So Q3 2008 was a $2.6 billion profit, Q4 2008 is a $6.8 billion loss. Devon says the loss is a product of an accounting rule that will no longer be in effect for 2009. Most importantly, the loss will NOT alter plans for the Devon Tower.
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Devon Energy reports record loss
BY RANDY ELLIS
newsok.com
Published: February 4, 2009
Oklahoma City-based Devon Energy Corp. today reported a record $6.8 billion loss for the fourth quarter of 2008 — a sudden turn of events since the company reported a record $2.6 billion profit the previous quarter.
The $6.8 billion quarterly loss amounted to $15.42 per common share. For the year, Devon lost $2.1billion, or $4.85 a share. That was also a record.
Devon stock was trading down more than 5 percent in mid-morning trading as financial results did not meet analysts expectations.
The dramatic reversal at Devon is not the result of any major change in the way the company does business, said Vince White, Devon's senior vice president of investor relations. Instead, he said it is a reflection of oil prices that plunged from about $140 a barrel in mid-2008 to about $40 a barrel at the end of the year.
Securities and Exchange Commission rules required the company to value its oil and natural gas properties based on oil and gas prices on Dec. 31, resulting in a $7.1 billion non-cash charge, White said.
Accounting rules will change next year so that oil and gas properties will be valued at average prices throughout the year. Had those rules been in effect this year, Devon would not have had a loss, he said.
Despite the fourth quarter loss, Devon remains in good financial shape, White said.
Devon, Oklahoma's largest publicly traded company, has more than $3 billion in cash and unused credit lines and the non-cash charge does not impact the company's cash flow, cash position or access to credit lines, he said.
“It does not change the value of what we own at all,” White said. “It is purely an artifact of accounting.”
J. Larry Nichols, Devon's chairman and chief executive officer, was similarly optimistic about the company's underlying performance last year and its prospects for the future.
“Despite the effects of the sharp fourth-quarter declines in oil and natural gas prices, 2008 was a very successful year for the company,” Nichols said. “Cash flow reached an all-time record of nearly $10 billion. We increased oil and gas production by six percent and drilled 2,441 wells with a 98 percent success rate. In addition, we added 584 million barrels of proved reserves before price revisions at a very attractive cost per barrel.”
White said the loss does not alter Devon's plans to build a new office skyscraper in downtown Oklahoma City.
“We will need this building to accommodate our future growth,” he said.
http://newsok.com/article/3343215