The year has not been good to natural gas producers in North America, and Devon Energy is the latest in a string of companies to report the fourth-quarter pounding.
Devon reported a loss of $357 million, or 89 cents a share, down from a profit of $507 million, or $1.25 a share, for the same time period last year.
The loss was driven by an asset impairment charge of $896 million –- its second for 2012 — as low natural gas prices have depleted the value of many of its properties.
“In spite of a challenging commodity price environment that impacted our financial results, Devon delivered solid operating results in 2012,” said John Richels, Devon’s president and chief executive officer. “During the year, we continued to make significant progress toward the conversion of our asset portfolio to a higher oil weighting.”
The company reported 2012 earnings of t $9.5 billion, down 17.8 percent from 2011 earnings of $11.4 billion.
Like other independent producers, Devon was hard hit in 2012 by its investment in natural gas, and in the third quarter took $1.1 billion impairment loss from falling prices on its oil and gas properties.
Its third-quarter revenues plunged to $1.86 billion, down 88 percent from revenues of $3.5 billion in the third quarter of 2011. But earnings were worse: the book reported $719 million loss, a free fall from its $1.04 billion earned in the third quarter of 2011.
The company has shifted its focus to oil, and is especially upbeat about its prospects in the Permian Basin, where its production increased 24 percent in 2012.
Analysts noted that the company still managed to beat both profit and revenue expectations – an indication of how glum the current natural gas environment has become in North America.
“Despite a difficult operating environment, Devon’s 2013 recovery prospects are better than its gas-weighted peers,” wrote James Sullivan, an analyst with Alembic Global Advisors in a research note.