Devon Energy, the largest producer in the Barnett Shale, said it will spend significantly less in the field for a second straight year as it continues to focus on higher-paying crude oil.
In a conference call with financial analysts, CEO John Richels said Devon expects to spend a combined $600 million in the Barnett and another shale gas play in Oklahoma’s Anadarko Basin. It expects to drill about 200 wells total “in only the most economic portion of these plays.”
Last year, Oklahoma City-based Devon drilled 356 wells in the fields — 172 in the Barnett and 184 in the Anadarko — according to its fourth-quarter earnings statement released Wednesday. It did not break out spending by field, but in its 2013 outlook a year ago, it had expected to spend about $1 billion total in the two plays — $500 million in the Barnett and $550 million in the Anadarko.
In spending and the number of wells, the decline in the Barnett is roughly 40 percent. In 2012, Devon drilled 322 wells in the field and spent $920 million, according to past reports.
Despite the big cuts, Devon’s production in the Barnett stayed virtually unchanged from 2012, the equivalent of 1.4 billion cubic feet a day. Those figures include dry gas, natural gas liquids and crude oil.
Devon and other producers have generally steered their efforts toward oil and liquids because they have drawn higher prices than dry gas. Late last year, Devon spent $6 billion to enter South Texas’ booming Eagle Ford Shale, predominantly a crude oil play, and it holds 1.5 million acres in the Permian Basin, also an oil province.
Devon said its oil and liquids production rose 32 percent in the U.S. in the fourth quarter and was up 17 percent in the Barnett, to 57,000 barrels a day.
Overall, Devon said it expects to spend $4.8 billion to $5.2 billion on exploration and development this year, compared with $5.4 billion reported for 2013.
In its earnings report, Devon showed a net profit of $207 million, or 51 cents a share, on revenue of $2.6 billion in the fourth quarter. That compares with a net loss a year earlier of $357 million on revenue of $1.9 billion.
After adjustments for hedging and other unusual items, Devon said it earned $447 million, or $1.10 a share. That compared with Wall Street’s consensus estimate of $1.08, and the company’s shares (ticker: DVN) closed up 2 percent in heavy trading.
Also Wednesday, Devon said it agreed to sell most of its conventional assets in Canada for $2.8 billion to Canadian Natural Resources Ltd. That deal does not include its Horn River property in British Columbia or its oil sands holdings in Alberta.