Devon to boost spending, reverse production declines
The US independent will spend \\$2bn-\\$2.3bn this year on exploration and developmnet, up from about \\$1.2bn in 2016. It will deploy 20 rigs across its key oil and gas fields by the end of this year, doubling the activity levels of 2016.
The ramp-up in drilling and spending will "jumpstart company-wide production growth," Devon's chief executive Dave Hager said today during a conference call with investors.
Devon and other large US independents such as Anadarko Petroleum and Occidental Petroleum slashed spending last year and reined in development to cope with low energy prices. Devon in the past year completed the sale of \\$3.2bn in assets to shore up its balance sheet and pay down debt, while it focused on the most profitable oil-producing areas of its portfolio.
Devon is aiming to boost 2017 oil output by 13-17pc from the fourth quarter 2016 levels. Fourth-quarter oil output was 244,000 b/d, a decline of 12pc from a year earlier. The company said it expects 2018 oil production to increase by about a fifth from 2017 levels.
Overall production during the most recent quarter was 537,000 b/d of oil equivalent (boe/d), down by 11pc from a year earlier after excluding output from divested assets. The company is targeting full year 2017 output of 539,000-561,000 boe/d, compared with 2016 total production of 568,000 boe/d.
The company will focus this year on opportunities in Oklahoma's Stack formation and the Delaware basin in southeastern New Mexico, Devon's most lucrative oil fields.
Devon is facing rising costs for oil field services as producers dispatch more crews and equipment to capture higher energy prices.
But Devon said today it can hold costs down by cutting drilling times, signing long-term contracts with service companies and shopping services with a variety of vendors.
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