Hurt by weaker-than-expected sales, Devon Energy (NYSE:DVN) reported a narrowed fourth-quarter profit, though it continued with its divestiture plan through the quarter following losses amid the 2010 Gulf of Mexico oil spill.
The Oklahoma City-based company posted net earnings of $562 million, or $1.30 a share, compared with $667 million, or $1.50 a share, in the same quarter last year. Excluding one-time items, the company earned $1.57 a share, beating the Street’s view of $1.41.
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Devon CEO John Richels called 2010 an outstanding year, attributing the results to the company’s focus on its North American onshore capital program that helped widened proved reserves to an all-time record of 2.9 billion equivalent barrels.
“The company’s record earnings were accompanied by excellent operating results and the successful execution of our strategic repositioning,” he said.
Revenue for the natural gas and oil explorer was $2.14 billion, down from $2.45 billion a year ago, short of average analyst estimates polled by Thomson Reuters of $2.37 billion.
Fueling the sales was an increase in drill-bit reserve additions, which were 175% of its production output for the year, partially offset by decreased sales of natural gas and oil. Still, Devon increased oil and natural gas liquids production from its North American on shore properties by 6% to average of 193,000 barrels a day.
Cost cutting initiatives were evident in Devon’s full-year results, with general and administrative costs down 13% to $563 million, driven by lower employee costs. Depreciation, repletion and amortization of oil and gas properties decreased 9% to $1.7 billion.
The company said its strategic repositioning is near completion. Following the BP (NYSE:BP) Gulf of Mexico rig explosion and subsequent oil spill in 2010, Devon divested its Gulf of Mexico operations and closed on the sale of its assets in Azerbaijan and China for total proceeds of $7 billion. Devon expects to book another $3.2 billion this year from the divestiture of its operations in Brazil.