$ |
109 |
$ |
82 |
$ |
- |
$ |
1,654 | ||||||||||||
Income tax expense |
$ |
557 |
$ |
38 |
$ |
18 |
$ |
- |
$ |
613 | ||||||||||||
Net earnings |
$ |
906 |
$ |
71 |
$ |
64 |
$ |
- |
$ |
1,041 | ||||||||||||
Net earnings attributable to noncontrolling interests |
$ |
- |
$ |
- |
$ |
25 |
$ |
- |
$ |
25 | ||||||||||||
Net earnings attributable to Devon |
$ |
906 |
$ |
71 |
$ |
39 |
$ |
- |
$ |
1,016 | ||||||||||||
Capital expenditures |
$ |
1,211 |
$ |
335 |
$ |
209 |
$ |
- |
$ |
1,755 | ||||||||||||
Nine Months Ended September 30, 2015: |
||||||||||||||||||||||
Revenues from external customers |
$ |
6,570 |
$ |
802 |
$ |
2,887 |
$ |
- |
$ |
10,259 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
499 |
$ |
(499) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
1,817 |
$ |
382 |
$ |
289 |
$ |
- |
$ |
2,488 | ||||||||||||
Interest expense |
$ |
271 |
$ |
70 |
$ |
76 |
$ |
(34) |
$ |
383 | ||||||||||||
Asset impairments |
$ |
14,344 |
$ |
336 |
$ |
799 |
$ |
- |
$ |
15,479 | ||||||||||||
Loss before income taxes |
$ |
(14,450) |
$ |
(609) |
$ |
(667) |
$ |
- |
$ |
(15,726) | ||||||||||||
Income tax expense (benefit) |
$ |
(5,334) |
$ |
(129) |
$ |
28 |
$ |
- |
$ |
(5,435) | ||||||||||||
Net loss |
$ |
(9,116) |
$ |
(480) |
$ |
(695) |
$ |
- |
$ |
(10,291) | ||||||||||||
Net earnings (loss) attributable to noncontrolling interests |
$ |
1 |
$ |
- |
$ |
(370) |
$ |
- |
$ |
(369) | ||||||||||||
Net loss attributable to Devon |
$ |
(9,117) |
$ |
(480) |
$ |
(325) |
$ |
- |
$ |
(9,922) | ||||||||||||
Property and equipment, net |
$ |
11,586 |
$ |
5,623 |
$ |
5,566 |
$ |
- |
$ |
22,775 | ||||||||||||
Total assets |
$ |
17,436 |
$ |
6,754 |
$ |
10,274 |
$ |
(113) |
$ |
34,351 | ||||||||||||
Capital expenditures |
$ |
3,205 |
$ |
478 |
$ |
777 |
$ |
- |
$ |
4,460 | ||||||||||||
Nine Months Ended September 30, 2014: |
||||||||||||||||||||||
Revenues from external customers |
$ |
10,065 |
$ |
1,671 |
$ |
1,835 |
$ |
- |
$ |
13,571 | ||||||||||||
Intersegment revenues |
$ |
- |
$ |
- |
$ |
672 |
$ |
(672) |
$ |
- |
||||||||||||
Depreciation, depletion and amortization |
$ |
1,791 |
$ |
419 |
$ |
199 |
$ |
- |
$ |
2,409 | ||||||||||||
Interest expense |
$ |
303 |
$ |
61 |
$ |
33 |
$ |
(31) |
$ |
366 | ||||||||||||
Earnings before income taxes |
$ |
2,224 |
$ |
1,310 |
$ |
234 |
$ |
- |
$ |
3,768 | ||||||||||||
Income tax expense |
$ |
1,121 |
$ |
517 |
$ |
60 |
$ |
- |
$ |
1,698 | ||||||||||||
Net earnings |
$ |
1,103 |
$ |
793 |
$ |
174 |
$ |
- |
$ |
2,070 | ||||||||||||
Net earnings attributable to noncontrolling interests |
$ |
1 |
$ |
- |
$ |
54 |
$ |
- |
$ |
55 | ||||||||||||
Net earnings attributable to Devon |
$ |
1,102 |
$ |
793 |
$ |
120 |
$ |
- |
$ |
2,015 | ||||||||||||
Property and equipment, net |
$ |
23,661 |
$ |
6,882 |
$ |
4,626 |
$ |
- |
$ |
35,169 | ||||||||||||
Total assets |
$ |
30,431 |
$ |
10,895 |
$ |
9,630 |
$ |
(117) |
$ |
50,839 | ||||||||||||
Capital expenditures |
$ |
9,724 |
$ |
1,055 |
$ |
515 |
$ |
- |
$ |
11,294 | ||||||||||||
Year Ended December 31, 2014: |
||||||||||||||||||||||
Property and equipment, net |
$ |
24,463 |
$ |
6,790 |
$ |
5,043 |
$ |
- |
$ |
36,296 | ||||||||||||
Total assets |
$ |
32,037 |
$ |
8,517 |
$ |
10,207 |
$ |
(124) |
$ |
50,637 |
____________________________
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