Oklahoma City-based Devon Energy had a banner year in 2004, posting sharply higher earnings and showing solid reserves and production growth. The company’s net income was up 25% for the year to $2.2 billion ($4.38/share compared to estimates of $4.27) and net income in the fourth quarter rose 24% to $673 million ($1.35/share) compared to $543 million ($1.16/share) in 4Q2003.

“Devon delivered record-breaking performance in 2004, from nearly every perspective,” said CEO J. Larry Nichols. “Record production of 251 million boe and rising oil and gas prices led to record net earnings and earnings per share.

“Furthermore, with drill-bit capital of $2.8 billion we added 313 million bbl of proved reserves, before price revisions. Simultaneously, the company reduced net debt by $1.8 billion with free cash flow. Devon is clearly performing at a very high level and we couldn’t be more enthusiastic about our future.”

In 2004, the company’s production rose 10% to 1.5 Tcfe, wholesale gas prices were up 14% and crude oil prices rose 33%. Devon’s domestic natural gas production was up 2% for the year to 1,642 MMcf/d, but down 7% for the quarter to 1,619.7 MMcf/d.

Lehman Brothers analyst Thomas Driscoll said Devon’s fourth quarter earnings beat his forecast of $1.23 and the consensus estimate of $1.20. Devon’s production beat the Lehman Brothers projection by 0.7%.

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