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Devon Cuts Production Outlook, Raises Proven Reserves Estimates

This year's devastating storms led Devon Energy Corp. to lower its oil and natural gas production outlook for the year, but the Oklahoma City-based producer increased its estimate of proven oil and natural gas reserves.

Devon estimates additions to proved reserves in 2005 will be 410-420 MMboe, exceeding a previous estimate of 360-390 MMboe. Confirming an estimate made in late October following the 3Q hurricanes -- which reduced 2005 output by about 5 MMboe -- Devon estimated production this year will be about 216 MMboe from properties retained after selling off assets. Drill-bit capital for 2005 is estimated at $3.9-4 billion.

"We have had a terrific year with the drill bit," said President John Richels. "We previously estimated that we would add up to 390 MMboe, but we now expect to book as much as 420 MMboe, at very attractive unit costs. These additions would significantly exceed our expected 2005 production from retained properties of 216 MMboe. Reserve additions are coming from across Devon's high quality oil and gas property base and include about 100 MMboe of additions from our Jackfish project in the Canadian oil sands."

The Jackfish project, located 87 miles south of Fort McMurray, AB, is targeted to hit full production in 2008. Field activities began this year.

In 2006, Devon expects to post strong reserve growth, forecasting proved reserve additions of 410-440 MMboe, with company-wide production ranging between 215-219 MMboe. The production range excludes about 3 MMboe suspended because of hurricane-related damage, the company said. Drill-bit capital for 2006 is forecast at $4.5-4.7 billion, an increase resulting from 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," said Richels. "Furthermore, our 2007 production forecast of 232-236 MMboe significantly exceeds the 225 MMboe 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."

Devon is expected to provide more detailed forecasts for 2006 in early February.

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