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Devon Energy Posts Q2 Loss; Sees $300 Mln Of Cash Cost Savings By Year End

Devon Energy Corp. (DVN) reported a second quarter net loss of $670 million or $1.78 per share, compared to net income of $495 million or $1.19 per share in the previous year. The quarterly result was negatively impacted by a $593 million unrealized change in the fair value of the company's derivative position due to higher futures commodity pricing.

Core loss for the latest-quarter was $66 million or $0.18 per share.

Total revenues dropped to $394 million from $1.81 billion in the prior year. Analysts polled by Thomson Reuters expected the company to report a loss of $0.13 per share for the quarter. Analysts' estimates typically exclude special items.

Devon raised its full-year oil production forecast in 2020 to a range of 148,000 to 152,000 barrels per day due to strong base production performance across its diversified asset portfolio. In the third quarter, due to timing of completion activity, the company expects oil production to decline to a range of 138,000 to 143,000 barrels per day.

In a separate press release, Devon Energy announced the next phase of its strategic plan to accelerate value creation for shareholders. It included initiatives to reduce cash costs by $300 million annually, reduce debt balances by up to $1.5 billion and return cash to shareholders in the form of a $100 million special dividend.

Devon and Banpu Kalnin Ventures plan to accelerate the scheduled closing date of the Barnett Shale asset sale to October 1, 2020, from the previously arranged date of December 31, 2020. Devon expects to receive a net cash payment of more than $300 million at closing.

Devon declared a special dividend in the amount of $0.26 per share. The special dividend will result in an aggregate payment of $100 million to shareholders by Devon. The special dividend is payable on October 1, 2020, to shareholders of record at the close of business on August 14, 2020. This special dividend is in addition to the regular quarterly cash dividend of $0.11 per share.

The company plans to deliver sustainable, cash-cost reductions of $300 million by year-end 2020. The cost-reduction plan includes several actions to better align the workforce with go-forward activity levels, achieve more efficient field-level operations and decrease financing costs. The PV-10 of this cost savings plan is estimated to exceed $1 billion of value over the next five years.

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