Devon Energy Corp. reported a third-quarter loss of $719 million, as the natural gas producer continues to struggle with low prices for the resource.
The driver of the loss was a $1.1 billion write down of the value of its natural gas assets, something that has hampered the results of other gas producers as resource values have fallen. But even with that non-cash charge aside, Devon’s adjusted earnings of $355 million were down from its earnings of $1 billion a year ago, when it reported no write downs.
Still, the Oklahoma City-based company outperformed some analysts’ expectations by adding substantially to its oil production.
About 63 percent of Devon’s average daily production of 678,000 barrels of oil equivalent per day is natural gas, according to the company’s third-quarter earnings release, down from 66 percent in the July-September quarter a year ago.
Devon cut back on its production of low-cost natural gas while growing its oil production 14 percent over the last year.
The company produced an average of 142,500 barrels of oil a day in the third quarter, up from 125,000 barrels a day in the same period a year ago.
A year ago, Devon reported third-quarter earnings of $1 billion, but, like other gas producers, falling natural gas prices cut into the company’s profits and forced it into an aggressive effort to boost production of more lucrative oil.
“As we have pursued higher-returning oil projects, we also have de-emphasized natural gas drilling, limiting overall production growth,” Devon CEO John Richels said in a statement. “This is exactly the right tactical decision for Devon in this environment and is consistent with our longstanding strategy to optimize returns as opposed to top-line production growth.”