Sharply

Sharply lower gas and oil prices in the fourth quarter of 2001 forced Devon Energy to write down the value of its reserves by $556 million (after taxes) and take a $518 million net loss compared to $307 million in net earnings in 4Q2000. Quarterly earnings per share before special charges were 23 cents, or nearly double the average of Wall Street estimates. Despite the poor results, Devon reported record high oil and gas production, revenues and year-end reserves, mainly because of its mergers with Canada’s Anderson Exploration and Houston-based Santa Fe Snyder. Earnings for the year including special charges were $103 million, down from $730 million a year earlier. Earnings per share for the year before special charges were $5.03, also beating average Wall Street estimates of $4.87. Sales of oil, gas and natural gas liquids reached a record high $3 billion in 2001, up 10% from 2000. Total production of oil, gas and natural gas liquids rose 12% to a record 135 MMboe. There was an 81% increase in Canadian production attributable to the Anderson acquisition. The average price the company received for its oil production decreased 15% to $21.57/bbl and the average price for gas increased 9% to $3.80/Mcf. Gas liquids prices fell 19% to $16.98/bbl. Although the company reported minimal expenses related to its mergers with Anderson Exploration ($1 million pre-tax) and Santa Fe Snyder ($60 million), operating and other expenses rose across the board, including a 20% increase in operating expenses, a 55% in transportation expenses, a 26% increase in rates related to depreciation, depletion and amortization of property and equipment, a 19% increase in general and administrative expenses and a $3 million charge related to exposure to Enron. Estimated proved oil and gas reserves at the end of the year were 1,620 MMboe, or 523 MMboe greater than at Dec. 31, 2000. Total reserve additions were 658 MMboe, reduced by production of 135 MMboe. This resulted in production replacement of 487%. Year-end reserves included 586 MMbbl of oil, 5.5 Tcf of natural gas and 121 MMbbl of gas liquids. The company’s 2002 capital budget for drilling and facilities expenditures is approximately $1.3 billion. In addition, Devon has budgeted approximately $150 million for midstream facilities.

Sharply lower gas and oil prices in the fourth quarter of 2001 forced Devon Energy to write down the value of its reserves by $556 million (after taxes) and take a $518 million net loss compared to $307 million in net earnings in 4Q2000. Quarterly earnings per share before special charges were 23 cents, or nearly double the average of Wall Street estimates. Despite the poor results, Devon reported record high oil and gas production, revenues and year-end reserves, mainly because of its mergers with Canada’s Anderson Exploration and Houston-based Santa Fe Snyder.

While many producers are cutting spending plans this year because of sharply lower domestic oil and gas prices, Marathon Oil Corp. said it would raise its capital investment and exploration spending by 3% to $1.8 billion for 2002 and would double spending on acquisitions.

The Enron calamity dragged down many energy company stocks Wednesday and the stocks of some financial institutions, particularly Citigroup and JP Morgan Chase & Co., which were working on the now defunct $8.4 billion Enron-Dynegy merger. Many energy companies, however, said they have had weeks to prepare for this and have reduced their Enron exposures to manageable levels.

A sharp decline in shallow drilling in the Gulf of Mexico and declining rig dayrates led to a 3.1% drop in Global Marine’s worldwide SCORE report, or Summary of Current Offshore Rig Economics, for October 2001 from the September SCORE. The SCORE for the Gulf of Mexico plummeted 16% and is down 13.7% from last October and 33.2% from the five-year average

A sharp decline in shallow drilling in the Gulf of Mexico and declining rig dayrates led to a 3.1% drop in Global Marine’s worldwide SCORE report, or Summary of Current Offshore Rig Economics, for October 2001 from the September SCORE. The SCORE for the Gulf of Mexico plummeted 16% and is down 13.7% from last October and 33.2% from the five-year average

Although quarterly net income for AGL Resources declined sharply from $17.4 million last year to $4.8 million for the quarter ending Sept. 30, the company said it posted record earnings for its fiscal year ending Sept. 30. Net income for the year was $88.9 million ($1.63 per share) compared with net income of $71.1 million ($1.29 per share) for the prior fiscal year.

Although quarterly net income for AGL Resources declined sharply from $17.4 million last year to $4.8 million for the quarter ending Sept. 30, the company said it posted record earnings for its fiscal year ending Sept. 30. Net income for the year was $88.9 million ($1.63 per share) compared with net income of $71.1 million ($1.29 per share) for the prior fiscal year.

Cash prices registered gains Wednesday that were between 15 and 25 cents at nearly all points. Colder weather moving into the Midwest was the primary eastern driver, a Midcontinent marketer said. However, another trader said heat in California was more responsible for the western upticks.